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Quiz 17
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Q.1
Real risk-free rate is applicable when it is expected that there will be
high inflation
low inflation
no inflation
none of above
Q.2
Bonds that do not pay original coupon payment but payment is made from additional bonds are classified as
payment in-kind bonds
payment off-kind bonds
kind payment
additional bond
Q.3
According to top rating agencies S&P double-B and other lower grade bonds are classified as
development bonds
junk bonds
compounded bonds
discounted bonds
Q.4
In expected rate of return for constant growth, an expected total rate of return must be
less than expected yield on dividend
greater than expected yield on dividend
equal to expected yield on dividend
equal to one
Q.5
Bond call provision that is not practiced even after several years of issuance is classified as
original provision
deferred call
deferred provision
permanent provision
Q.6
An expected rate of return is subtracted from capital gains yield to calculate
expected dividend yield
capital earning
casual growth
specialized growth rate
Q.7
After-the-fact rate of return often consider as realized or actual can be denoted
s hat r
r bar s
r hat s
s bar r
Q.8
In expected rate of return for constant growth, dividends are expected to grow but with the
constant rate
variable rate
yielding rate
returning yield
Q.9
Value of future dividends after horizon date is classified as
hypothesis value
horizon value
terminal value
Both B and C
Q.10
Pre-emptive right of common stockholders are necessarily included in company
laws
purchase chart
corporate charter
selling charter
Q.11
An expected dividend yield is subtracted from an expected rate of return which is used to calculate
specialized growth rate
capital gains yield
casual growth yield
past growth rate
Q.12
First step in calculating value of stock with non-constant growth rate is to
estimate expected dividend
actual expected dividend
estimate number of share
estimate intrinsic shares
Q.13
Calculation of formula in common stock valuation does not include
intrinsic value
dividend of stockholder
number of stock issued
expected growth rate
Q.14
Expected capital gain is Rs 20 and expected final price is Rs 50 then original investment will be
Rs 30.00
-Rs 30.00
Rs 70.00
-Rs 70.00
Q.15
Preferred dividend is Rs 60 and required rate of return is 20% then value of preferred stock will be
Rs 40.00
Rs 120.00
Rs 12.00
Rs 300.00
Q.16
An earning before interest, taxes, depreciation and amortization average multiple for publicly traded companies is classified as
entity multiple
depreciation multiple
earning multiple
amortization multiple
Q.17
Stock in large companies and own by people who are not active in management is classified as
self-held stock
privately held stock
publicly held stock
enactive held stock
Q.18
Information which is reflected in current market prices with help of past price movements is classified as
market efficiency
semi strong efficiency
weak form efficiency
strong form efficiency
Q.19
Constant growth rate is 8% and an expected dividend yield is 5.4% then expected rate of return would be
-3.40%
3.40%
13.40%
-13.40%
Q.20
Real rate of return, risk and expected inflation are primary determinants of
minimum rate of return
accepted return
expected return
real risk free rate
Q.21
Preferred stocks are also classified as
intrinsic preference
perpetuities
extrinsic preference
weak preference
Q.22
Paid dividend is Rs 20 and dividend yield is 40% then current price would be
60.00%
Rs 60.00
Rs 50.00
2.00%
Q.23
Preferred stock dividends must be paid on common stock and must have
fixed amount of dividends
fixed amount of shares
variable amount of dividends
variable amount of shares
Q.24
An expected dividend yield is 7.5% and an expected rate of return is 15.5% then constant growth rate will be
22.00%
8.00%
23.00%
2.06%
Q.25
Capital gain is Rs 3 and capital gains yield is 6% then beginning price will be
Rs 18.00
Rs 36.00
Rs 50.00
Rs 55.00
Q.26
Growth rate which is predicted by marginal investors for dividends is classified as
expected growth rate
annual growth rate
past growth rate
unexpected growth rate
Q.27
An expected final stock price is Rs 70 and an expected capital gain is Rs 25 then an original investment would be
Rs 45.00
-Rs 45.00
Rs 95.00
-Rs 95.00
Q.28
Constant growth model would not be used in condition if growth rate is
greater than dividend paid
equal to realized rate of return
less than realized rate of return
greater than realized rate of return
Q.29
Cash flow which is available for all investors of company is classified as
extrinsic stock
intrinsic stock
investing cash
free cash flow
Q.30
Present value of dividends which is expected to be provided in future is classified as an
intrinsic value of stock
extrinsic value of stock
intrinsic bonds
extrinsic bonds
Q.31
Constant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be
5.30%
19.70%
-5.30%
17.36%
Q.32
An original investment is Rs 30 and an expected capital gain is Rs 10 then an expected final stock price will be
Rs 20.00
Rs 40.00
-Rs 40.00
-Rs 20.00
Q.33
Constant growth rate is 6.5% and an expected dividend yield is 3.4% then an expected rate of return would be
9.90%
10.00%
3.10%
19.12%
Q.34
Value of stock is Rs 1200 and preferred dividend is Rs 120 then required rate of return would be
Rs 144,000.00
10.00%
Rs 10.00
0.2 times
Q.35
Expected dividends in each year and price investor expecting to get at selling of stock are two components of
dividend cash flow
expected cash flows
price cash flows
investing cash
Q.36
An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as
market efficiency
semi strong efficiency
weak form efficiency
strong form efficiency
Q.37
An expected dividend yield is added into expected growth rate to calculate
dividend return
expected rate of return
expected capital
invested capita
Q.38
Dividend yield is 25% and current price is Rs 40 then dividend yield will be
Rs 50.00
Rs 10.00
Rs 65.00
Rs 15.00
Q.39
Dividend expected on stock during coming year is classified as
current dividend yield
expected dividend yield
yearly dividend
past yield
Q.40
In expected rate of return for constant growth, capital gains is divided by beginning price to calculate
yield of loan return
yield of mortgage return
yield of capital gains
yield of fixed cost
Q.41
Preferred dividend is divided for required rate of return to calculate
value of number of shares
value of equity
value of preferred stock
value of common stock
Q.42
According to investors point of view, an expected rate of return is rate on stocks which they
receive in future
received in past
yearly growth
semi-annual growth
Q.43
Second step in calculating value of stock with non-constant growth rate is to find out an
expected intrinsic stock
extrinsic stock
expected price of stock
intrinsic stock
Q.44
Owners of corporation having certain rights and privileges are considered as
special stockholders
common stockholders
public stocks
enactive stocks
Q.45
Stockholders having right to elect directors and in smaller firms have high post are classified as
public stocks
inactive stocks
special stockholders
common stockholders
Q.46
Paid dividend with dividend yield 25% is Rs 5 then cost price would be
30.00%
Rs 30.00
20.00%
Rs 20.00
Q.47
An expected final stock price is Rs 45 and an original investment is Rs 25 then an expected capital gain will be
Rs 75.00
-Rs 75.00
-Rs 20.00
Rs 20.00
Q.48
Value of stock is Rs 400 and required rate of return is 20% then preferred dividend would be
Rs 80.00
Rs 8,000.00
Rs 20.00
Rs 50.00
Q.49
An amount of company retain earning, return on equity and inflation are factors which effect
earning growth
return on assets
return on sales
return on value
Q.50
In expected rate of return for constant growth, an expected dividend yield must be
functional decreasing
constant
continuously growing
functional increasing
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