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.
A. 1 and 2
B. 2 and 3
C. 1 and 3
D. 1, 2 and 3
Answer: Option D
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Related Questions on Business Finance
The appropriate ratio for indicating liquidity crisis is
A. Operating ratio
B. Sales turnover ratio
C. Current ratio
D. Acid test ratio
A. Net present value method
B. Internal rate of return method
C. Profitablity index method
D. None of the above
A. a-4, b-3, c-1, d-2
B. a-3, b-4, c-1, d-2
C. a-2, b-3, c-1, d-4
D. a-3, b-2, c-4, d-1
Which one of the following assumptions is not included in the James E. Walter Valuation model?
A. All financing by retained earnings only
B. No change in the key variables such as EPS and DPS
C. The firm has finite life
D. All earnings are either distributed as dividends or invested internally immediately
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