Tag: organisation of commerce and management

Quizzes (188) Questions (1057)

Questions Related to organisation of commerce and management

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

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

  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)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Dividends paid out of share premium accounts are subject to specific legal and regulatory requirements, which typically mandate that shareholders be informed and consulted regarding the use of these capital reserves.

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

Which of the following is known as the melon?

  1. Cash dividend

  2. Stock dividend

  3. Scrip dividend

  4. Property dividend
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In financial jargon, a stock dividend is sometimes colloquially referred to as a melon, particularly when it represents a distribution of accumulated surplus to shareholders.

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

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

  1. regular dividend payment

  2. stable dividend policy

  3. extra dividend policy

  4. irregular dividend
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A regular dividend is a payment made by a company to its shareholders at a consistent, predictable rate, usually on a quarterly or annual basis.

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

Corporations encourage irregular dividend payments due to

  1. Unsuccessful operations

  2. Earnings are fluctuating

  3. Impossibility to pay dividend regularly

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Irregular dividend payments are often a consequence of unstable financial performance, where the company cannot guarantee a fixed payout due to fluctuating earnings or operational challenges.

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

Which of the following factors dominate the dividend policy?

  1. Ownership considerations

  2. Firm-oriented considerations

  3. Both (a) and (b)

  4. Legal considerations
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Dividend policy is primarily driven by internal factors related to the firm, such as liquidity, profitability, investment opportunities, and growth requirements, collectively known as firm-oriented considerations.

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

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

  1. Regular dividend payments

  2. Stable dividend payments

  3. Irregular dividends

  4. Extra dividends
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Stable dividend payments signal financial health and reliability to the market, which helps attract long-term investors and shifts the perception of the stock from a speculative asset to a stable investment.

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

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

  1. capital and reserves

  2. securities held

  3. aggregate deposit of the bank

  4. aggregate loans and advances
Reveal answer Fill a bubble to check yourself
C Correct answer
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. 
Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

Mutually exclusive projects can be more accurately ranked as per:

  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
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

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

  1. I and II are correct

  2. II and III are correct

  3. I, II and IV are correct

  4. All are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Regular dividend payments provide all the listed benefits: they build a reputation for reliability, facilitate easier access to capital markets, improve creditworthiness, and reduce stock price volatility.

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

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

  1. Investment decisions

  2. Financing decisions.

  3. Dividend decisions

  4. All of above
Reveal answer Fill a bubble to check yourself
B Correct answer
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.