Financial Management MCQ Quiz in मल्याळम - Objective Question with Answer for Financial Management - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

The correct option is option 3

Additional Information:

• An underlying assumption of the constant growth model is that the share price will grow at the same percentage rate as the dividend.

The correct option is option 2

Additional Information:

• The floor value is the present value of the redemption option of the loan note. Converting today means receiving 15 shares. Dividing the floor value by the number of shares an investor receives on conversion is the threshold at which it makes sense to convert (106.20/15 shares = $7.08 per share).

The correct option is option 2 

Additional Information:

• The value of next year’s dividend (D1) is given, so the share price calculation is:
• Share price = D1/(ke − g) = 0.32/(0.12 − 0.02) = $3.20
• Barsha’s shareholding is 800,000 × 20% = 160,000 shares
• The value of this shareholding is 160,000 × $3.20 = $512,000

The correct option is option 2 

Additional Information:

• Share price = (0.826 × 0.5)/(0.1 − 0.03) + (0.25 × 0.826) = $6.11 per share
• The DVM states that the ex dividend market value of an ordinary share is equal to the present value (PV) of the future dividends paid to the owner of the share. No dividends are to be paid in the current year (Y0) and in Y1, so the value of the share does not depend on dividends from these years. The first dividend to be paid is in Y2 is different from the dividend paid in Y3 and in subsequent years. The PV of the Y2 dividend, discounted at 10% per year, is (0.25 × 0.826) = $0.2065
• The dividends paid in Y3 and subsequently can be valued using the DGM. Using P0 = D1/(re - g), the PV of the future dividend stream beginning with $0.50 per share paid in Y3 will be a Y2 value and will need discounting for two years to make it a Y0 PV.
• P0 = (0.826 × 0.5)/(0.1 − 0.03) = 0.826 × 7.1429 = 5.90
• Alternatively, discount the Y3 dividend by 0.826 to give a Y1 dividend, and then apply the dividend growth model P0 = D1/(re - g). Mathematically, this is the same, as follows:
• (0.826 × 0.5)/(0.1 − 0.03) = 0.413/(0.1 − 0.3) = 0.413/0.07 = 5.90
• The current share price is then the sum of the two PVs:
• P0 = 5.90 + 0.2065 = $6.11 per share

The correct option is option 2

Additional Information:

• The bank advising on an IPO would need to value the company’s equity to set a realistic guide price for the share issue.
• IFRS reports the carrying amount of equity not its market value. Return on equity is calculated by dividing net income by the book value of equity. A script (bonus) issue is an issue of new shares to existing shareholders for zero consideration, so market price is irrelevant.

The correct option is option 1

Additional Information:

• The P/E ratio measures the amount that investors are willing to pay for each dollar of current earnings per share. Lower P/E ratios generally indicate that investors are not anticipating high future earnings growth.

The correct option is option 4 

Additional Information:

• The dividend valuation model assumes that the cost of equity will remain constant and that the share price will change at the same rate as the dividend.

The correct option is option 3 

Additional Information:

• The P/E ratio is calculated as share price/current EPS. Therefore, today’s share price = $5 × 10 = $50. The P/E ratio itself already anticipates the value of future growth in earnings.

The correct option is option 4 

Additional Information:

• Market interest rates (yields) and the market value of fixed income securities (such as loan notes) have an inverse relationship. This is because the market value of a loan note equals the present value of the fixed future payments it will make to the investor. If market interest rates (i.e. discount rates) fall, the present value of a loan note’s future cash flows will rise and with it the loan note’s market price.