Q. In _______________ approach, the capital structure decision is relevant to the valuation of the firm.
✅ Correct Answer: (A)
Net income
Financial Management MCQs and Notes
Q. _____________ enhance the market value of shares and therefore equity capital is not free of cost.
✅ Correct Answer: (B)
Dividends
Q. ______________ is the price at which the bond is traded in the stock exchange.
✅ Correct Answer: (C)
Market value
Q. In the _______________, the future value of all cash inflow at the end of time horizon at a particular rate of interest is calculated.
✅ Correct Answer: (C)
Discounting technique
Q. ___________________ of a firm refers to the composition of its long-term funds and its capital structure.
✅ Correct Answer: (A)
Capitalisation
Q. The market price of a share of common stock is determined by:
✅ Correct Answer: (D)
individuals buying and selling the stock.
Q. A(n) would be an example of a principal, while a(n) would be an example of an agent.
✅ Correct Answer: (A)
shareholder; manager
Q. What are the earnings per share (EPS) for a company that earned Rs. 100,000 last year in after-tax profits, has 200,000 common shares outstanding and Rs. 1.2 million in retained earning at the year end?
✅ Correct Answer: (C)
Rs. 0.50
Q. The long-run objective of financial management is to:
✅ Correct Answer: (B)
maximize the value of the firm's common stock.
Q. "Shareholder wealth" in a firm is represented by:
✅ Correct Answer: (D)
the market price per share of the firm's common stock.