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Q.1
Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be
11.95%
6.88%
13.05%
22.72%
Q.2
Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate
transaction cost of preferred stock
financing of preferred stock
weighted cost of capital
component cost of preferred stock
Q.3
Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be
0.1123 times
11.23%
11.23 times
Rs 11.23
Q.4
In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as
payout ratio
payback ratio
growth retention ratio
present value of ratio
Q.5
In weighted average cost of capital, rising in interest rate leads to
increase in cost of debt
increase capital structure
decrease in cost of debt
decrease capital structure
Q.6
Corner portfolio are calculated where a ___________.
Security enters
Security leaves
Security enters or leave
Security with high extreme value enters
Q.7
The relationship between potential unsystematic risk and reward is given by ___________.
Excess return to beta ratio
Excess return to security
Excess return to security
Excess return to beta square ratio
Q.8
A technique uses in comparative analysis of financial statement is
graphical analysis
preference analysis
common size analysis
returning analysis
Q.9
In weighted average capital, capital structure weights estimation does not rely on value of
investor's equity
market value of equity
book value of equity
stock equity
Q.10
Interest rates, tax rates and market risk premium are factors which an/a
industry cannot control
industry cannot control
firm must control
firm cannot control
Q.11
Net income available to stockholders is Rs 125 and total assets are Rs 1,096 then return on common equity would be
0.11%
11.40%
0.12 times
12.00%
Q.12
Price per share is Rs 30 and an earning per share is Rs 3.5 then price for earning ratio would be
8.57 times
8.57%
0.11 times
11.00%
Q.13
For each component of capital, a required rate of return is considered as
component cost
evaluating cost
asset cost
asset depreciation value
Q.14
If payout ratio is 0.45 then retention ratio will be
0.55
1.45
1.82
0.45
Q.15
An inflation rate includes in bond's interest rates is one which is inflation rate
at bond issuance
expected in future
expected at time of maturity
expected at deferred call
Q.16
Stock selling price is Rs 35, expected dividend is Rs 5 and expected growth rate is 8% then cost of common stock would be
40.00%
22.29%
14.28%
80.00%
Q.17
Non cash revenues are Rs 500,000 and net income is Rs 950,000 then net cash flow would be
Rs 475,000.00
Rs 485,000.00
Rs 1,450,000.00
Rs 450,000.00
Q.18
Cash and equivalents, inventories and accounts receivables are classified as
assets on balance sheet
liabilities on balance sheet
earnings on income statement
payments on income statement
Q.19
A premium charged by lenders for securities that cannot be converted into cash is classified as
required premium
liquidity premium
marketability premium
Both B and C
Q.20
An unsecured bond that provides no lien against property as security for bond obligation is classified as
secured bond
debenture
obligation bond
specific bond
Q.21
Unsecured bonds which is designated for only notes payable or all other debts are classified as
designated bonds
payable bonds
ordinate bonds
subordinated bonds
Q.22
In situation of bankruptcy, stock which is recorded above common stock and below debt account is
debt liabilities
preferred stock
hybrid stock
common liabilities
Q.23
If security pays Rs 5,000 in 20 years with 7% annual interest rate, PV of security by using formula is
Rs 1,290.10
Rs 1,292.10
Rs 1,295.10
Rs 1,297.10
Q.24
An interest rate which is quoted by brokers, banks and other financial institutions is classified as
annuity rate
perpetuity rate
nominal rate
external rate of return
Q.25
Company who sells products to customer without demanding immediate payment but record it in balance sheet as
account payable
account receivable
account equivalent
account investment
Q.26
A market interest rate for specific type of bond is classified as bonds
required rate of return
required option
required rate of redemption
required rate of earning
Q.27
Speculators in the futures markets_____________.
make the market more volatile
contribute liquidity to the market
engage mainly in short sales
serve no real economic function
Q.28
Which of the following is/are the problem(s) encountered in financial statement analysis?
Development of benchmarks
Window dressing
Interpretation of results
All of the above
Q.29
Nominal rate which is quoted to consumers on loans is considered as
annual percentage rate
annual rate of return
loan rate of return
local rate of return
Q.30
An inventory recording in balance sheet includes
First in first out
Last in first out
last in last out
Both A and B
Q.31
Values recorded as determined in marketplace are considered as
market values
book values
appreciated values
depreciated values
Q.32
A major difference between individual and institutional investors is their very different_______.
approaches to market analysis
evaluations of return
time horizons
types of securities held in their portfolios
Q.33
Earnings Per Share (EPS) is equal to __________.
Profit before tax/No of outstanding shares
Profit after tax/No of outstanding shares
Profit after tax/Amount of equity share capital
Profit after tax less equity dividends/No of outstanding shares
Q.34
__________ are a way U. S. investors can invest in foreign companies.
ADRs
IRAs
SDRs
GNMAs
Q.35
A type of security payment in which payments are made at equal intervals of time and each payment amount is same is classified as
fixed interval investment
fixed payment investment
annuity
lump sum amount
Q.36
Portfolio risk is best measured by the______________.
expected value
portfolio beta
weighted average of individual risk
standard deviation
Q.37
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 dollars profits earned by the firm
Q.38
Markowitz's main contribution to portfolio theory is___________.
that risk is the same for each type of financial asset
that risk is a function of credit, liquidity and market factors
risk is not quantifiable
insight about the relative importance of variances and co variances in determining portfolio risk
Q.39
Owning two securities instead of one will not reduce the risk taken by an investor if the two securities are______________.
perfectly positively correlated with each other
perfectly independent of each other
perfectly negatively correlated with each other
of the same category, eg blue chips
Q.40
Transfer through institutions such as mutual funds or banks are classified as
non-financial intermediary
financial intermediary
savers intermediary
discounted intermediary
Q.41
Money lends to corporations by banks is classified as
Eurodollar market deposits
commercial loans
consumer credit loans
consumer credit loans
Q.42
The market price of a share of common stock is determined by ___________.
the board of directors of the firm
the stock exchange on which the stock is listed
the president of the company
individuals buying and selling the stock
Q.43
Markets in which outstanding securities are traded by investors are classified as
primary markets
secondary markets
initial public offering market
stock market
Q.44
Professionals such as doctors, accountants and lawyers often make corporations are classified as
general professionals
Professional Corporation
professional association
Both B and C
Q.45
Markets which deals with high liquid and short term debt securities are classified as
capital markets
money markets
liquid markets
short-term markets
Q.46
Low default-risk security issued by financially secure firms is classified as
U.S treasury bills
commercial paper
certificate of deposit
mutual funds
Q.47
Document in a corporation which consists of amount of stock, name and addresses of directors is classified as
liability plan
stock planning
corporation paperwork
charter
Q.48
A price for equity is called
interest rate
cost of equity
debt rate
investment return
Q.49
Risk in which value of investment depends on what happens to foreign exchange rates is classified as
preferred risk
exchange rate risk
country risk
foreign risk
Q.50
Firm's promise to pay and is backed or guaranteed by bank is classified as
customer's acceptance
banker's acceptance
federal acceptance
treasury acceptance
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