41
Which formula is used to measure the degree of operating leverage?
A)
EBIT/Sales
B)
EBIT/EBT
C)
C/EBIT
D)
EBIT/C
Answer & Solution
Answer: Option
B
42
Which one of the following points is not a merit of payback period method?
A)
Easy to understand
B)
Emphasises liquidity
C)
Not a measure of probability
D)
Uses cash flow information
Answer & Solution
Answer: Option
C
43
Who gave the optimal cash balance technique?
A)
Milton Friedman
B)
J. M. Keynes
C)
William J. Baumol
D)
Modigliani
Answer & Solution
Answer: Option
C
44
According to which one of the following theories, differences in nominal interest rates will be eliminated in the exchange rate?
A)
Leontief Paradox Trade Theory
B)
Fisher Effect Economic Theory
C)
Purchasing Power Parity Theory
D)
Combined Equilibrium Theory
Answer & Solution
Answer: Option
B
45
Arbitrage opportunity means you can earn a positive return with
A)
Zero initial investment and zero risks
B)
Zero initial investment and some risk
C)
Low risk
D)
Positive initial investment and zero risks
Answer & Solution
Answer: Option
A
46
Match the following.
List-I (Forms of Dividend Payment)List-II (Features)
a. Cash dividend
1. This type of dividend is rarely opted by companies
b. Stock dividend
2. The companies whose liquidity position is sound also prefer distribution of this dividend
c. Bond dividend
3. Companies which are short of cash resources for dividend payment can distribute this dividend
d. Property dividend
4. It is distributed only when the company is capable of bearing the increased burden of interest on bonds
A)
a-4, b-1, c-2, d-3
B)
a-2, b-3, c-4, d-1
C)
a-3, b-4, c-1, d-2
D)
a-3, b-1, c-4, d-2
Answer & Solution
Answer: Option
B
47
Which of the following statement(s) is/are incorrect?
A)
The system of public deposits is economical
B)
Commercial banks do not grant long-term loans
C)
Both A and B
D)
All of the above
Answer & Solution
Answer: Option
B
48
How can a firm provide a margin of safety if it cannot borrow on short notice to meet its needs?
A)
Maintain a low level of current assets (especially cash and marketable securities)
B)
Shorten the maturity schedule of financing
C)
Increase the level of fixed assets (especially plant and equipment)
D)
Lengthen the maturity schedule of financing
Answer & Solution
Answer: Option
D
49
Irregular dividend policy is followed due to
A)
uncertainty of earnings
B)
heavy fixed burden of interest
C)
shortage of liquid resources
D)
All of the above
Answer & Solution
Answer: Option
D
50
The external sources of finance do not include
A)
Leasing
B)
Overdrafts
C)
Debentures
D)
Retained earnings
Answer & Solution
Answer: Option
D
