Business Finance MCQs

The portion of eamings which is distributed among shareholders in the form of dividend is called

Which one of the following methods of capital budgeting assumes that cash inflows are reinvested at the project's rate of return?

Match List-I with List-II and select the correct answer: List I List II a. Extended Fund Facility 1. 1986 b. Compensatory Financing Facility 2. 1963 c. Compensatory and Contingency Facility 3. 1988 d. Structural Adjustment Facility 4. 1974

The elimination of riskless profit opportunities in the futures market is

From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques. 1. Profitability index 2. Net present value 3. Accounting rate of return 4. Internal rate of return

Which of the following techniques for appraisal of investment proposals are based on time value of money? 1. Accounting rate of return 2. Internal rate of return 3. Profitability index method 4. Earnings per share Select the correct answer:

In a traditional approach, which of the following statement is true in the context of the average cost of capital?

Match List-I with List-II and select the correct answer: List-I List-II a. Payback rate of return 1. Discounted cash flow technique b. Internal rate of return 2. Cornpounded values of investments and returns c. Benefit cost ratio 3. Crude method for project evaluation d. Net terminal value method 4. Varying sized projects evaluation

Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure. Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.