Business Finance MCQs

Which of the following statements are false?
1. Share capital issued by a company for the first time is known as venture capital.
2. All venture capital funds in India are promoted by the government.
3. In addition to capital, venture capitalists provide managerial and technical support to the assisted firms.
4. The benefits of venture capital financing can be realizedin long-run only.

Select the correct answer regarding motives for holding inventories by firms.
1. Transaction motive
2. Environmental motive
3. Precautionary motive
4. Speculative motive
5. Competitive motive

Match the items of the following two lists and suggest the correct answer:

List-I	List-II
a. Realized Yield Method	1. Cost of equity share capital
b. Taxation	2. Cost of equity capital
c. Cost of total capital employed	3. Cost of debt capital
d. Dividend growth is a consideration	4. Weighted cost of capital

If a company goes for a new issue of debentures, what is the impact of such development?
1. The volatility of the returns of equity in relation to a market index is likely to be affected.
2. The beta may rise.
3. The gearing ratio will rise.

Match the items given in the two lists.

List-I	List-II
a. Debt securities	1. Floating Rate Bonds without any explicit interest rate
b. Company issuing such bonds experiences less financial distress	2. Zero-Coupon Bonds
c. Coupon rate quoted as a mark-up on the given rate	3. Income Bonds

Match the statements in List-I with dividend models in List-II as follows:

List-I	List-II
a. Dividend Capitalization Approach	1. Traditional Model
b. Dividend policy has a bearing on the share valuation	2. Gordon Model
c. Stock market places more weight on dividends than on retain earnings	3. Walter Model
d. Dividend payout is irrelevant to the value of the firm	4. Modigliani and Miller Model

Which of the following statement(s) is/are false?
1. Capital profits can never be distributed as dividends to the shareholders.
2. Dividends are paid out of profits and, therefore, do not affect the liquidity position of the firm.
3. Every company should follow the policy of low dividend payment.
4. Walter's model suggests that dividend payment dose not affect the market price of the share.
Choose the correct answer

Which one of the following combination of rules stands true while preparing schedule of changes in working capital?
1. An increase in current assets increases working capital.
2. An increase in current assets decreases working capital.
3. An increase in current liabilities decreases working capital.
4. An increase in current liabilities increases working capital.

Which of the following are the examples of systematical risk.
1. Elimination of Government Subsidy
2. Increase in bank rate
3. Labour problem
4. High levered fund
Select the correct answer: