vu fin622 Final Term - Quiz No.2
vu fin622 Corporate Finance Quiz
This quiz belongs to book/course code vu fin622 Corporate Finance of vu organization. We have 17 quizzes available related to the book/course Corporate Finance. This quiz has a total of 10 multiple choice questions (MCQs) to prepare and belongs to topic Final Term. NVAEducation wants its users to help them learn in an easy way. For that purpose, you are free to prepare online MCQs and quizzes.
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Question 1: Please choose one Which of the following is TRUE regarding optimal capital structure?
An optimal capital structure refers to the mix of debt and equity level where the firm has minimum cost of capital
An optimal capital structure refers to the mix of debt and equity level where the firm has minimum financial leverage
An optimal capital structure refers to the mix of debt and equity level where the firm has maximum cost of capital
An optimal capital structure refers to the mix of debt and equity level where the firm has high financial leverage
Question 2: Which one of the following statements describes the relationship between Interest rates and bond prices?
Move in the same direction
Move in opposite directions
Sometimes move in the same direction, sometimes in opposite directions
Have no relationship with each other (i.e., they are independent).
Question 3: Which of the following is a disadvantage of Capital Asset Pricing model?
It consider market risk
It can be used for listed companies
It can be used for Non-listed companies
It is based on Past data
Question 4: Which of the following is the principal advantage of high debt financing?
Tax savings
Low bankruptcy costs
Minimum financial risk
Low financial leverage
Question 5: Which of the following is a planning tool?
A budget
A balance sheet
An income statement
A Cash flow statement
Question 6: The basic characteristics of relevant project flows include all of the following except
After-tax flows.
Cash flows.
Incremental flows.
Financing flows.
Question 7: All of the following could be an outcome of financial distress of a firm EXCEPT?
Employees are leaving the firm
Suppliers refuse to supply on credit
Banks do not provide loans
Financial markets become in-stable
Question 8: Which of the following statements applies to Dividend Growth Model?
It is difficult to understand and use
It is used for non-listed companies
It is used for debt securities also
It do not consider risk level of a security
Question 9: Which of the following could be used to calculate the cost of common equity?
Interpolation method
Dividend discount model
YTM (Yield-to-Maturity) method
Capital structure valuation
Question 10: A more aggressive financing policy by a firm would lead to __________ profitability and __________ risk.
higher, lower
higher, higher
lower, higher
lower, lower
