1. If a company issues bonus shares the debt equity ratio ________________.

A) Remain unaffected.
B) Will be affected.
C) Will improve.
D) None of the above.



2. The par value of the stocks and bonds outstanding is termed as ___________________.

A) Capitalization.
B) Multiplication.
C) Outstanding income.
D) Earnings before interest and taxes.



3. Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

A) EPS maximization ignores the firm's risk level.
B) EPS maximization does not specify the timing or duration of expected EPS
C) EPS maximization naturally requires all earnings to be retained.
D) EPS maximization is concerned with maximizing net income.



4. The long-run objective of financial management is to _____________.

A) Maximize earnings per share.
B) Maximize the value of the firm's common stock.
C) Maximize return on investment.
D) Maximize market share.



5. ___________ on capital gain and current income may influence form of capital.

A) Legal stipulation.
B) Rate of tax.
C) Capital market condition
D) Cost of floating.