44.

46.

Advantage of Debt financing is :
(A) interest is tax-deductible
(B) it reduces weighted average cost of capital
(0) does not dilute owners control
തു all of the above

Which of the following is studied with the help of financial leverage?

(A) Financing risk (B) Interest Rate Risk
(C) Foreign Exchange Risk (D) Market Risk

Which of the following is not a fundamental assumption made by Modigliani and Miller?
(ಗ) No taxes

(B) There is imperfect information
(0) Firms can be classified into distinct risk class
(D) Possible to borrow and lend at the risk-free rate

What is Gordon's ‘bird in the hand’ fallacy?

(^) Investors prefer early resolution of uncertainty and apply a lower discount rate to
later dividends

(B) Investors prefer early resolution of uncertainty and apply a higher discount rate
to later dividends

(0) Investors prefer later resolution of uncertainty and apply a higher discount rate to
later dividends

(D) Investors prefer later resolution of uncertainty and apply a lower discount rate to
later dividend

47. Which of the following is not a fundamental concept in Corporate Finance?
(ക) Net present value (B) Relationship between risk and return
(C) Business cycle (D) Double-entry book-keeping
48. A high risk, high vield bond rated below investment grade is :
(A) junk bond (B) unsecured bond
(0 non investable bond (D) none of these
49. A short term lease where the leasing company will take the asset back at the end of the lease
is:
(ಗ) operating lease (B) finance lease
(0) sale and lease back (D) leveraged lease
50. Short-term unsecured promissory note issued by corporations is called :
(ಗಿ) commercial paper (B) certificates of deposit
(C) bonds (D) swaps
172/2015 8 A