1. CARE has been set up by ___________ in collaboration with some banks and financial institutions.

A. IDBI

B. IFCI

C. ICICI

D. UTI

Correct : A. IDBI

2. The concept of Credit Rating was originated in which country?

A. UK

B. USA

C. Russia

D. UAE

Correct : B. USA

3. Which was the first ever instruments that was rated?

A. US Rail Road Bonds

B. UK Rail Road Bonds

C. US Mines Bonds

D. None of the Above

Correct : A. US Rail Road Bonds

4. Which sentence is true? Sentence A – Rating once given remains unchanged Sentence B – Rating may be upgraded, downgraded or continue to be unchanged.

A. Sentence A is True

B. Sentence B is True

C. none

D. none

Correct : B. Sentence B is True

5. Which of the following is NOT true with respect to Credit Rating

A. Credit Rating helps the market regulators in promoting stability and efficiency in securities market.

B. Credit Rating helps issuers to have a wider access to capital with better pricing

C. Credit Rating saves the investor’s time and enables him to take quick decision.

D. Credit Rating is a recommendation for the issuers to buy, sell or hold the security.

Correct : D. Credit Rating is a recommendation for the issuers to buy, sell or hold the security.

6. Which one of the following is the Regulator of the Credit Rating Agencies in India?

A. RBI

B. SBI

C. SIDBI

D. SEBI

Correct : D. SEBI

7. ‘Where Got’ Where Gone’ Statement is also known as

A. Balance Sheet

B. Profit and Loss Statement

C. Funds Flow Statement

D. Capital Budget

Correct : C. Funds Flow Statement

8. Operating Loss is a

A. Application of Fund

B. Source of Fund

C. Loss of Assets

D. None of the Above

Correct : A. Application of Fund

9. Public Deposit accepted by a company represents

A. Use of Fund

B. Source of Fund

C. Application of Fund

D. Equilibrium

Correct : B. Source of Fund

10. Redemption of Debenture by a company represents

A. Application of Fund

B. Source of Fund

C. Loss of the Company

D. None of the Above

Correct : A. Application of Fund

11. Only Current Assets and Current Liabilities are shown in the statement showing

A. Changes in Assets

B. Changes in Liabiliteis

C. Changes in Working Capital

D. Changes in Fixed Capital

Correct : C. Changes in Working Capital

12. Decrease in Working Capital Denotes

A. Application of Fund

B. Source of Fund

C. Disposition of Fund

D. Operating Loss

Correct : B. Source of Fund

13. Which one of the following is not an Application of Fund?

A. Purchase of Fixed Assets

B. Repayment of Loans

C. Operating Loss

D. Operating Profit

Correct : D. Operating Profit

14. When liability decreases it is a ________

A. Source of Funds

B. Profit

C. Application of Funds

D. Loss

Correct : C. Application of Funds

15. Loss on sale of Fixed Assets / Investment will be shown on the credit side of adjusted profit and loss account.

A. True

B. False

C. none

D. none

Correct : B. False

16. The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year taxed paid were Rs. 10000 then what will be the current year provision for tax made from profit?

A. Rs. 7000

B. Rs. 5000

C. Rs. 15000

D. Rs. 10000

Correct : B. Rs. 5000

17. The proposed dividend for the Current Year would appear on the debit side of which account?

A. Profit and Loss Account

B. Balance Sheet

C. Adjusted Profit and Loss Account

D. Adjusted Balance Sheet

Correct : C. Adjusted Profit and Loss Account

18. If the shares are issued at a premium during the year then the amount of premium received will appear as a _______

A. Source of Fund

B. Application of Fund

C. Profit

D. Loss

Correct : A. Source of Fund

19. If we want to prepare the funds flow statement, we should have

A. Balance sheets of two consecutive years

B. Funds flow statements of two consecutive years

C. Budget for next financial year

D. All of the Above

Correct : A. Balance sheets of two consecutive years

20. Last year’s proposed dividend has been paid during the current year and hence will be shown as________

A. A source of funds

B. An application of funds

C. Increase in liabilities

D. None of the above

Correct : B. An application of funds

21. Any change in Current Liabilities will effect inverse change in the working capital.

A. True

B. False

C. none

D. none

Correct : A. True

22. From the following details find out the funds from operations: Net Profit after Tax Rs. 48,000 Depreciation Rs. 30,000 Loss on Sale of Outdated Machinary : Rs. 4000

A. Rs. 82,000

B. Rs. 22,000

C. Rs. 74,000

D. Rs. 14,000

Correct : A. Rs. 82,000

23. From the following details find out the fund from operations PAT Rs. 2,500 Accumulated Depreciation Rs. 2,900 Retained Earning Rs. 4,200 Goodwill Written off Rs. 300 Profit on Sale of Fixed Assets Rs. 200

A. Rs. 9,900

B. Rs. 9,600

C. Rs. 9,700

D. Rs. 5,100

Correct : C. Rs. 9,700

24. Funds Flow Statement indicates the necessity of arranging external funds in advance if projected outflow is more than inflow.

