1. In India ,preference shares must be redeemed within a period
Correct : C. 10 years of issue
2. Dividend yield method the cost of equality is ascertained as a percentage of
Correct : A. Expected dividend
3. In the case of existing shares cost of equity is computed under dividend yield method by dividing dividend per share with
Correct : B. Market value
4. The weighted average cost of new or additional capital is called
Correct : C. Marginal cost
5. The ratio between debt and equity in the total capitalization is called
Correct : A. Capital gearing
6. Capital composition of a company including long term, medium term and short term finances
Correct : D. Financial structure
7. According NO1 theory, increase in EBIT will
Correct : A. Increase the value of the firm
8. According NO1 theory ,value of firm is
Correct : B. Not related to its capital structure
9. --------------- theory says that the value of a firm will be different stages of growth
Correct : D. Traditional theory
10. Redundant working capital means
Correct : C. Idle working capital
11. Floating capital means
Correct : A. Liquid capital
12. According to ------------- approach, cash inflow from assets should match with the cash outflow required to acquire them.
Correct : B. Hedging approach
13. The appropriate objective of an enterprise is :
Correct : B. Maximization of owners wealth
14. The job of finance manager is confined to:
Correct : C. Raising of funds and their effective utilization
15. Financial decision involve
Correct : A. Investment, financing and dividend decisions
16. The possibility that a company will have lower than anticipated profits is called ---------------------
Correct : C. Business risk
17. -------------------- refers to the risk associated with the capital structure composition
Correct : A. Financial risk
18. When contribution is dividend with EBIT we get
Correct : A. Operating leverage
19. According to ------------------ the degree of leverage is irrelevant in determining the value of a firm
Correct : A. MM theory
20. --------------- leverage is obtained from the equation EBIT/EBT
Correct : B. Financial leverage
21. Buying a security from low priced market and selling at high priced market is called -------------
Correct : B. Arbitrage
22. The traditional approach of capital structure was propounded by -------------------
Correct : B. Solomon Ezra
23. Net operating income(NOI) approach was propounded by ------------
Correct : C. Modigilani-Miller
24. According to NOI theory, the value of the firm depends on -----------
Correct : C. Technological risk
25. --------------- theory is applicable only when the dividend pay out ratio is 100%
Correct : A. MM theory
26. Which is the limitation of traditional approach of financial management
Correct : D. All of these
27. The finance function is/are ----------------------
Correct : D. All of these
28. Financial management is a part of ---------------------
Correct : B. Business management
29. The financial management is responsible for the
Correct : D. Finance function of the firm
30. Financial management includes -------------------
Correct : A. Measurement of performance
31. Profit maximization includes ---------------------
Correct : D. Measurement of success of business decisions
32. Function of finance officers includes -----------------------
Correct : D. Adequate liquidity
33. The term value implies the ------------
Correct : D. All of these
34. Which is a type of value
Correct : A. Book value
35. Which is the approach of valuation
Correct : A. Asset based approach to valuation
36. Total assets – Total external liabilities equal to ---------------------
Correct : A. Net asset
37. The arrangement of working capital and current assets can be done only by -------------------
Correct : D. Financial plan
38. Which is the source of short term
Correct : D. All of these
39. Which is the type of trade credit
Correct : D. All of these
40. Which is the form of credit
Correct : A. Overdraft
41. Which is the characteristics of share capital
Correct : A. Getting permanent capital
42. The ownership capital of Joint Stock Companies is dividend in its --------------
Correct : D. Debentures and preference shares
43. The payment of dividend is not compulsory on ------------------
Correct : D. Share capital
44. The capital raised through equity share is ---------- for the company
Correct : D. Permanent or fixed capital
45. The control and management of the company is in the hands of ----
Correct : C. Equity shareholders
46. Who have the last right on the company assets
Correct : B. Equity shareholders
47. The equity shareholders are owners of ---------------------
Correct : A. Residual income of the company
48. Which is the advantage of the share capital
Correct : D. None of these
49. When the expansion of business and income is there, then the market value increases which result in ------------------
Correct : A. Capital gain by capital loss
50. If the company announces dividend then it is necessary to pay if
Correct : A. Within a certain time
51. Which ratio explains that how much portion of earning is distributed in the form of dividend
Correct : B. Pay Out Ratio
52. Preference shares are those shares whose holders have -------------
Correct : B. Certain preferential Rights
53. When preference shareholders have a right to convert their preference shares in to equity shares after a pre-decided dare such shares are called -------- shares.
