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what do you understand by the term 'trad...

what do you understand by the term 'trading on equity. ?

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Trading on equity means the use of fixed cost sources of finance such as preference shares, debentures and long-term loans in thhe capital structre, so as to increase the returen on equity shares. This is also known as financial leverage. It is advisable to use tarding on equity when the rate of Return on Investment is more than the rate of intereest payable on debetures and loans.
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ARIHANT PUBLICATION-Financial Management -CHAPTER PRACTICE (Short Answer type questions)
  1. State the objective of financial management .

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  2. Discuss in brief the importance of financial management .

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  3. What is meant by 'long-term investment decision ? State any three fact...

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  4. Inestment decision can vbe long-term or short-term. Explain long-term ...

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  5. Explain any four points that highlight the importance of financial pla...

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  6. Financial planning tries to link the present with the future. Explain ...

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  7. what do you understand by the term 'trading on equity. ?

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  8. Though Angel Pharma is making huge profits every year on a regular bva...

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  9. When can a capital sturucture be considered optimum and what kind of ...

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  10. What is fixed capital ? Enumerate any two of the factors determining t...

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  11. What is meant by working capital ?

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  12. What does 'management of fixed capital,imply ? Explain briefly any thr...

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  13. You are a financial expert and your company startys a busineess of man...

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  14. The overall financial health of a business is determined by the qualit...

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  15. How is shareholder's wealth maximisation linked with the market price ...

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  16. Why does a financial manager consider wealth maximisation as the forem...

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  17. Investment criteraia is one of the factors, which affect capital budge...

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  18. State whether the working capital requirement of business manufacturi...

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  19. Distinguish between fixed capital and working capital .

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  20. The Return on Investment (RoI) of a company ranges between 10-12% for ...

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