In order to design an optimal capital structure, a company should strive for:
(a) Maximum Debt
(b) Minimum Debt
(c) Minimum WACC
(d) Minimum Cost of Equity
Capital structure of a firm influences the:
(a) Risk of the firm,
(b) Return of the Equity Shareholder
(c) Risk but not return
(d) Both (a) and (b)
Which of the following is not considered while designing the capital structure?
(a) Size of the company
(b) Tax rate
(c) Location of the plant
(d) Dilution of control
Which of the following is not relevant for optimal capital structure?
(a) Flexibility
(b) Solvency
(c) Liquidity
(d) Control
Financial Structure refers to
(a) All financial resources
(b) Short term funds
(c) Long term funds
(d) None of these
An optimal capital structure is one when the MP of the equity share is:
(a) Zero
(b) Maximum
(c) Minimum
(d) Moderate
Agency cost arises due to:
(a) Increase to Cost of Production
(b) Hiring more employees
(c) Increase in Debt
(d) Sales decline
Which of the following is not affected by capital structure?
(a) Total tax liability
(b) Return on Equity
(c) Operating Profit
(d) Earnings Per Share
While increasing debt proportion in the capital structure, which one of the following should be considered?
(a) Cash flow position,
(b) Operating profits
(c) Financial risk,
(d) All of the above
Which of the following may be ignored while designing a capital structure?
(a) Profitability
(b) Flexibility
(c) Control Philosophy
(d) Political Stability
In NI approach the value of firm is depends on :
(a) Capital Structure
(b) Cost of Debt
(c) Cost of capital
(d) Operating Profit
Maximum amount of debt, a firm can comfortably service is known as:
(a) Debt-service Coverage
(b) Debt Capacity
(c) Interest charge
(d) Debt Value
Cash flow required during a period in meet the interest and repayment commitments is known as:
(a) Debt capacity
(b) Interest Coverage
(c) Debt-service Coverage
(d) Market Value of Debt
In Pecking Order Theory, the first priority is given to:
(a) Fresh Equity
(b) Fresh Loan
(c) Mix of Debt & Equity
(d) Retained Earnings
In NOI approach the value of firm is depends on :
(a) Capital Structure
(b) Cost of Debt
(c) Cost of capital
(d) Operating Profit
Contributor of Optimum Capital Structure theory is
1. Durand David
2. Philip Kotler
3. Ezra Solomon
4. Modigliani & Miller