Global MCQ Practice

🌐 Total MCQ
🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books

Capital Structure Quiz 6 (30 MCQs)

Quiz Instructions

Select an option to see the correct answer instantly.

1. Explain the concept of leverage in capital structure to Aanya, Ishaan, and Arjun.
2. Financial leverage is also known as .....
3. A firm has operating costs of P10, 000, the sales prices per unit of its product is P25 and its variable cost per unit is P15. The firm breakeven point in units is ..... and its breakeven point in peso is .....
4. The cost of debt is equal to one minus the marginal tax rate multiplied by the interest rate on new debt.
5. In order to raise an additional capital of?50 lacs, Yudhister Limited has used debt because
6. Under this type of Lease the Lessor can Lease the Asset to more than one person .....
7. If EBIT is more than Indifference point then which financial plan is better
8. The cost of capital used in capital budgeting should reflect the average cost of the various sources of investor-supplied funds a firm uses to acquire assets.
9. According to tradeoff theory, the total value of a levered firm equals the value of the firm without leverage plus the present value of ....., less the present value of .....
10. Who does EPS refer for?
11. If in a particular situation, the earnings per share (EPS) falls with the increased use of debt, it indicates that
12. If investors have homogeneous expectations, the market is efficient, and thereare no taxes, no transaction costs, and no bankruptcy costs, Modigliani andMiller's Proposition I states that:
13. A critical assumption of the net operating income (NOI) approach to valuation is .....
14. Which of the following statements about company financial statements is/are correct, according to International Financial Reporting Standards?1. Dividends paid on ordinary shares should be included in the statement of profit or loss and other comprehensive income.2. Dividends paid on redeemable preference shares are treated in the same way as dividends paid on ordinary shares.3. The statement of profit or loss and other comprehensive income shows the gain on revaluation of non-current assets for the period.
15. In Traditional Approach, which one is correct?
16. Only accounting rate of return ignores the time value of money
17. Which is the cheapest source of financing?
18. ROI is 9.65% and interest rate 11%, the company is planning to raise funds through issue of debentures .....
19. Equity in a firm with no debt is called unlevered equity.
20. According to the second Modigliani-Miller theorem (MM II) in a world with no taxes, what happens to the cost of equity as a firm increases its level of debt
21. Wonder Plantation wants to increase their financing of $ 1 million by applying for long-term loan at 15% interest rate. Expected EBIT = $ 800, 000Income tax rate is 35%. Calculate the DFL.
22. Operating leverage occurs due to the existing of ..... in the firm
23. What are the advantages of having a high debt-to-equity ratio in capital structure, according to Vanya, Aanya, and Aisha?
24. Which of the following appearing in the balance sheet generates tax advantage and hence affects the capital structure decision?
25. Commonly if a company is classified as a SME (Small and Medium Enterprise), the company must consider:
26. A greater tax rate will affect company cost of debt (Kd) in the sense that:
27. ) "In arbitrage process we earn same income by taking same risk and investing less than before, or we earn more income by investing same as before and taking same risk" Whether the statement is
28. Which of the following is NOT an assumption made by the Modigliani-Miller theorem?
29. Which one of these statements is correct?
30. The increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest is called .....
🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books