Tag: organisation of commerce and management

Questions Related to organisation of commerce and management

When dividend out of stock premiums is to be declared __________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. stockholders need not be informed

  2. stockholders need not be consulted about them

  3. stockholders must be informed and consulted about them

  4. Both (a) and (b)

Show answer
Correct Option: C

Which of the following is known as the melon?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Cash dividend

  2. Stock dividend

  3. Scrip dividend

  4. Property dividend

Show answer
Correct Option: B

When a dividend is paid at the usual rate, it is designated as a ________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. regular dividend payment

  2. stable dividend policy

  3. extra dividend policy

  4. irregular dividend

Show answer
Correct Option: A

Corporations encourage irregular dividend payments due to

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Unsuccessful operations

  2. Earnings are fluctuating

  3. Impossibility to pay dividend regularly

  4. All of the above

Show answer
Correct Option: D

Which of the following factors dominate the dividend policy?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Ownership considerations

  2. Firm-oriented considerations

  3. Both (a) and (b)

  4. Legal considerations

Show answer
Correct Option: B

Which of the following dividend payments lead to a transfer of stock from a speculative class into an investment category?

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Regular dividend payments

  2. Stable dividend payments

  3. Irregular dividends

  4. Extra dividends

Show answer
Correct Option: B

Minimum cash reserves fixed by law is a percentage of _________.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. capital and reserves

  2. securities held

  3. aggregate deposit of the bank

  4. aggregate loans and advances

Show answer
Correct Option: C
Explanation:
The aggregate banking deposit is a calculation which determines if your money is federally insured from loss or can determine how much of your money is at risk with that financial institution.
Therefore, minimum cash reserves are a percentage of the aggregate deposits of the bank, by law. 

Mutually exclusive projects can be more accurately ranked as per:

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Internal rate of return method

  2. Net Present Value Method

  3. Modified Internal Rate of Returns Method

  4. Accounting or Average Rate of Return Method

Show answer
Correct Option: B
Explanation:

Projects with a positive $NPV$ are expected to increase the value of the firm. Thus, the $NPV$ decision rule specifies that all independent projects with a positive $NPV$ should be accepted. When choosing among mutually exclusive projects, the project with the largest (positive) $NPV$ should be selected.

Advantages of Regular dividend payments:
I. It establishes a healthy record for corporation
II. It aids in long-run financing and makes financing easier 
III. It improves the credit base of a corporation
IV. It stabilises the market value of securities
Of these

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. I and II are correct

  2. II and III are correct

  3. I, II and IV are correct

  4. All are correct

Show answer
Correct Option: D

_______comprises two decisions, viz., (i) Financial Planning; and (ii) Capital structure decision.

functional area of management financial management nature and significance of management organisation of commerce and management business studies

  1. Investment decisions

  2. Financing decisions.

  3. Dividend decisions

  4. All of above

Show answer
Correct Option: B
Explanation:
Financial decision is yet another important function which a financial manger must perform. It is important to make wise decisions about when, where and how should a business acquire funds. Funds can be acquired through many ways and channels. Broadly speaking a correct ratio of an equity and debt has to be maintained. This mix of equity capital and debt is known as a firm’s capital structure.

A firm tends to benefit most when the market value of a company’s share maximizes this not only is a sign of growth for the firm but also maximizes shareholders wealth. On the other hand the use of debt affects the risk and return of a shareholder. It is more risky though it may increase the return on equity funds.

A sound financial structure is said to be one which aims at maximizing shareholders return with minimum risk. In such a scenario the market value of the firm will maximize and hence an optimum capital structure would be achieved. Other than equity and debt there are several other tools which are used in deciding a firm capital structure.