Finance Management & Corporate Finance Quiz Set 10

1. ABD Inc.'s Rs. 100 par value preferred stock just paid its Rs. 10 per share annual dividend. The preferred stock has a current market price of Rs. 96 a share. The firm's marginal tax rate (combined federal and state) is 40 percent, and the firm plans to maintain its current capital structure relationship into the future. The component cost of preferred stock to Lei-Feng, Inc. would be closest to.

Correct! Wrong!

2. The term "capital structure" refers to?

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3. A critical assumption of the net operating income (NOI) approach to valuation is?

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4. The traditional approach towards the valuation of a company assumes?

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5. Two firms that are virtually identical except for their capital structure are selling in the market at different values. According to M&M?

Correct! Wrong!

6. What is the value of the tax shield if the value of the firm is Rs. 5 million, its value if unlevered would be Rs. 4.78 million, and the present value of bankruptcy and agency costs is Rs. 360,000?

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7. Reserves & Surplus are which form of financing?

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8. What are the different options other than cash used for distributing profits to shareholders?

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9. The addition of all current asset’s investment is known as?

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10. If the weighting of equity in total capital is 1/3, that of debt is 2/3, the return on equity is 15% that of debt is 10% and the corporate tax rate is 32%, what is the Weighted Average Cost of Capital (WACC)?

Correct! Wrong!

Finance Management & Corporate Finance Quiz Set 10

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