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MCQs

Total Questions : 53 | Page 2 of 6 pages
Question 11. In weighted average cost of capital, the capital components are the funds that are usually offered by
  1.    stock market
  2.    investors
  3.    capitalist
  4.    exchange index
 Discuss Question
Answer: Option B. -> investors
Answer: (b).investors
Question 12. If the future return on common stock is 19% and the rate on T-bonds is 11% then the current market risk premium will be
  1.    30
  2.    0.3
  3.    0.08
  4.    8
 Discuss Question
Answer: Option C. -> 0.08
Answer: (c).0.08
Question 13. The special situation in which large projects are financed by with and securities claims on project's cash flow is classified as
  1.    claimed securities
  2.    project financing
  3.    stock financing
  4.    interest cost
 Discuss Question
Answer: Option B. -> project financing
Answer: (b).project financing
Question 14. The cost which is used to calculate weighted average cost of capital is classified as
  1.    weighted cost of capital
  2.    component cost of preferred stock
  3.    transaction cost of preferred stock
  4.    financing of preferred stock
 Discuss Question
Answer: Option B. -> component cost of preferred stock
Answer: (b).component cost of preferred stock
Question 15. The type of cost which is used to raise common equity by reinvesting internal earnings is classified as
  1.    cost of mortgage
  2.    cost of common equity
  3.    cost of stocks
  4.    cost of reserve assets
 Discuss Question
Answer: Option B. -> cost of common equity
Answer: (b).cost of common equity
Question 16. During the planning period, a marginal cost for raising a new debt is classified as
  1.    debt cost
  2.    relevant cost
  3.    borrowing cost
  4.    embedded cost
 Discuss Question
Answer: Option B. -> relevant cost
Answer: (b).relevant cost
Question 17. The cost of common stock is 13% and the bond risk premium is 5% then the bond yield would be
  1.    18
  2.    0.026
  3.    0.08
  4.    0.18
 Discuss Question
Answer: Option C. -> 0.08
Answer: (c).0.08
Question 18. A risk associated with the project and the way considered by well diversified stockholder is classified as
  1.    expected risk
  2.    beta risk
  3.    industry risk
  4.    returning risk
 Discuss Question
Answer: Option B. -> beta risk
Answer: (b).beta risk
Question 19. In weighted average cost of capital, a company can affect its capital cost through
  1.    policy of capital structure
  2.    policy of dividends
  3.    policy of investment
  4.    all of the above
 Discuss Question
Answer: Option D. -> all of the above
Answer: (d).all of the above
Question 20. The cost of common stock is 14% and the bond risk premium is 9% then the bond yield will be
  1.    0.0156
  2.    0.05
  3.    0.23
  4.    0.6428
 Discuss Question
Answer: Option B. -> 0.05
Answer: (b).0.05

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