Financial Management

✅ The correct answer is B.
Payment divided by par value is classified as coupon payment. A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond’s issue date until it matures.

✅ The correct answer is A.
Payment of security if it is made at end of each period such as beginning of year is classified as annuity due. An annuity due is a repeating payment that is made at the beginning of each period, such as a rent payment.

✅ The correct answer is C.
A modified internal rate of return is considered as present value of costs and is equal to PV of terminal value. The present value (PV) of the terminal value is then added to the PV of the free cash flows in the projection period to arrive at an implied firm value.

✅ The correct answer is C.
Real interest rate and real cash flows do not include inflation effects. Inflation may or may not result in an increase in production. As long as the economy does not reach the full employment stage, inflation has a favorable effect on production. Usually, as the price level increases, profits increase too.

✅ The correct answer is B.
Operating cash flow = Free cash flow – Fixed expenditure
= 8000 – 6000 = Rs. 2000.

✅ The correct answer is B.
Physical location exchange or telephone networks are types of secondary markets. The secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the “stock market,” though stocks are also sold on the primary market when they are first issued.

✅ The correct answer is C.
salvage cash flow = Free cash flow – Investment outlay cashflow – Operating cash flow =
15000 – 5000 – 3000 = Rs. 7000.

✅ The correct answer is B.
Financial risk is most associated with the use of debt financing by corporations. Financial risk is the risk that a company won’t be able to meet its obligations to pay back its debts. Which in turn could mean that potential investors will lose the money invested in the company. The more debt a company has, the higher the potential financial risk.

✅ The correct answer is D.
A risk which is classified as its contribution to risk of portfolio is classified as relevant risk. Relevant risk is the fluctuation of returns caused by the macroeconomic factors that affect all risky assets.

✅ The correct answer is A.
An equity multiplier is multiplied to return on assets to calculate return on assets. Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.