". VdoTips: Financial Management Practice Set



Financial Management Practice Set

116. Which of the following methods does a firm resort to avoid dividend payments?
(A) Share splitting.
(B) Declaring bonus shares.
(C) Rights issue.
(D) New issue.
117. Which of the following is the assumption of the MM model on dividend policy?
(A) The firm is an all-equity firm.
(B) The investments of the firm are financed solely by retained earnings.
(C) The firm has an infinite life.
(D) None of the above.
118. Dividend changes are perceived important than the absolute level of dividends because
(A) management change dividends to protect their seats.
(B) dividend changes have signal value for future.
(C) MM state that absolute level of dividends is irrelevant.
(D) changes determine the level of borrowing.
119. Walters model on dividend policy assumes that
(A) the firm offers an increasing amount of dividend per share at a given level of price per share.
(B) the firm has a finite life.
(C) the cost of capital of the firm is variable.
(D) equal to current assets plus current liabilities including bank borrowings.
120. Under trading means
(A) Having low amount of working capital.
(B) High turnover of working capital.
(C) Sales are less compared to assets employe
(D) Low turnover of working capital.