Finance Management (Computer's Eng..) MCQ's




Question 61 :
Which one of the following statements is correct concerning the weighted average cost of capital (WACC)?

  1. The WACC may decrease as a firm's debt-equity ratio increases.
  2. 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.
  3. A firm's WACC will decrease as the corporate tax rate decreases.
  4. 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 62 :
_________________are a long-term promissory notes with maturities ranging from 5 to 30 years.

  1. Notes
  2. Shares
  3. Bonds
  4. Commercial Papers
  

Question 63 :
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 _____________

  1. Rule of 415
  2. Rule of 72
  3. Rule of 78
  4. Rule of 144
  

Question 64 :
Capital Budgeting Decisions are:

  1. Reversible
  2. irreversible
  3. Unimportant
  4. not required
  

Question 65 :
Assume that Project X costs ₹ 2,500 now and is expected to generate year-end cash inflows of ₹ 900, ₹ 800, ₹ 700, ₹ 600 and ₹ 500 in years 1 through 5. The opportunity cost of the capital may be assumed to be 10 per cent. Calculate the NPV?

  1. 250
  2. 225
  3. 325
  4. 275
  

Question 66 :
The costs of goods sold is also called _______

  1. Cost of sales
  2. Cost of goods produced during accounting period.
  3. Direct material cost
  4. Direct labour cost
  

Question 67 :
Net sales are generally defined as ___________

  1. Sales-Sales return -Excise duty
  2. Sales and gross profit
  3. Cost of goods sold
  4. Cost of goods sold
  

Question 68 :
The capital structure that maximizes the value of a firm also:

  1. Minimizes financial distress costs
  2. Minimizes the cost of capital
  3. Maximizes the present value of the tax shield on debt
  4. Maximizes the value of the debt
  

Question 69 :
Diversifiable risk is caused by

  1. Success of marketing programs, winning or losing a major contract
  2. War, inflation
  3. Recessions
  4. floods
  

Question 70 :
Which of the following techniques does not take into account the time value of money?

  1. Internal rate of return method
  2. Discounted cash payback method
  3. Net present value method
  4. Simple cash payback method
  

Question 71 :
Which of the following option is considered as current liabilities?

  1. Bills recievables
  2. Sundry creditors
  3. Advance payments
  4. Sundry debtors
  

Question 72 :
_______________ and _______________ are the two versions of goals of the financial management of the firm.

  1. Profit maximisation, Wealth maximization
  2. Value maximisation, Wealth maximisation
  3. Sales maximisation, Profit maximization
  4. Production maximisation, Sales maximisation
  

Question 73 :
Consider the following data on a proposed investment: Investment required: Rs. 160,000, Annual cash inflows: Rs. 40,000, Life of the investment: 6 years, Salvage value: 0, Discount rate: 10% Based on the above data, what is the payback period of the proposed investment project?

  1. 5 years
  2. 3 years
  3. 4 years
  4. 0.25 years
  

Question 74 :
Calculate the return for a stock that earned a Rs. 27 profit per share based on a sale price of Rs104 per share.

  1. 3.8519
  2. 1
  3. 0.0319
  4. 0.3506
  

Question 75 :
ABC Ltd is considering undertaking a project that would yield average annual profits (after depreciation) of Rs. 68,000 for 5 years. The initial outlay of the project would be Rs. 800,000. What would be the accounting rate of return for this project?

  1. 0.17
  2. 0.085
  3. 0.08
  4. 0.091
  

Question 76 :
What is the period of Financial statement in india?

  1. 1st January to 31st December in the same year
  2. 1st July in the first year to 30th June in the next year
  3. 1st April in the first year to 31st March in the next year
  4. Any period during the same year
  

Question 77 :
Exchange Traded Funds are part of

  1. Private Placement
  2. Secondary Market
  3. Domestic Market
  4. Derivatives Market
  

Question 78 :
____________ is the length of time between the firm’s actual cash expenditure and its own cash receipt.

  1. Net operating cycle
  2. Cash conversion cycle
  3. Working capital cycle
  4. Gross operating cycle
  

Question 79 :
What is the present value of a Rs. 1,000 ordinary annuity that earns 8% annually for a period of 10 years?

  1. Rs. 6500
  2. Rs. 6710
  3. Rs. 6750
  4. Rs. 6170
  

Question 80 :
A borrower offers 16 per cent nominal rate of interest with quarterly compounding. What is the effective rate of interest ?

  1. 16
  2. 17
  3. 18
  4. 20
  

Question 81 :
Given an investment of Rs. 10,000 for a period of one year, it is better to invest in a scheme that pays:

  1. 12% interest compounded daily
  2. 12% interest compounded monthly
  3. 12% interest compounded annually
  4. 12% interest compounded quarterly
  

Question 82 :
Which of the following statements is not true with regard to Call money?Select correct one

  1. It is short-term finance repayable on demand
  2. There is a direct relationship between call rates and other short-term money market instruments.
  3. Its maturity period ranges from one day to fifteen days
  4. It is used for inter-bank transactions
  

Question 83 :
Which of the following statements about financial markets and securities are false?

  1. Few common stocks are traded over-the-counter, although the over-the-counter markets have grown in recent years
  2. A corporation acquires new funds only when its securities are sold in the primary market
  3. Capital market securities are usually more widely traded than longer term securities and so tend to be more liquid
  4. Financial Markets and securities are not standardised and not regulated
  

Question 84 :
Which of the following is not a part of Non-discounted cash flow criteria –

  1. Payback
  2. Discounted payback
  3. Accounting rate of return
  4. Net Present Value
  

Question 85 :
Which of the following are long-term financial instruments?

  1. A negotiable certificate of deposit
  2. A banker’s acceptance
  3. A U.S. Treasury bond
  4. A U.S. Treasury bill
  

Question 86 :
The annual demand for a product is 10,000 units. The cost per item is Rs.20 and inventory carrying cost per unit per annum is 5%. If the cost of order is Rs. 200 per order, determine: Economic Order Quantity (EOQ)

  1. 1000
  2. 1500
  3. 2000
  4. 5000
  

Question 87 :
What is the definition of Gross Profit Margin Ratio?

  1. difference of net sales and cost of goods sold , divided by Net sales
  2. Operating profit divided net sales
  3. Net Profit / Net sales
  4. Profit after Tax / Average Total assets
  

Question 88 :
Accounts receivable is also known as ______

  1. Sundry debtors
  2. Sundry creditors
  3. Net cash
  4. Gross profit
  

Question 89 :
The gross profit margin is unchanged, but the net profit margin declined over the same period. This could have happened if

  1. cost of goods sold increased relative to sales.
  2. sales increased relative to expenses
  3. Govt. increased the tax rate
  4. dividends were decreased.
  

Question 90 :
Which of the following is true for MM Model?

  1. Share price goes up if dividend is paid
  2. Share price goes down if dividend is paid
  3. Market value is unaffected by Dividend policy
  4. Share price goes up if dividend is not paid
  
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