Practice Financing Decisions (23.5.B) - Introduction to Financial Management

Practice: Financing Decisions

Lesson 23.5.BIntroduction to Financial Management

Practise this section

8 questions

Flashcard drill
5 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
2 questions · about 1 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What are the two main types of financing sources?
Show hintHide hint
Think about how companies get money.
Question 2.
What is financial leverage?
Show hintHide hint
Focus on the relationship between debt and profit.
3Question 3.
Which of the following is a source of equity financing?
- Bank loan
- Venture capital
- Bond
Show hintHide hint
Think about how a company can gain investors.
4Question 4.
True or False: Financial leverage increases the potential for profit but also the risk of loss.
- True
- False
Show hintHide hint
Consider the effect of debt on outcomes.
Question 5.
A tech company is considering whether to raise funds through debt or equity to finance a new project. Analyze the risks and benefits of each option given their current financial state.
Show hintHide hint
Consider current debt levels and market conditions.
Question 6.
Calculate the cost of capital for a company planning to fund its operations using 60% debt at an interest rate of 5% and 40% equity with a required return of 10%. What would be the company’s weighted average cost of capital?
Show hintHide hint
Use the formula for WACC considering the proportions of each financing method.

4 more questions in this section. Enroll free to practise them all.