Correct : A. Participating
54. Which is the element of cumulative convertible preference shares?
Correct : A. The rate of dividend will be 10%
55. ----------- have veto power to protect their preferential rights
Correct : C. Common preference share
56. The company can reduce its capital by -------------
Correct : A. Convertible share
57. Which is the type of dividend?
Correct : A. Cash dividend
58. The dividend on equity shares is only paid when dividend on ---------- has already been paid
Correct : B. Preference shares
59. Which shares are not redeemed during lifetime of the company?
Correct : A. Equity shares
60. “ A debenture is a document which either creates a debt or acknowledge it” . who said?
Correct : A. Justice Chitty
61. Which is the current liability?
Correct : D. All of these
62. Reserve is an ---------------
Correct : A. Additional part of profit
63. If there is over capitalization in the company, the redemption of debenture can lead to---------------
Correct : B. Balanced capital structure
64. The interest on debenture may be ---------------
Correct : A. Fixed liability
65. The issue of debenture is done only by the --------------
Correct : D. Established and reputed companies
66. The debentures are used only by those companies whose ------------
Correct : A. Goodwill is more
67. The debentures are issued on the security of ----------------
Correct : A. Fixed assets
68. Every debenture holders is a ----------------
Correct : B. Creditor of the company
69. A company should arrange the capital structure in such a way that there is maximum flexibility in the capital and cost of capital is
Correct : B. Minimum
70. Term loans are those loans which are payable after one or more ______________
Correct : A. years
71. The redemption means
Correct : A. The payment of amount
72. Refunding means
Correct : D. Issue new debentures in place of old debentures
73. Conversion means
Correct : D. Debenture holders are allotted equity shares
74. Stock is --------------------
Correct : A. Current asset
75. Earnings means -----------------------
Correct : A. Profit
76. Face value per debenture less issue expenses equal to ---------------
Correct : A. Net proceeds per debentures
77. Capital budgeting means ----------------------------
Correct : A. Planning for capital asset
78. Capital budgeting is the process of making investment decisions in the ----------
Correct : D. Capital expenditure
79. Capital budgeting is --------------
Correct : A. Actually the process of making investment decision in capital expenditure
80. Capital budgeting is known as -----------------
Correct : B. Capital expenditure
81. Capital budgeting is ------------------------
Correct : A. Related to long time
82. Capital budgeting actually the process of making investment decisions in -----------
Correct : C. Fixed asset
83. Capital budgeting is also known as --------------------
Correct : D. All of these
84. “Capital budgeting is long term planning for making and financing proposed capital outlays”. Who said?
Correct : A. Charles T. Horngreen
85. Capital budgeting investment decision involves -----------------------
Correct : A. Long term function
86. Which is the element of capital budgeting decision
Correct : D. Large investment
87. Capital budgeting process involves --------------------
Correct : D. All of these
88. Which is the step of capital budgeting process?
Correct : D. Project execution
89. Which is the traditional method of capital budgeting
Correct : D. All of these
90. Which is the time adjusting method of capital budgeting
Correct : D. All of these
91. If the annual cash inflows are constant, the payback period can be computed by dividing cash outlay by ----------------
Correct : D. Annual sales flows
92. If a project requires Rs.20,000 as initial investment and it will generate an annual inflow of Rs.2,000 for the 20 years, the pay back period will be ------------------
Correct : A. 10 years
93. Projects which yields the highest earnings are ------------------
Correct : A. Selected
94. The present value of total cash inflows should be compared with present value of ----------------------
Correct : B. Cash outflows
95. The proposal is accepted if the profitability index is more than -----
Correct : A. One by zero
96. The proposal is rejected in case the profitability index is ------------
Correct : A. Less than one
97. The present value of all inflows are cumulated in -------------------
Correct : C. Order of investment
98. The performance report supplement with date on non-financial performance measures includes ------------------
Correct : D. All of these
99. The investment of long term funds is made after a careful assessment of the various projects through -------------------
Correct : C. Capital budgeting by sales
100. Which is the objective of a firm’s finance management?