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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