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Financial Management Practice Set

26. A firm will have favourable leverage if its _____ are more than the debt cost
(A) debt
(B) interest
(C) equity
(D) earnings


27. Operating leverage * financial leverage=
(A) composite leverage
(B) financial composite leverage
(C) operating composite leverage
(D) fixed leverage


28. Operating leverage = ______
(A) contribution / EBIT
(B) contribution / EBT
(C) contribution / total expenses.
(D) contribution / operating PBT


29. Cost of capital is the _____ rate of return expected by its investors
(A) minimum
(B) maximum
(C) equal
(D) higher


30. According to the traditional approach cost of capital affected by
(A) debt-equity mix
(B) debt-capital mix
(C) equity expenses mix
(D) debt-interest mix