A. True

B. False

C. none

D. none

Correct : A. True

25. Any change in the Current assets is positively correlated to the change in working capital

A. True

B. False

C. none

D. none

Correct : A. True

26. Non-cash adjustments like Depreciation, Preliminary Expenses and Goodwill Written off are shown on the debit side of which account?

A. Balance Sheet

B. Funds Flow Statement

C. Adjusted Profit and Loss Account

D. Working Capital Statement

Correct : C. Adjusted Profit and Loss Account

27. Part of Profit transferred to General Reserve will be shown on the debit side of _________

A. Balance Sheet

B. Funds Flow

C. Cash Flow

D. Adjusted Profit and Loss Account

Correct : D. Adjusted Profit and Loss Account

28. A projected Funds Flow Statement informs the management about

A. Future Financial Stringency

B. Future Requirement of Funds

C. Funds Position of the Company

D. All of the above

Correct : D. All of the above

29. Funds Flow Statement can be prepared in which form?

A. Vertical Form

B. Horizontal Form

C. Complex Form

D. Both a and b

Correct : D. Both a and b

30. Funds flow statement being based on ________________, which is of limited utility for future planning is a limitation of funds flow statement.

A. Historical Facts

B. Traditional Facts

C. Hypothetical Facts

D. Current Facts

Correct : A. Historical Facts

31. Which one of the following is NOT a theory of International Parity Relationship

A. Purchasing Power Parity

B. Covered Interest Arbitrage and Interest Rate Parity

C. Money Market Hedge Theory

D. Expectations Theory

Correct : C. Money Market Hedge Theory

32. Indirect Quotation is also known as ___________

A. European Quotation

B. Indian Quotation

C. American Quotation

D. Euro Quotation

Correct : C. American Quotation

33. The spread in a two way quotation is affected by

A. Currency involved

B. The volume of business

C. Market sentiments/rumours about the currency

D. All of the above

Correct : D. All of the above

34. The Rate of Exchange applicable for delivery of Foreign Exchange at a future date is called ______

A. Spot Rate

B. Current Rate

C. Forward Rate

D. Expected Rate

Correct : C. Forward Rate

35. The act of arbitrage that involves three foreign currencies involving three different foreign exchange market is called __________

A. Geographical Arbitrage

B. Triangular Arbitrage

C. Cross Arbitrage

D. None of the Above

Correct : B. Triangular Arbitrage

36. An option to buy is called a _______

A. Put Option

B. Bid Option

C. Call Option

D. Preemptive Option

Correct : C. Call Option

37. ‘Speculators’ in the market _______________

A. Need foreign currency to pay their import obligations

B. Invest in securities of foreign country

C. Try to profit from exchange rate movements

D. None of the Above

Correct : C. Try to profit from exchange rate movements

38. Which one of the following is NOT a Foreign Exchange Risk Management Technique

A. Forward Contract

B. Futures Contract

C. External Commercial Borrowing

D. Currency Options

Correct : C. External Commercial Borrowing

39. Default risk is higher in which one of the following?

A. Forward Contracts

B. Futures Contracts

C. Equal in both a and b

D. None of the Above

Correct : A. Forward Contracts

40. A financial instrument that provides its holder a right but no obligation to buy or sell a pre-specified amount of a foreign currency at a pre-determined rate is referred to as ____________

A. A Promise

B. An Option

C. An Obligation

D. A Swap

Correct : B. An Option

41. Establishment of new plants and offices overseas by MNC as a mean of FDI is

A. A Greenfield Investment

B. A Brownfield Investment

C. Vertical FDI

D. None of the Above

Correct : A. A Greenfield Investment

42. Hilton Hotels of United States opening a hotel in Mumbai, India is ____________

A. A Horizontal FDI

B. A Vertical FDI

C. A Conglomerate FDI

D. None of the Above

Correct : A. A Horizontal FDI

43. There are basically two approaches to find out NPV of a foreign based project’s capital budgeting exercise. Which are those two?

A. Home Currency and foreign currency approaches

B. One Currency and Multi Currency Approaches

C. Home Country and Foreign Country Approaches

D. None of the Above

Correct : A. Home Currency and foreign currency approaches

44. F1 = 𝑆1 𝑒 denotes

A. Purchasing Power Parity

B. Covered Interest Arbitrage and Interest Rate Parity

C. Expectations Theory

D. International Fisher Effect

Correct : C. Expectations Theory

45. If there are no costs or other barriers associated with the movement of goods or services across countries, the price of each product should be the same in each country, after making appropriate currency conversions. It is called ____________ in Economics.

A. Law of Similar Mortgage Rate

B. Law of Similar Labour Rules

C. Law of One Price

D. Law of One type of Manufacturing

Correct : C. Law of One Price

46. The current spot rate for the Euro is Rs. 86,the expected inflation rate is 5 in India and 3 in Europe. What is the expected Spot Rate of Euro one year hence?

