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business
intermediate financial management
Taxmans Fundamentals Of Financial Management 14th Edition R.P. Rustagi - Solutions
True or False. Interest factor helps in incorporating the time value of money in financial analysis.
True or False. Investors do not have preference for present money
True or False.Money has no time value
True or False.Investment, financing and dividend decisions works collectively to determine the growth of the firm.
True or False.Profit maximization and wealth maximization are essentially the same thing.
True or False.Financial management interacts with other departments of the firm and determines the future growth of the firm.
True or False. Risk and return are two basic dimensions of any financial decision.
True or False. The basic objective of financial manager is the maximization of wealth of shareholders.
True or False. Financial management and financial accounting are essentially same.
True or False. Over last few decades, the scope of financial management has broadened.
True or False. Financial management refers to financial decision making.
True or False. In financial management, the objective of financial manager is profit maximization.
True or False. In the traditional approach, the scope of financial management was restricted to procurement of funds.
True or False. Bond Valuation is sensitive to both the interest rate and the required rate of return of the investor.
True or False. Bond valuation depends upon the discounted cash flow technique.
True or False. YTM of a bond is the same as the IRR of the bond investment.
True or False. Basic or Current yield on a bond is calculated with reference to the face value or issue price of a debenture.
True or False. Market Value of debt instruments depends upon the market value of collateral.
True or False. Face Value, Issue Price and Market Value of bond must be same.
True or False. CAPM helps in determining required rate of return.
True or False. β factor is a measure of value of share.
True or False. In Walter’s Model, the value of equity share depends upon the DP ratio.
True or False. For companies which are not expected to pay dividends, equity shares cannot be valued.
True or False. In Constant Growth model, the value of equity share is not sensitive to required rate of return.
True or False. In Constant Growth model, the value of equity share is sensitive to growth rate.
True or False. Gordon’s Model and Constant Growth Model are one and same.
True or False. No-growth dividend model does not involve present value concept.
True or False. In No-growth Dividend model, only next years’ dividend is capitalised.
True or False. In Dividend discount model, the valuation of equity shares is based on expected stream of dividends.
True or False. BV of an equity share is the best measure of valuation.
True or False. Intrinsic value and market price of equity shares are always equal.
True or False. Equity shares cannot be valued because equity shares have no redemption.
True or False. Valuation of bonds and of equity shares can be made by the same valuation model.
True or False. Average inventory in EOQ model is 1/2 of EOQ.
True or False. EOQ model assumes a constant usage rate for a particular item.
True or False. The EOQ model attempts to minimizing the total cost of holding inventory.
True or False. ABC analysis helps to ascertain the minimum level of stock of raw material.
True or False. Cost of stock out occurs whenever the firm has no stock of a particular item.
True or False. Carrying cost and ordering cost are opposite forces in receivable management.
True or False. Carrying cost of inventory includes the carriage in.
True or False. There is no explicit benefit of keeping inventory, hence no stock be maintained.
True or False. Stock of finished goods should be as high as possible so that no customer is denied the sale.
True or False. Inventory management does not include management of work in progress.
True or False. Aging schedule of receivables is one way of monitoring the receivables.
True or False.) In order to minimize the level of receivables, a firm should follow a strict and aggressive collection procedures.
True or False. Credit evaluation of a customer is a costly process, hence it need not be undertaken by a selling firm.
True or False. Liberalizing the discount rate means increasing the discount rate for the same period.
True or False. Delinquency cost refers to bad debt losses to the firm.
True or False. Credit period allowed to customers must be equal to credit period allowed by the supplier to the firm.
True or False. The objective of a credit policy is to curtail the credit period allowed to customers.
True or False. Receivables management involves a trade off between costs and benefits of receivable.
True or False. Receivables management deals only with the collection of cash from the debtors.
True or False. Conversion of debentures into share capital is equal to issue of share capital and hence it is a type of cash inflow.
True or False. Issue of share capital or debentures are taken as inflows in cash budget.
True or False. Capital expenditures are not considered in cash budget.
True or False. In cash management, expected surplus cash, if any, is not considered at all.
True or False. Baumol’s model attempts at optimization of cash balance.
True or False. Baumol’s model of cash management assumes a constant rate of use of cash.
True or False. Concentration banking is a method of controlling cash outflows.
True or False. Receipts and disbursement method of preparation of cash budget is the most widely used method.
True or False. Cash cycle is equal to operating cycle for a firm.
True or False. Cash management always attempts at minimizing the cash balance.
True or False. Cash is the most important but least earning current asset.
True or False. Management of cash means management of cash inflows.
True or False. In Conservative approach, there is no long term financing of working capital.
True or False.In Hedging approach, the permanent working capital is financed partly from long term sources.
True or False. Working capital management stresses the risk-return trade off.
True or False. In working capital management, time value of money has no relevance.
True or False. Deferral period refers to credit period allowed by a firm to its customers.
True or False.Receivables conversion period begins when cash sales are effected.
True or False. The operating cycle is equal to the total manufacturing period in a firm.
True or False. Management of working capital deals with the short term liquidity position of the firm.
True or False. Same principles and considerations are involved in the management of fixed assets as well as current assets.
True or False. The level of working capital does not affect the smooth working of a firm.
True or False.No company in India, can pay final dividend unless it has already paid an interim dividend.
True or False. Stability of dividend does not affect the market price of the share.
True or False. Constant DP ratio-refers to stability of dividend.
True or False. In India, there is a restriction on the rate of dividend being paid by a company.
True or False. Capital profits can never be distributed as dividends to the shareholders.
True or False. Cash dividend and bonus share issue affect the firm in the same way.
True or False. While designing a dividend policy, the legal provisions may be considered by the firm.
True or False. Stability of dividend refers to the fact that the rate of divided must be fixed.
True or False. Dividends are paid out of profit and therefore does not affect the liquidity position of the firm.
True or False. DP ratio of a firm should be directly related to future growth plans of the firm.
True or False. MM model asserts that value of the firm is not affected whether the firm pays dividend or not.
True or False. In the arbitrage process of MM model, the dividends paid by a company are replaced by fresh investment.
True or False. MM model is a fool proof model of dividend irrelevance.
True or False. MM model deals with irrelevance of dividend decision.
True or False. Residual theory says that dividend decision is no decision.
True or False.In the Walters model, the DP ratio should depend upon the relationship between r and ke.
True or False. Gordon’s model suggests that dividend payment does not affect the market price of the share.
True or False. Walters model supports the view that dividend is relevant for value of the firm.
True or False.There is a difference of opinion on relationship between dividend payment and value of the firm.
True or False. % rate of dividend is also known as dividend payout ratio.
True or False. Dividend payout ratio refers to that portion of total earnings which is distributed among shareholders.
True or False. Retained earnings is an easily available source of funds at no explicit cost.
True or False. Effective dividend policy is an important tool to achieve the goal of wealth maximization.
True or False.Dividend is compulsorily payable to preference shareholders.
What do you mean by Agency Problem? How this can be resolved?
‘Equity shareholders provide risk capital’. Comment.
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