". VdoTips: Financial Management Practice Set

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Financial Management Practice Set

41. Altering the leverage ratio does not influence the market value of the firm. This is the basic premise of
(A) net income approach
(B) traditional approach
(C) modern approach
(D) net operating income approach.


42. Arbitrage is the level processing technique introduced in
(A) Net income approach
(B) MM approach
(C) Operating approach
(D) Traditional approach


43. The probability of bankrupt is higher
(A) for a levered firm than an unlevered firm
(B) for a unlevered firm than an levered firm
(C) only levered firm
(D) only unlevered firm


44. Capital budgeting decisions in India cannot be reversed due to
(A) leaviness of the project
(B) ill organized market for second hand capital goods
(C) government regulations
(D) policy of the management


45. Payback period is superior to other methods, if the objective of the investor is to
(A) consider cash flow in its entirety
(B) consider the present value of future cash flows
(C) consider the liquidity
(D) consider the inflows in its entirety