Administrator

2943. Survey and inspection of a property is essential

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Before acceptance of risk to assess the risk for rating purpose
To find out the true value of asset
To find out how the asset came into the owner’s possession
To know whether any other property in the neighbourhood can be insured
✅ The correct answer is A.
Survey and inspection of a property is essential before the acceptance of risk to assess the risk for rating purpose. A survey is an inspection of a property.

2917. Cost of equity which is raised by reinvesting earnings internally must be higher than the

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cost of initial offering
cost of new common equity
cost of preferred equity
cost of floatation
✅ The correct answer is B.
Cost of equity which is raised by reinvesting earnings internally must be higher than the cost of new common equity. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.

274. Which of the following is true about a trial balance?

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It lists down the balances of accounts
It lists down the balances of a balance sheet
It is a kind of financial statement
It is not a part of accounting cycle
✅ The correct answer is A.
Trial balance It lists down the balances of accounts. The debit balance values will be listed in the debit column of the trial balance and the credit value balance will be listed in the credit column.

2923. Which of the following are incorrect? 1. Mutuality means funds from various individuals are combined. 2. Diversification means spreading out funds to various destinations.

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1 is correct
2 is correct
Both A & B
None of the above is correct
✅ The correct answer is D.
Mutuality means flow of resources from many to one. Diversification is a risk management technique that mixes a wide variety of investments within a portfolio.

2924. The use of preference share capital as against debt finance.

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Reduces DFL
Increases DFL
Increases financial risk
Both a and b
✅ The correct answer is A.
The use of preference share capital as against debt finance reduces DFL. A degree of financial leverage (DFL) is a leverage ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure.

2925. If the income elasticity is greater than one, the commodity is

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Necessity item
Luxury item
Inferior good
None
✅ The correct answer is B.
If the income elasticity is greater than one, the commodity is Luxury item. Luxury goods represent normal goods associated with income elasticities of demand greater than one. Consumers will buy proportionately more of a particular good compared to a percentage change in their income.

2926. According to exercise value and option price, market value of option will be zero when

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stock price is maximum
option price is zero
stock price is zero
stock price is minimum
✅ The correct answer is C.
According to exercise value and option price, market value of option will be zero when stock price is zero. The strike price is defined as the price at which the holder of an options can buy (in the case of a call option) or sell (in the case of a put option) the underlying security when the option is exercised. Hence, strike price is also known as exercise price.