Short Questions Answers Write short notes on: i) Implications of business and financial risks Business risk is the riskiness on a firm’s stock provided that the firm has used no debt capital. It is the risk inherent in the operation of the business. A firm’s business risk arises because of uncertainty associated with projections of […]
Chapter 8: The Basics of Capital Budgeting
Short Question Answer 1. Briefly explain relative merits and demerits of different methods of evaluating capital budgeting projects. Capital budgeting projects are evaluated using non-discounted and discounted cash flow methods. Non discounted cash flow method includes the ranking criteria such as payback period and accounting rate of return, whereas the non-discounted cash flow method includes […]
Chapter 7: Cost of Capital
Short Question Answer 1. What is the significance of marginal cost of capital in decision making? Explain. Marginal cost of capital is the cost of raising an additional rupee of capital. In other words, it is the cost incurred for raising incremental funds. Thus, the weighted average cost of incremental capital is known as the […]
Chapter 10: Internal Analysis
Very Short Question Answer 1. Point out the areas of internal analysis. The areas of internal analysis are: Production and operations Marketing Finance Human resource 2. What do you mean by internal analysis? Internal analysis is an assessment of strengths and weaknesses of an organization. Organizations must exploit and expand on their strengths, as well […]
Chapter 9: Establishing Company Direction
Very Short Question Answer 1. Define vision and mission. Vision can be defined as the description of what an organization wants to be in future. It provides direction to the organization. Through vision, organization can focus on achieving the desired goals. The vision statement of McDonald’s is to be the world’s best quick service restaurant. […]
Chapter 6 :Exempt Amounts, Concessions, Tax Rates And Withholding Payments
Very Short Question Answer Briefly state any two tax-exempt amounts. Two tax-exempt amounts are: Amount received by a person entitled to tax exemption privileges under a bilateral or a multilateral treaty or agreement concluded between the Government of Nepal and a foreign country or an international organization. Amount received by an individual from employment in […]
Chapter 5: Capital and Revenue
Very Short Question Answer State the expenses that are treated as capital expenditure according to Income Tax Act, 2058. Income Tax Act, 2058 has treated the following expenses as capital expenditure: Expenditure incurred for feasibility study, exploration and development of natural resources. Expenditure incurred for obtaining assets with useful life of more than 12 months. […]
Chapter 8: Strategic Management
Very Short Answer Question 1. State two characteristics of strategy. Strategy is a long term action plan for achieving sustainable competitive advantage. Its two important characteristics are: Long term direction: Strategy provides long term direction to an organization. Competitive advantage: Strategic decisions always aim at achieving competitive advantage. 2. Define strategy. Strategy is an action […]
Chapter 7: Asian And Global Environment
Very Short Answer Question 1. Define globalization. Globalization can be defined as the free flow of goods and services, human resources, capital and information beyond the national borders. The driving factors for the globalization are transportation and communication infrastructure. It is the process of transformation of local phenomena into global ones. 2. What do you […]
Chapter 4 : Risk and Return
Short Questions Answer Beta coefficient Beta coefficient, denoted as ßj, is the measure of diversifiable risks. This is defined as the degree of movement in an asset or security’s return in response to the overall market return. Symbolically, it is expressed as. j=COVjM / Varm Where, j = Beta coefficient for security ‘j’. COVjM = […]