Correct Answer:- Option-D

Question24:-Indicate the correct statement /statements regarding dividend policy
(i) the residual theory of dividend is applicable only when the cost of retained
earnings is lower than the cost of debt

(11) According to Gordon, the value of share changes with changes in
retention/dividend ration

(11) Walter's dividend policy says that if the company has investment opportunities
to invest its earnings, it does not pay dividend

(iv) As per MM theory of dividend, the firm has a dynamic investment policy and
investors behave rationally

A:-(ii) and (iii)

B:-(i) and (iii)

C:-(iii) and (iv)

D:-(i) and (iv)

Correct Answer:- Option-A

Question25:-An individual received Rs. 10,000 at the end of 5 years. If the interest
rate suddenly increases, then the present value of cash flow

A:-Will rise
B:-Will remain unchanged
C:-Will fall

D:-Will rise slowly but not in the same proportion
Correct Answer:- Option-C

Question26:-EBIT is Rs. 15,00,000, interest is Rs. 2,50,000, corporate tax is 40%
degree of financial leverage is

A:-1.20
B:-1.40
C:-1.25
D:-1.50
Correct Answer:- Option-A

Question27:-Which of the following statement is/are correct

(1) A form having higher debt content in its capital structure is considered to be
more riskier than the form having lower debt content in its capital structure

(11) Inflation risk arises when the change in price index for a given period is more
than the change in return earned in investment

(iii) The systematic risk cannot be eliminated through diversification as they are
uncontrollable by the company

(iv) Variability in the actual earnings of a firm from its expected earnings is
business risk

A--(i), (ii), (iii)
B:-(i) and (iii)
C:-(ii), (iii), (iv)