Q1. The primary purpose of the firm is to pay dividend for the share holders. Therefore, irrespective of the firm's need and desires of share holders, a firm should follow a policy of very high dividend payout-Comment.
Q2. The credit policy of a company is criticized because the bad debt losses have increased considerably and the collection period has also increased. Discuss under what conditions this criticism may not be justified.
Q3. If use of financial leverage magnifies the earnings per share under favourable economic conditions, why do the companies not employ a very large amount of debt in their capital structures?
Q4. Since the right issue allows the common shareholder to purchase the shares at a price much lower than the current market price. Why shareholders wealth is not increasing. Illustrate your answers with examples.
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