WorksheetsFinance and Investment Quiz
Total questions: 10
Worksheet time: 3mins
What is an internal source of finance?
Bank loan
Selling company shares
Retained profit
Crowdfunding
Which of the following is a short-term external source of finance?
Venture capital
Bank overdraft
Preference shares
Retained earnings
What does WACC stand for?
Weighted Average Corporate Capital
Working Asset Cost Calculation
Weighted Average Cost of Capital
Work Allocation Capital Cost
What is the main feature of a preference share?
Higher risk than ordinary shares
Voting rights
Fixed dividends
No dividend ever paid
What is the purpose of a rights issue?
To sell company property
To raise equity from existing shareholders
To reduce share prices
To raise debt from banks
What is the formula to calculate the cost of equity using the Dividend Growth Model?
Ke = D1/P0 + g
Ke = P0/D1 + g
Ke = D1 – P0 + g
Ke = D1 x g x P0
Which source of finance is considered 'risk-free'?
Retained earnings
Ordinary shares
Bank overdraft
None – all carry some level of risk
What happens in a sale and leaseback arrangement?
The business gives away an asset
The asset is bought and returned for free
The asset is sold and leased back
The business gets a free asset
What is the marginal cost of capital?
The cost of previous financing
The average of all past financing
The cost of raising one extra unit of capital
The amount paid to shareholders
According to the Modigliani & Miller theory, what is the impact of dividend policy on company value?
It increases company value
It reduces shareholder wealth
It has no impact if investment is in positive NPV projects
It changes tax rates
