In large expansion programs, increased riskiness and flotation cost associated with project can cause_______________?
(A) Rise in marginal cost of capital
(B) Fall in marginal cost of capital
(C) Rise in transaction cost of capital
(D) Rise in transaction cost of capital
Reinvestment risk of bonds is higher on__________?
(A) Short maturity bonds
(B) High maturity bonds
(C) High premium bonds
(D) High inflated bonds
Type of bonds that pays no coupon payment but provides little appreciation are classified as______________?
(A) Depreciated bond
(B) Interest bond
(C) Zero coupon bond
(D) Appreciation bond
Bonds issued by small companies tend to have_____________?
(A) High liquidity premium
(B) High inflation premium
(C) High default premium
(D) High yield premium
Coupon rate of bond is also called____________?
(A) Nominal rate
(B) Premium rate
(C) Quoted rate
(D) Both a and c
An increasing in interest rate leads to decline in value of__________?
(A) Junk bonds
(B) Outstanding bonds
(C) Standing bonds
(D) Premium bonds
In internal rate of returns, discount rate which forces net present values to become zero is classified as__________?
(A) Positive rate of return
(B) Negative rate of return
(C) External rate of return
(D) Internal rate of return
Set of projects or set of investments usually maximize firm value is classified as_________?
(A) Optimal capital budget
(B) Minimum capital budget
(C) Maximum capital budget
(D) Greater capital budget
Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is____________?
(A) Positive
(B) Negative
(C) Zero
(D) One
In capital budgeting, a negative net present value result in______________?
(A) Zero economic value added
(B) Percent economic value added
(C) Negative economic value added
(D) Positive economic value added