1. The cheapest source of finance is ; Debenture Equity share capital Preference share Retained earning 2. A decision to acquire a new and modern plant to upgrade an old one is a ; Financing decision Working capital decision Investment decision Dividend decision 3. Other things remaining the same, an increase in the tax rate in corporate profit will ; Makes debt relatively cheaper Make debit relatively less cheap home No impact on the cost of debt We can’t say 4. Companies with higher growth paternal are likely to ; Pay lower dividends Pay higher dividends Dividends are not affected by growth consideration None of the above 5. Financial leverage is called favorable if ; Return on investment is lower than cost of debt ROI is higher than cost of debt Debt is nearly available If the degree of existing financial leverage is low 6. Higher debt equity ratio [Debt/Equity] results in ; Lower financial risk Higher degree of operating risk Higher degree of financial risk Higher EPS 7. Higher working capital usually results in ; Higher current ration, higher risk and higher profits Lower current ratio, higher risk and profits Higher equality, lower risk and lower profits Lower equality, lower risk and higher profits 8. Current assets are those assets which get converted into case ; Within six months With in one year Between one and three years Between three and five years 9. Financial planing arrives at ; Minimizing the external borrowing by resorting to equity issues. Entering that firm always have significantly more fund than required so that there is no paucity of funds. Ensuring that the firm paces a shortage nor a glut of unusable funds. Doing only what is possible with the funds that the firms has at its disposal. 10. Higher dividends per share is associated with ; High earning, high cash flows, unusable earning and higher growth opportunities. High earning, high cash flows, stable earnings and high growth opportunity High earning, high cash flows, stable earnings and lower growth opportunity High earning, low cash flows, stable earning and lower growth opportunity 11. A fixed asset should be financed through ; A long term liability A short term liability A mix of long and short term liability None of these 12. Current assets of a business firm should be financed through ; Current liability only Long term liability only Partly from both types, long and short term liabilities None of these Loading … Question 1 of 12 Business class 12 Business Environment and Organizing Business class 12 Directing Business class 12 Financial Management Business class 12 Financial Market Business class 12 Nature, Significance and Principle of