A. Rs. 87.67/Euro

B. Rs. 84.36/Euro

C. Rs. 86/Euro

D. Rs. 93/Euro

Correct : A. Rs. 87.67/Euro

47. When an Option can be exercised on any date up to maturity, it is called

A. A Flexible Option

B. An European Option

C. A British Option

D. An American Option

Correct : D. An American Option

48. Is it necessary for an organization to own 100 % of an overseas firm for its investment to be classified as an FDI?

A. Yes

B. No

C. none

D. none

Correct : B. No

49. Capital investment made by firms in another county is called______

A. Foreign Direct Investment

B. Foreign Direct Involvement

C. Foreign Debt Investment

D. None of he Above

Correct : A. Foreign Direct Investment

Quiznetik

Advanced Financial Management 2 | Set 2

1. CARE has been set up by ___________ in collaboration with some banks and financial institutions.

2. The concept of Credit Rating was originated in which country?

3. Which was the first ever instruments that was rated?

4. Which sentence is true? Sentence A – Rating once given remains unchanged Sentence B – Rating may be upgraded, downgraded or continue to be unchanged.

5. Which of the following is NOT true with respect to Credit Rating

6. Which one of the following is the Regulator of the Credit Rating Agencies in India?

7. ‘Where Got’ Where Gone’ Statement is also known as

8. Operating Loss is a

9. Public Deposit accepted by a company represents

10. Redemption of Debenture by a company represents

11. Only Current Assets and Current Liabilities are shown in the statement showing

12. Decrease in Working Capital Denotes

13. Which one of the following is not an Application of Fund?

14. When liability decreases it is a ________

15. Loss on sale of Fixed Assets / Investment will be shown on the credit side of adjusted profit and loss account.

16. The balances of Provision for Taxation were Rs. 20000 and Rs. 15000 in 2019 and 2020 respectively, if in the current year taxed paid were Rs. 10000 then what will be the current year provision for tax made from profit?

17. The proposed dividend for the Current Year would appear on the debit side of which account?

18. If the shares are issued at a premium during the year then the amount of premium received will appear as a _______

19. If we want to prepare the funds flow statement, we should have

20. Last year’s proposed dividend has been paid during the current year and hence will be shown as________

21. Any change in Current Liabilities will effect inverse change in the working capital.

22. From the following details find out the funds from operations: Net Profit after Tax Rs. 48,000 Depreciation Rs. 30,000 Loss on Sale of Outdated Machinary : Rs. 4000

23. From the following details find out the fund from operations PAT Rs. 2,500 Accumulated Depreciation Rs. 2,900 Retained Earning Rs. 4,200 Goodwill Written off Rs. 300 Profit on Sale of Fixed Assets Rs. 200

24. Funds Flow Statement indicates the necessity of arranging external funds in advance if projected outflow is more than inflow.

25. Any change in the Current assets is positively correlated to the change in working capital

26. Non-cash adjustments like Depreciation, Preliminary Expenses and Goodwill Written off are shown on the debit side of which account?

27. Part of Profit transferred to General Reserve will be shown on the debit side of _________

28. A projected Funds Flow Statement informs the management about

29. Funds Flow Statement can be prepared in which form?

30. Funds flow statement being based on ________________, which is of limited utility for future planning is a limitation of funds flow statement.

31. Which one of the following is NOT a theory of International Parity Relationship

32. Indirect Quotation is also known as ___________

33. The spread in a two way quotation is affected by

34. The Rate of Exchange applicable for delivery of Foreign Exchange at a future date is called ______

35. The act of arbitrage that involves three foreign currencies involving three different foreign exchange market is called __________

36. An option to buy is called a _______

37. ‘Speculators’ in the market _______________

38. Which one of the following is NOT a Foreign Exchange Risk Management Technique

39. Default risk is higher in which one of the following?

40. A financial instrument that provides its holder a right but no obligation to buy or sell a pre-specified amount of a foreign currency at a pre-determined rate is referred to as ____________

41. Establishment of new plants and offices overseas by MNC as a mean of FDI is

42. Hilton Hotels of United States opening a hotel in Mumbai, India is ____________

43. There are basically two approaches to find out NPV of a foreign based project’s capital budgeting exercise. Which are those two?

44. F1 = 𝑆1 𝑒 denotes

45. If there are no costs or other barriers associated with the movement of goods or services across countries, the price of each product should be the same in each country, after making appropriate currency conversions. It is called ____________ in Economics.

46. The current spot rate for the Euro is Rs. 86,the expected inflation rate is 5 in India and 3 in Europe. What is the expected Spot Rate of Euro one year hence?

47. When an Option can be exercised on any date up to maturity, it is called

48. Is it necessary for an organization to own 100 % of an overseas firm for its investment to be classified as an FDI?

49. Capital investment made by firms in another county is called______