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Capital Structure Quiz 10 (30 MCQs)

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1. Enterprises are divided into 3 forms, 4 forms and 4 types. Which of the following is the form of an enterprise?
2. By adding leverage, the returns on a firm are split between debt holders and equity holders, but equity holder risk increases because .....
3. Why is capitalization often neglected in the nonprofit sector?
4. The Traditional Approach to Value of the firm m that
5. If in the Project calculation, the Net Present Value (NPV) shows the number 0 with the composition R = WACC and C is the cash flow generated by the project, then as a manager you should.....
6. When investors use leverage in their own portfolios to adjust the leverage choice made by the firm, it is referred to as .....
7. How does the tax shield effect influence a firm's overall cost of capital when financial gearing is increased?
8. The firm's capital structure refers to .....
9. Which one of the following journal entries could correctly record a bonus issue of shares?
10. In order to enhance the wealth of the stockholders and to send positive signals to the market, corporations generally raise funds using the following order:
11. What role does financial flexibility play in capital structure decisions for students like Ishaan, Alisha, and Shreya?
12. 'In MM-Model, irrelevance of capital structure is based on:
13. Financial Planning helps in .....
14. This decision determines the overall cost of capital and the financial risk of the enterprise
15. When Tax rates are high, which option should Riyaan, Neha, and Vanya choose?
16. The mix of debt, preferred stocks, and common equity that a firm plans to maintain over time is called as .....
17. Refers to the use of debt (borrowed funds) to amplify returns from an investment or project.
18. A general rule for managers to follow is to set the firm's capital structure such that .....
19. At 1 January 20X0 the capital structure of Q, a limited liability company was as follows:$ Issued share capital 1, 000, 000 ordinary shares of 50c each 500, 000Share premium account 300, 000On 1 April 20X0 the company made an issue of 200, 000 50c shares at $ 1.30 each, and on 1 July the company made a bonus (capitalisation) issue of one share for every four in issue at the time, using the share premium account for the purpose.Which of the following correctly states the company's share capital and share premium account at 31 December 20X0?
20. Refers to the additional risk placed on the ordinary equity shareholders as a result of the decision to finance with debt.
21. If EBIT is less than Indifference point then which financial plan is better
22. The internal rate of return is the least widely used of the capital investment techniques.
23. The ..... the firm's leverage, the more the firm exploits the tax advantage of debt, and the ..... its WACC
24. Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data:D0 = $ 0.80; P0 = $ 22.50; and g = 8.00% (constant). What is the cost of equity from retained earnings?
25. What is business risk in the context of a firm's cost of equity?
26. The "tradeoff theory" of capital structure suggests that:
27. Which of the following stakeholders are least likely to be positively affected byincreasing the proportion of debt in the capital structure?
28. What is Value of Firm (V) (Where S = Value of Equity and D = Value of Debt)
29. The cost of equity capital is all of the following EXCEPT
30. Which of the following sources of capital should not be selected by a business if its fixed cost is high?
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