1. All business need to have which fundamental essential element
Correct : D. stategy
2. Which of the following variable is not known in IRR?
Correct : A. discount rate
3. Acccording to the traditional approach what is the effect of increase in degree of leverage on the valuation of the firm
Correct : B. increase first and then decreases
4. The maximum expenses that an equity scheme charge to an investor is ____________
Correct : A. 0.025
5. The bonds with shorter maturity will have ______ duration
Correct : C. lower
6. Relaxed or libral credit implies -credit to customers
Correct : A. higher
7. Objectives of financial planning are
Correct : A. determining capital structure
8. PI of project is the ratio of present value of inflows to-
Correct : C. pv of outflows
9. Bird in hand - argument is given by
Correct : D. gordon\s model
10. When the required rate of return is less than the coupon rate the premium on the bond-
Correct : C. declines
11. Evaluation of firms credit policy can be done by computing expected ___________ from it
Correct : A. net benefit
12. All listed and traded securities are valued at _______
Correct : D. closing market price
13. Financial manager would not supervise on the following area
Correct : C. financial accounting and auditing
14. In case of risky projects the required rate of return would generally be-
Correct : D. higher
15. Residuals theory argues that dividend is as -
Correct : A. passive decision
16. Investors subscriptions are accounted as _____________
Correct : D. unit capital
17. Face value is the value stated on the face of the bond and is known as-
Correct : B. per value
18. _________Policy refers to the procedure follow to collect accounts receivable after the expiry of the credit period
Correct : B. collection
19. Financial mananger would play the role of __________ in area of finance
Correct : A. budget analyst
20. Accountng rate of return is based on _____________
Correct : B. average expected profit
21. MM model of dividend irrelevance uses arbitrage between-
Correct : A. dividend and capital issue
22. __________ Can be traded thourgh out the trading day at market prices
Correct : C. etf
23. Intrinsic value of a bond is ______________ vlaue of the all future cash flows
Correct : B. present
24. ______ Means the basic criteria for the extension of credit to customers
Correct : A. credit standards
25. The Presence of Taxes in capital budgeting analysis will cause ___________
Correct : C. the irr to decrease
26. _____________ refers to the price at which an asset can be traded in the market
Correct : C. market value
27. __________ is a blending of two or more exisiting undertaking into one undertaking
Correct : D. amalgamation
28. _____________ Means the action of an organisation or government selling or liquidating an asset or subsidiary
Correct : B. disinvestment
29. _________The lessee and the owner of the equipment are two different entities
Correct : A. direct lease
30. ___________ is the primary institutional source of working capital finance in India
Correct : C. bank credit
31. __________ means reputation of a firm which is in existance for a number of year in market
Correct : A. goodwill
32. ___________ involves mergers and acquisition of firm belonging to differernt countries of the world.
Correct : C. cross bordor merger
33. _______________Is a entity formed by two or more companies to undertake financial activity together.
Correct : C. joint venture
34. In a __________ transaction the goods are let on hire the purchase price is to be paid in installment and hirer is allowed an option to purchase the goods by paying all the installment
Correct : A. hire purchase
35. The arrengement in which entire amount of borrowing is credited to the current account of the borrower or realised in cash is called as_________
Correct : C. loan
36. Book value ( Net assets )= Total Assets - _______________
Correct : C. long term debt
37. ____________ synergy refers to increase in the value of the firm that occurs to the combined firm from financial factors.
Correct : C. financial
38. The kind of takeover which is done through negotiations between two groups is called_________
Correct : C. friendly take over
39. From the point of view lessee, a lease is a_________
Correct : A. financing decision
40. ____________ indirect form of working capital financing and bank assume only the risk the credit being provided by the supplier himself
Correct : B. letter of credit
41. EVA= ___________ - (Equity capital x % of cost of equity capital
Correct : B. net operating profit after tax
42. ___________ is the ratio of the number of shares of the aquiring firm and the selling firm's share
Correct : C. exchange ratio
43. Which of the follwing is not a usual method of calculation of share swap ratio?
Correct : B. economic value added
44. Sale and lease back and ____________ are types of finance lease
Correct : C. leverage lease
45. ________ are taken as an additional security for working capital credit by banks
Correct : C. mortgage
46. ___________ value is used when an investor wants true or real value on basis of analysis of fundamentals without considering the prevailing price in the market
Correct : A. intrinsic
47. EPS = ___________ / Total number of shares
Correct : B. net profit after interest and tax
48. _________ classifies merger as vertical and horizontal
Correct : A. as14
49. Treatment of _______ in AS 19 is almost same as required by tax laws in India
Correct : A. operating lease
50. _____________ has suggested three methods of working out of the maximum amount that unit may expect from the bank (MPBF)
Correct : A. tondon committee
51. The appropriate objective of an enterprise is;
Correct : B. Maximisation of owners wealth.
