….principle says that issue of debt and preference shares do not affect the interest of equity share holders.

Related MCQs

• National Ltd. Has 12,000 equity shares of Rs.100 each. Sale price is equity share Rs.115 per share; flotation cost Rs.5 per share. Expected dividend growth rate is 5% and expected dividend at the end of the financial year is Rs.11 per share, What is the cost of equity shares of National Ltd?
• Black & White Ltd. Has a cost of equity of 11% and a pre-tax cost of debt of 8.5%. The firm's target Weighted average cost of capital is 9% and its tax rate is 35%. What is the firm's target debt-equity ratio?
• Trading on equity implies having a ------ debt-equity ratio.
• Use of more debt capital rather than equity capital is called……
• ABC Ltd. acquires hundred percent of preference share capital of PQR Ltd. It would result in
• Dividend on preference share capital is ignored while calculating operating leverage.
• …… increases the number of shares without actually increasing the paid - up value of the share capital.
• ……. is the ratio in which an acquiring company will offer its own shares in exchange for the target company’s share during merger .
• The term trading on equity is generally used for …. .…financial leverage
• In …… approach says that capital structure decision is relevant to the valuation of the firm.