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Quiz 6
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Q.1
The return after the pay off period is not considered in case of __________.
Payback period method
Interest rate method
Present value method
Discounted cash flow method
Q.2
___________ shifts the weights of securities in the portfolio to take advantage of areas that is expected to do relatively better than other areas.
portfolio management
market timing
momentum strategy
sector rotation
Q.3
The cash management refers to management of ___________.
cash only
cash and bank balances
cash and near cash assets
fixed assets
Q.4
A bond issue is broken up so that some investors will receive only interest payments while others will receive only principal payments, which is an example of ________.
bundling
un-bundling
financial engineering
credit enhancement
B & C
Q.5
__________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.
Financial management
Profit maximization
Agency theory
Social responsibility
Q.6
The long-run objective of financial management is to________.
maximize earnings per share
maximize the value of the firm's common stock
maximize return on investment
maximize market share
Q.7
____________dividend promises to pay shareholders at future date
Scrip
Cash
Stock
Property
Q.8
Non-systematic risk is also known as_____________.
riskless
market risk
random risk
company-specific risk
Q.9
Setup cost is a type of __________ cost.
fixed
variable
semi variable
carrying
Q.10
Bond risk premium is 3% and bond yield is 10.2% then cost of common stock will be
3.40%
13.20%
7.20%
30.60%
Q.11
Offering cash discount to customers result in _______.
reducing the average collection period
increasing the average collection period
increasing sales
decreasing sales
Q.12
The optimal portfolio is the efficient portfolio with the______________.
lowest risk
highest risk
highest utility
least investment
Q.13
Finance company providing loans at 12% with 2 compounding periods per year, periodic rate is classified as
3% per quarter
6% per quarter
6% per year
0.1667 % per year
Q.14
Accounts payable, accruals and notes payables are listed on balance sheet as
accrued liabilities
current liabilities
accumulated liabilities
non-current liabilities
Q.15
Portfolios lying on the upper right portion of the efficient frontier are likely to be chosen by_______________.
aggressive investors
conservative investors
risk-averse investors
defensive investors
Q.16
Miller- Orr Model is suitable in those circumstances when the ________.
Demand for cash is steady
Demand for cash is not steady
Carry cost and transaction cost are to be kept at minimum
Demand for cash is variable
Q.17
__________ is concerned with the maximization of a firm's stock price.
Shareholder wealth maximization
Profit maximization
Stakeholder welfare maximization
EPS maximization
Q.18
Left side of balance sheet states the
appreciated earnings
liabilities
assets
stocks earnings
Q.19
Method of inventory recording gives lower cost of goods sold in income statement is classified as
last in first out
last out receivable
First out receivable
First in first out
Q.20
Under the P/E model, stock price is a product of_____________.
EPS and DPS
P/E ratio and EPS
EPS and required return
P/E ratio and required return
Q.21
The amount of the temporary working capital __________.
keeps on fluctuating from time to time
remains constant for all times
financed through long term services
none of the above.
Q.22
Noncash revenues and noncash charges if it subtracted from net income is equal to
free cash flow
retained cash flow
net cash flow
financing cash flow
Q.23
A higher accounts receivable turnover ratio means__________.
lower debt collection period
higher debt collection period
lower sales
higher sales
Q.24
Market risk is best measured by the____________.
alpha
beta
standard deviation
coefficient of variation
Q.25
A loan that is repaid on monthly, quarterly and annual basis in equal payments is classified as
amortized loan
depreciated loan
appreciated loan
repaid payments
Q.26
An interest rate is 5%, number of period are 3, and present value is Rs 100,and then future value will be
115.76
105.00
110.25
113.56
Q.27
The Markowitz model assumes most investors are_____________.
risk averse
risk neutral
risk seekers
risk moderators
Q.28
Intangible assets such as copyrights, trademarks and patents are applicable for
depreciation
amortization
stock amortization
perishable assets
Q.29
A schedule which shows interest constitutes reduced principal and unpaid balance is considered as
repaid schedule
depreciated schedule
amortization schedule
appreciated schedule
Q.30
Process of calculating future value of money from present value is classified as
compounding
discounting
money value
stock value
Q.31
A company purchases goods but does not pay payments to suppliers immediately and record them as
account payable
account receivable
current liabilities
accumulated liabilities
Q.32
Type of interest rates consist of
nominal rates
periodic rates
effective annual rates
all of above
Q.33
Future value of interest if it is calculated once a year is classified as
One time compounding
annual compounding
semi-annual compounding
monthly compounding
Q.34
An information uses by investors for expecting future earnings is all recorded in
five years report
annual report
stock report
exchange report
Q.35
In calculation of net cash flow, deferred tax payments are classified as
non-cash revenues
non-cash charges
current liabilities
income expense
Q.36
A method of inventory recording which produces high inventories in balance sheet is classified as
First out receivable
First in first out
Last in first out
last out receivable
Q.37
Price earning ratio and price by cash flow ratio are classified as
marginal ratios
equity ratios
return ratios
market value ratios
Q.38
Return on assets = 5.5%, Total assets Rs 3,000 and common equity Rs 1,050 then return on equity would be
Rs 22,275.00
15.71%
1.93%
1.925 times
Q.39
A techniques uses to identify financial statements trends are included
common size analysis
percent change analysis
returning ratios analysis
Both A and B
Q.40
Net income available to stockholders is Rs 150 and total assets are Rs 2,100 then return on total assets would be
0.07%
7.14%
0.05 times
7.15 times
Q.41
Stockholders that do not get benefits even if company's earnings grow are classified as
preferred stockholders
common stockholders
hybrid stockholders
debt holders
Q.42
In balance sheet, sum of retained earnings and common stock are considered as
preferred equity
due equity
common perpetuity
common equity
Q.43
Process of comparing company results with other leading firms is considered as
comparison
analysis
benchmarking
return analysis
Q.44
Net income is Rs 2250 and noncash charges are Rs 1150 then net cash flow would be
Rs 1,100.00
Rs 3,400.00
Rs 2,200.00
Rs 3,500.00
Q.45
Lottery payoffs and payment for rental apartments are examples of
lump sum amount
deferred annuity
annuity due
payment fixed series
Q.46
If common shares outstanding are 50,000,000 and book value per share is Rs 19.92 then total common equity will be
Rs 996,000,000.00
Rs 995,000,000.00
Rs 992,000,000.00
Rs 991,000,000.00
Q.47
In calculation of net cash flow, depreciation and amortization are treated as
current liabilities
income expenses
non-cash revenues
non-cash charges
Q.48
Payments if it is made at end of each period such as an end of year is classified as
ordinary annuity
deferred annuity
annuity due
Both A and B
Q.49
An interest rate which is paid by money borrower and charged by lender is considered as
annual rate
periodic rate
perpetuity rate of return
annuity rate of return
Q.50
In calculation of time value of money, 'PMT' represents
present money tracking
payment
payment money tracking
future money payment
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