Which of the following will lead to a rise in the required rate of return (ie the minimum return the investor would want in return for investing in a firm's shares)?
A reduction in a company's gearing ratio
B. Poorer outlook for business in general
C. A fall in the general level of interest rates
D. The firm adopts less risky business strategies
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Which of the following is most likely to lead to a rise in the price of a firm's shares?
A fall in the level of interest rates in the country
B. The bankruptcy of one or more of its rivals due to tough times in the industry
C. Increased borrowing by the firm
D. A fall in the firm's EPS
nullA company is considering a new investment project, and has calculated that the present value of the cash inflows from the project are less than the present value of the cash outflows, ie there is a negative net present value (NPV). What does this negative NPV imply?
A. The time period used as the basis for assessing future cash flows in the NPV calculation should beincreased.
B. The investment should not be undertaken as it will lead to a fall in the share price of the company.
C. The investment should only be undertaken if the firm has no better use for the capital.
D. The firm should increase its cost of capital before making future investment decisions.
Which of the following is the most appropriate for indicating long-term shareholder wealth?
A. Share price
B. Rate of return on capital
C. Earnings per share
D. Profit
Which THREE of the following are most likely to increase the price of the shares in XYZ plc?
A fall in interest rates
B. Increasing demand for some of XYZ's key products
C. News of better economic stability in XYZ's home country
D. Falling ROCE at XYZ plc
E. Increasing levels of borrowing at XYZ plc
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