Financial Management
Part 1 :
Multiple choices:
1. The approach focused mainly on the financial problems of corporate enterprise.
a. Ignored non-corporate enterprise
2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated period.
c. Redeemable preference shares
3. This type of risk arises from changes in environmental regulations, zoning requirements, fees, licenses and most frequently taxes.
b. Domestic risk
4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment proposal.
a. Future cost
5. This concept is helpful in formulating a sound & economical capital structure for a firm.
c. Designing optimal corporate capital structure
6. It is the minimum required rate of return needed to justify the use of capital.
b. Firms point
7. It arises when there is a conflict of interest among owners, debenture holders and the management.
d. Agency costs
8. Some guidelines on shares & debentures issued by the government that are very important for the constitution of the capital structure are:
a. Legal requirement
9. It is that portion of an investments total risk that results from change in the financial integrity of the investment.
b. Default risk
10. _________ measure the systematic risk of a security that cannot be avoided through diversification.
a. Beta
Part Two:
3. What is Annuity kind of cash flow?
Ans : A series of payments of an equal amount at fixed, equal intervals for a specified number of periods.
Annuity is fixed sum of money paid every year in at any other fixed interval shorter than a year. This annuity may be by way of return of some principal plus interest payment of against money invested or by way of payment of other dues such as pensions after retirement. In any case it represents out flow of cash from one account to in flow of