1536. Restructuring of debts refers to

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Swapping less interest loans with more interest loans
Modification of the terms of a loan to debtor who could default on payments
Closing all outstanding loans
Going for more and more borrowings
✅ The correct answer is B.
Debt restructuring refers to modification of the terms of a loan to provide relief to a debtor who could otherwise default on payments. The restructuring may involve extending the period of repayment, reducing the total amount owed, or exchanging a portion of the debt for equity in the debtor company. Also see extension, composition, debt-for-equity swap.

1533. Which of the following is not an assumption in the Miller & Modigliani approach?

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There are no transaction costs
Securities are infinitely divisible
Investors have homogeneous expectations
All the firms pay tax on their income at the same rate
✅ The correct answer is D.
All the firms pay tax on their income at the same rate is not an assumption in the Miller & Modigliani approach. The Modigliani and Miller Approach further states that the market value of a firm is affected by its operating income, apart from the risk involved in the investment. The theory stated that the value of the firm is not dependent on the choice of capital structure or financing decisions of the firm.

1549. Which of the below is an advantage of cash value insurance contracts?

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Returns subject to corroding effect of inflation
Low accumulation in earlier years
Lower yields
Secure investment
✅ The correct answer is D.
Secure investment is an advantage of cash value insurance contracts. Cash value life insurance provides more financial flexibility. Because cash values have the potential to grow inside the policy, you may be able to access the cash value while you are living.

1547. Relevant cash flow which company expects when its will implement project is classified as

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irrelevant cash flow
relevant cash flow
incremental cash flow
decrease cash flow
✅ The correct answer is C.
Relevant cash flow which company expects when its will implement project is classified as incremental cash flow. Incremental cash flow is the additional operating cash flow that an organization receives from taking on a new project. A positive incremental cash flow means that the company’s cash flow will increase with the acceptance of the project.

1525. Which of the following is / are assumption(s) underlying the Miller and Modigliani analysis?

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Capital markets are perfect
Investors are assumed to be rational and behave accordingly
There is no corporate or personal income tax
All of the above.
✅ The correct answer is D.
Capital markets are perfect, Investors are assumed to be rational and behave accordingly and there is no corporate or personal income tax are the assumptions underlying the Miller and Modigliani analysis.

1523. Bonds issued by small companies tend to have

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high liquidity premium
high inflation premium
high default premium
high yield premium
✅ The correct answer is A.
Bonds issued by small companies tend to have high liquidity premium. Liquidity premium is a premium demanded by investors when any given security cannot be easily converted into cash for its fair market value. When the liquidity premium is high, the asset is said to be illiquid, and investors demand additional compensation for the added risk of investing their assets over a more extended period since valuations can fluctuate with market effects.