Business Finance MCQs

Question 1

The cost of new debt or marginal debt is called

Accepted Answer

Both A and B

Answer

Historical rate

Answer

Embedded rate

Answer

Marginal rate

Question 2

When a company has surplus reserves but does not have adequate liquidity, then the company capitalises its reserves as

Accepted Answer

bonus share

Answer

equity shares

Answer

preference shares

Answer

debt

Question 3

Under the Walter Model, if the rate of return is greater than the cost of capital, then what should be the impact of it?

Accepted Answer

These firms are called growth firms, they should have a zero payout ratio

Answer

These firms are called growth firms, they should have a hundred per cent payout ratio

Answer

The firm is indifferent towards how much is to be retained and how much is to be distributed among the shareholders

Answer

There is no method to show relationship between returns and cost under Walter's Model

Question 4

Which of the following statements is false?

Accepted Answer

Capital budgeting decisions are reversible in nature

Answer

The opportunity cost of input is considered in capital budgeting

Answer

Cash flows and accounting profits are different

Answer

An expansion decision is a capital budgeting decision

Question 5

If the earnings of company are stable then it can easily follow

Accepted Answer

stable dividend policy

Answer

flexible dividend policy

Answer

lower rate dividend policy

Answer

None of these

Question 6

Which of the following refers to the institutional arrangements countries adopt to govern exchange rates?

Accepted Answer

International monetary system

Answer

International monetary fund

Answer

Global agreement on exchange rates

Answer

Bretton woods arrangement

Question 7

Securitisation market in India includes.

Accepted Answer

All of these

Answer

Mutual Funds

Answer

Pension Fund

Answer

Public Sector Units

Question 8

Interest rate risk is a type of

Accepted Answer

market risk

Answer

credit risk

Answer

operational risk

Answer

All of the above

Question 9

In 2015, the RBI issued regulations known as the Rupee Bond Guidelines allowing Indian issuers to raise funding through the issuance of rupee-denominated debt instruments. These instruments are now widely referred to as

Accepted Answer

Masala Bonds

Answer

Junk Bonds

Answer

Indian Depository Receipts

Answer

Bharat Bonds