Chapter 6 Cost of Capital

Chapter 6 Test

1、单选题:
‌Lepus has issued loan notes of $100 nominal value with annual interest of 9% per year, based on the nominal value. The current market price of the loan notes is $90. What is the cost of the loan notes?‍
选项:
A: 10%
B: 9%
C: 11%
D: 8%
答案: 【 10%

2、单选题:
‎HAHA is financed partly by equity and partly by debentures. The equity proportion is always kept at one thirds of the total. The cost of equity is 16% and that of debt 10%.  Ignore taxation.‍‎‍‎calculate the weighted average cost of capital for the entity.‍
选项:
A: 16%
B: 10%
C: 12%
D: 11%
答案: 【 12%

3、判断题:
‎The weighted average cost of capital can be used in investment appraisal if the project being appraised is small relative to the company.‍
选项:
A: 正确
B: 错误
答案: 【 正确

4、判断题:
‍The weighted average cost of capital can be used in investment appraisal if the existing capital structure will be maintained (same financial risk).‌
选项:
A: 正确
B: 错误
答案: 【 正确

5、填空题:
‎11% bank term loan, corporate tax is 30%. Kdat=?‏‎Please express the answer in percentage.‏
答案: 【 7.7%

Chapter Four Sources of Finance

Chapter Four Test

1、单选题:
‎Consider the following statements concerning sources of finance. ‏‎I Debentures are more similar to equity than preference shares. ‏‎II There is less risk for the equity shareholders if the company raises finance using preference shares rather than debt. ‏‎Are the statements above true or false? ‏‎‏
选项:
A: Statement I is true,Statement II is true.       
B: Statement I is true,Statement II is false.       
C: Statement I is false,Statement II is true.       
D: Statement I is false,Statement II is false.       
答案: 【 Statement I is false,Statement II is false.       

2、单选题:
‍Which of the following sources of equity finance is a company most likely to use in practice? ‎
选项:
A: Rights issue
B: Venture capital
C: New share issue
D: Retained earnings
答案: 【 Retained earnings

3、单选题:
​Which of the following is least likely to be a reason for seeking a stock market flotation? ‎
选项:
A:  Transfer of capital to other uses  
B: Access to a wider pool of finance  
C: Enhancement of the company's image  
D: Improving the existing owners' control over the business
答案: 【 Improving the existing owners' control over the business

4、单选题:
‍Which of the following is not true of a rights issue by a listed company? ‌
选项:
A: Rights issues do not require a prospectus.  
B: If shareholders do not take up the rights, the rights lapse. 
C:  The rights issue price can be at a discount to market price.  
D: Relative voting rights are unaffected if shareholders exercise their rights.
答案: 【 If shareholders do not take up the rights, the rights lapse. 

5、单选题:
‌What is the term for an arrangement whereby a listed company issues new shares which are  bought by a small number of institutional investors,

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