MCQ for CA Intermediate FMECO - SECTION A - FINANCIAL MANAGEMENT - Chapter 4 - COST OF CAPITAL
Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 8 - FINANCIAL MANAGEMENT & ECONOMICS FOR FINANCE - SECTION A - FINANCIAL MANAGEMENT - Chapter 4: COST OF CAPITAL - For Practice relevant for May/November 23 Examinations
Q1. Which of the following is not an assumption of the capital asset pricing model (CAPM)?
- The capital market is efficient.
- Investors lend or borrow at a risk-free rate of return.
- Investors do not have the same expectations about the risk and return.
- Investor’s decisions are based on a single-time period.
Answer: 3
Q2. Given: risk-free rate of return = 5 %; market return = 10%; cost of equity = 15%; value of beta (β) is:
- 1.9
- 1.8
- 2.0
- 2.2
Answer: 3
Q3. ____________may be defined as the cost of raising an additional rupee of capital:
- Marginal cost of capital
- Weighted Average cost of capital
- Simple Average cost of capital
- Liquid cost of capital
Answer: 1
Q4. Which of the following cost of capital requires to adjust taxes?
- Cost of Equity Share
- Cost of Preference Shares,
- Cost of Debentures
- Cost of Retained Earnings
Answer: 3
Q5. Marginal Cost of capital is the cost of:
- Additional Revenue
- Additional Funds
- Additional Interests
- None of the above
Answer: 2
Q6. In order to calculate Weighted Average Cost of Capital, weights may be based on:
- Market Values
- Target Values
- Book Values
- Anyone of the above
Answer: 4
Q7. Firm’s Cost of Capital is the average cost of:
- All sources of finance
- All Borrowings
- All share capital
- All Bonds & Debentures
Answer: 1
CA Intermediate FMECO - SECTION A - MCQ for Chapter 5 -
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