Question 1 : Which of the following statements is not true with regard to Call money? Select correct one
- It is short-term finance repayable on demand
- There is a direct relationship between call rates and other short-term money market instruments.
- Its maturity period ranges from one day to fifteen days
- It is used for inter-bank transactions
Question 2 : The gross profit margin is unchanged, but the net profit margin declined over the same period. This could have happened if
- cost of goods sold increased relative to sales.
- sales increased relative to expenses
- Govt. increased the tax rate
- dividends were decreased.
Question 3 : Which of the following is not considered as capital market security?
- equity share
- preferential share
- corporate bond
- 6-month treasury bill
Question 4 : What the Cash flow statement Portrays?
- The financial position of a firm at a given point of time.
- The performance of a firm over a period of time
- The flow of cash through the business during a given accounting period.
- The flow of cash through the business during three months.
Question 5 : Honeywell International Inc has a market debt-equity ratio of 0.5. Assume its current debt cost of capital is 6.5%, and its equity cost of capital is 14%. What is weighted average cost of capital (WACC)?
- 0.15
- 0.1
- 0.14
- 0.12
Question 6 : Capital Budgeting Decisions are:
- Reversible
- irreversible
- Unimportant
- not required
Question 7 : Which of the following techniques does not take into account the time value of money?
- Internal rate of return method
- Discounted cash payback method
- Net present value method
- Simple cash payback method
Question 8 : How many years a given sum of money must earn at a given compound annual interest rate in order to double that initial amount is given by the (Roughly estimate) Rule _____________
- Rule of 415
- Rule of 72
- Rule of 78
- Rule of 144
Question 9 : Which of the following is not a part of Non-discounted cash flow criteria –
- Payback
- Discounted payback
- Accounting rate of return
- Net Present Value
Question 10 : Intermediaries who link buyers and sellers by buying and selling securities at stated prices are called
- investment bankers
- traders
- brokers
- dealers
Question 11 : Why deferred tax liability arrises?
- The difference between cash and profit.
- The temporary differences between taxable income and accounting profit.
- The difference sales and profit.
- The difference cost of goods sold and profit.
Question 12 : What is mean by Investments?
- Copyrights
- Noncurrent assets
- Financial securities owned by the firm.
- Net book value
Question 13 : The problem with a constant payout ratio dividend policy from the shareholder’s perspective is that
- it bores the shareholders
- if the firm’s earnings drop, so does the dividend payment
- there is no informational content
- even when earnings are low, the company must pay a fixed dividend
Question 14 : Which of the following is not true about the long term finance purpose
- To finance fixed assets
- To finance the inventory
- Expansion of companies
- Increasing facilities
Question 15 : Net sales are generally defined as ___________
- Sales-Sales return -Excise duty
- Sales and gross profit
- Cost of goods sold
- Cost of goods sold
Question 16 : NOPAT stands for
- Net Operating Profit after Taxes
- No operation on Project after Termination
- No Operating Profit after Taxes
- No Operating Profit after Termination
Question 17 : Which of the following techniques does not reward shareholders for investing in a company?
- Repurchasing company shares
- Offering non-pecuniary benefits
- Making a rights issue
- Paying a final dividend
Question 18 : Diversifiable risk is caused by
- Success of marketing programs, winning or losing a major contract
- War, inflation
- Recessions
- floods
Question 19 : Which one of the following statements is correct concerning the weighted average cost of capital (WACC)?
- The WACC may decrease as a firm's debt-equity ratio increases.
- When computing the WACC, the weight assigned to the preferred stock is based on the coupon rate multiplied by the par value of the stock.
- A firm's WACC will decrease as the corporate tax rate decreases.
- The weight of the common stock used in the computation of the WACC is based on the number of shares outstanding multiplied by the book value per share.
Question 20 : The focal point of financial management in a firm is
- The number and types of products or services provided by the firm
- The minimization of the amount of taxes paid by the firm
- The creation of value for shareholders
- The profits earned by the firm in Rs
Question 21 : Equity shareholders are called
- Owners of the company
- Partners of the company
- Executives of the company
- Guardian of the company
Question 22 : Capital Budgeting Decisions are based on:
- Incremental Profit
- Incremental Cash Flows
- Incremental Assets
- Incremental Capital
Question 23 : You bought a share for Rs. 100 and sold it for Rs. 120 after one year. You received share dividend Rs.10 during the holding period. What was the rate of holding period return?
- 0.1
- 0.2
- 0.3
- 0.5
Question 24 : Calculate the return for a stock that earned a Rs. 27 profit per share based on a sale price of Rs104 per share.
- 3.8519
- 1
- 0.0319
- 0.3506
Question 25 : There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?
- That the Capital Employed has reduced
- That the Profitability has gone up
- That debtors’ collection period has increased
- That Sales has decreased.
Question 26 : What is the definition of Gross Profit Margin Ratio?
- difference of net sales and cost of goods sold , divided by Net sales
- Operating profit divided net sales
- Net Profit / Net sales
- Profit after Tax / Average Total assets
Question 27 : Which of the following is not an assumption in the Miller & Modigliani approach?
- There are no transaction costs
- Securities are infinitely divisible
- All the firms pay tax on their income at the same rate
- Investors have homogeneous expectations
Question 28 : What is the present value of a Rs. 1,000 ordinary annuity that earns 8% annually for a period of 10 years?
- Rs. 6500
- Rs. 6710
- Rs. 6750
- Rs. 6170
Question 29 : Future value interest factor takes
- compound rate
- deflation rate
- discounting rate
- inflation rate
Question 30 : Classification of financial markets by the maturity of claims are
- Money market and capital market
- Primary and secondary market
- Forward and future market
- option 2 and 3