52. The job of a finance manager is confined to
Correct : C. Raising of funds and their effective utilization.
53. Financial decision involve;
Correct : A. Investment ,financing and dividend decision
54. Net Profit Ratio Signifies:
Correct : A. Operational Profitability
55. Working Capital Turnover measures the relationship of Working Capital with:
Correct : A. Fixed Assets
56. Dividend Payout Ratio is:
Correct : B. DPS ÷ EPS
57. Inventory Turnover measures the relationship of inventory with:
Correct : B. Cost of Goods Sold
58. The term 'EVA' is used for:
Correct : B. Economic Value Added
59. Return on Investment may be improved by:
Correct : D. All of the above
60. In Current Ratio, Current Assets are compared with:
Correct : B. Current Liabilities
61. There is deterioration in the management of working capital of XYZ Ltd. What does it
refer to?
Correct : C. That debtors collection period has increased,
62. Debt to Total Assets Ratio can be improved by:
Correct : D. Redemption of Debt.
63. Ratio of Net Income to Number of Equity Shares known as:
Correct : C. Earnings per Share
64. A Current Ratio of Less than One means:
Correct : C. Current Assets < Current Liabilities
65. A firm has Capital of 10,00,000; Sales of 5,00,000; Gross Profit of . 2,00,000 and
Expenses of . 1,00,000. What is the Net Profit Ratio?
Correct : A. 20%
66. Suppliers and Creditors of a firm are interested in
Correct : B. Liquidity Position
67. Which of the following is a measure of Debt Service capacity of a firm?
Correct : C. Interest Coverage Ratio
68. Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The
reason for such behavior could be:
Correct : B. If Increase in Expense
69. Which of the following statements is correct?
Correct : D. Lower Debt-Equity Ratio means lower Financial Risk.
70. Debt to Total Assets of a firm is .2. The Debt to Equity boo would be:
Correct : B. 0.25
71. Which of the following helps analysing return to equity Shareholders?
Correct : B. Earnings Per Share
72. In Inventory Turnover calculation, what is taken in the numerator?
Correct : B. Cost of Goods Sold,
73. Financial Planning deals with:
Correct : C. Preparing Budgets
74. Financial planning starts with the preparation of:
Correct : D. None of the above.
75. Process of Financial Planning ends with:
Correct : C. Comparison of Actual with Projected
76. Capital Budgeting is a part of:
Correct : A. Investment Decision
77. Capital Budgeting deals with:
Correct : A. Long-term Decisions
78. Which of the following is not used in Capital Budgeting?
Correct : C. Net Assets Method
79. Capital Budgeting Decisions are:
Correct : B. Irreversible
80. Which of the following is not incorporated in Capital Budgeting?
Correct : D. Rate of Cash Discount
81. Which of the following is not a capital budgeting decision?
Correct : D. Inventory Level
82. A sound Capital Budgeting technique is based on:
Correct : B. Accounting Profit
83. Which of the following is not a relevant cost in Capital Budgeting?
Correct : D. Both (a) and (c) above.
84. Capital Budgeting Decisions are based on:
Correct : B. Incremental Cash Flows
85. Which of the following does not effect cash flows proposal?
Correct : D. Method of Project Financing
86. Cash Inflows from a project include:
Correct : D. Both (a) and (b)
87. Which of the following is not true with reference capital budgeting?
Correct : C. Existing investment in a project is not treated as sunk cost,
88. Which of the following is not followed in capital budgeting?
Correct : C. Accrual Principle
89. Depreciation is incorporated in cash flows because it:
Correct : C. Reduces Tax liability
90. Which of the following is not true for capital budgeting?
Correct : B. Opportunity costs are excluded,
91. Which of the following is not applied in capital budgeting?
Correct : C. All accrued costs and revenues be incorporated,
92. Evaluation of Capital Budgeting Proposals is based on Cash Flows because:
Correct : C. Cash is more important than profit
93. Which of the following is not included in incremental A flows?
Correct : B. Sunk Costs
94. A proposal is not a Capital Budgeting proposal if it:
Correct : C. brings short-term benefits only
95. In Capital Budgeting, Sunk cost is excluded because it is:
Correct : B. not incremental
96. Savings in respect of a cost is treated in capital budgeting as:
Correct : A. An Inflow
97. In capital budgeting, the term Capital Rationing implies:
Correct : B. That limited funds are available for investment
98. Feasibility Set Approach to Capital Rationing can be applied in:
Correct : A. Accept-Reject Situations
99. In case of divisible projects, which of the following can be used to attain maximum
NPV?
Correct : C. Profitability Index Approach
100. In case of the indivisible projects, which of the following may not give the optimum
result?