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This is the Financial Management questions of SMU MBA examination. I have already shared some questions for Financial Management. You can get solved MBA assignments also for all semesters.

1. TATA issues 4 years 12% debentures of Rs. 100/- each for Rs.
105/-. The debentures are redeemable at par. The company has spent Rs.5 per debentures as floatation cost.

A) 13%
B) 12%
C) 11%
D) 10%

2. Dividend on ordinary shares cannot be paid if———- is not paid.

A) Dividend on preference share
B) Interest on debentures
C) Tax
D) None of these

3. According to bond yield plus risk premium approach cost of equity can be calculated as

A) Yield on the bond
B) Risk premium
C) Yield on the bond + debenture interest
D) Yield on the bond + risk premium

4. If EPS = Rs 10, Price per share = Rs 100
Then cost of equity is

A) 100%
B) 10%
C) Data inadequate
D) 1%

5. The earnings before interest and taxes are also known as —–profits.

A) Net
B) Gross
C) Operating
D) Manufacturing

6.”The employment of an assets or funds for which the firms pays a fixed cost of fixed return”

A) James bob B) James hone
C) James Horne D) James bond

7. ——— the fixed cost, ——- will be the variation of operating profits to given rise or fall in sales.

A) higher, lower B) lower, higher
C) lower, lower D) higher, higher

8. The following is the formula of contribution

A) Sales – fixed cost B) Sales – variable cost
C) Sales – opportunity cost D) Sales – sunk cost

9. ———- cost does not change with the change in the output.

A) Variable B) Sunk
C) Fixed D) Material

10. ——– leverage involves the use of fixed cost source of finance like debt and preference capital.

A) Operating B) Favorable
C) Financial D) Unfavorable

11. ABC has an EBIT of Rs 600000 at 5000 level of production. The company has 500000 equity shares of Rs.10/- each, 15% debentures of Rs. 500000 & 10% preference capital of Rs. 500000. Calculate degree of financial leverage.

A) 1.49 B) 1.41
C) 1.70 D) 1.25

12. ———– leverage represents the effect of a given change in the sales revenue on the earning per share.

A) Financial B) Operating
C) Combined D) Favourable