SECTION A 1. Suppose a firm maintains its preferred debt-equity and pays dividends only after meeting its investment needs, what type of dividend policy is being referred to? A. Stable B. Hybrid c. Compromise D. Residual 2. What term describes a transaction where a firm buys some of its outstanding shares? A. Stock payout B. Share Reversal C. Share repurchase D. Distribution 3. Which of this is not consider in the calculation of the required rate of return using the CAPM? A. Earning for next period B. Risk free rate Market return expected for the time period D. Bela for the firm 4. Alomo Ltd has cash of GHS 100,000 that will be invested in an equity investment that has a beta of 2.25. The current risk-free rate in the market is 2.5%, and the market requires an 8% risk premium for equity securities. What the return Alomo Ltd, should expect to earn? A. GHS 8,000 B. GHS 18.000 C. GHS 23,625 D. GHS 20,500 5. The principal-agent problem emerges under which of the following circumstances? A. When ownership is separated from control B. At least one member of the Directors don't attend meetings C. When Board of Directors are set-up to control management activities D. When ownership is not separated from control 6. Which of this source of financing in an organization do not carry the payment of interest