Finance MCQs

Page No. 21

During planning period, a marginal cost for raising a new debt is classified as__________?


aDebt cost


bRelevant cost


cBorrowing cost


dEmbedded cost


View Answer Relevant cost

A risk associated with project and way considered by well diversified stockholder is classified as______________?


aExpected risk


bBeta risk


cIndustry risk


dReturning risk


View Answer Beta risk

Variability for expected returns for projects is classified as___________?


aExpected risk


bExpected risk


cVariable risk


dReturning risk


View Answer Expected risk

Method uses for an estimation of cost of equity is classified as___________?


aMarket cash flow


bFuture cash flow method


cDiscounted cash flow method


dPresent cash flow method



In weighted average capital, capital structure weights estimation does not rely on value of__________?


aInvestors equity


bMarket value of equity


cBook value of equity


dStock equity


View Answer Book value of equity

Beta which is estimated as regression slope coefficient is classified as___________?


aHistorical beta


bMarket beta


cCoefficient beta


dRiskier beta


View Answer Historical beta

Risk free rate is subtracted from expected market return is considered as___________?


aCountry risk


bDiversifiable risk


cEquity risk premium


dMarket risk premium


View Answer Equity risk premium

Capital budgeting decisions are analyzed with help of weighted average and for this purpose____________?


aComponent cost is used


bComponent cost is used


cCost of capital is used


dAsset valuation is used



In weighted average cost of capital, capital components are funds that usually offer by____________?


aStock market


bInvestors


cCapitalist


dExchange index


View Answer Investors

An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax__________?


aTerm structure


bMarket premium


cRisk premium


dCost of debt


View Answer Cost of debt

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