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Quiz 7
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Q.1
Land, buildings, and factory fixed equipment are classified as
tangible asset
non-tangible assets
financial asset
financial liability
Q.2
Rate of return that an investment provides its investor is classified as
investment return rate
internal rate of return
international rate of return
intrinsic rate of return
Q.3
If profit margin = 4.5% and total assets turnover = 1.8% then return on assets DuPont equation would be
2.50%
8.10%
0.40%
4.00%
Q.4
High price to earning ratio shows company's
low dividends paid
high risk prospect
high growth prospect
high marginal rate
Q.5
Return on assets = 6.7% and equity multiplier = 2.5% then return on equity will be
16.75%
2.68%
0.37%
9.20%
Q.6
A formula such as net income available to common stockholders divided by common equity is used to calculate
return on earning power
return on investment
return on common equity
return on interest
Q.7
Companies that help to set benchmarks are classified as
competitive companies
benchmark companies
analytical companies
return companies
Q.8
Total assets divided common equity is a formula uses for calculating
equity multiplier
graphical multiplier
turnover multiplier
stock multiplier
Q.9
Securities with less predictable prices and have longer maturity time is considered as
cash equivalents
long-term investments
inventories
short-term investments
Q.10
Number of shares outstanding if it is divided by net income for using to calculate
earning per share
dividends per share
book value of share
market value of shares
Q.11
Purchase cost of assets over its useful life is classified as
appreciation
depreciation
appreciated assets
appreciated liabilities
Q.12
An equity multiplier is multiplied to return on assets to calculate
return on assets
return on multiplier
return on turnover
return on stock
Q.13
An annual estimated costs of assets uses up every year are included
depreciation and amortization
net sales
net profit
net income
Q.14
Proceeds of company shares of sold stock is recorded in
preferred stock account
common stock account
due stock account
preceded stock account
Q.15
Cost of new debt or marginal debt is also classified as
historical rate
embedded rate
marginal rate
Both A and B
Q.16
An income available for shareholders after deducting expenses and taxes from revenues is classified as
net income
net earnings
net expenses
net revenues
Q.17
Security present value is Rs 100 and future value is Rs 150 after 10 years and value of 'I = interest rate' will be
4.14%
0.59%
0.69%
0.79%
Q.18
Price per share divided by earnings per share is formula for calculating
price earning ratio
earning price ratio
pricing ratio
earning ratio
Q.19
Profit margin multiply assets turnover multiply equity multiplier is used to calculate
return on turnover
return on stock
return on assets
return on equity
Q.20
Difference between bond's yield and any other security yield having same maturities is considered as
maturity spread
bond spread
yield spread
interest spread
Q.21
Protective covenant devised in market to reduce event risk and to control debt cost is classified as
super poison covenant
super poison put
super poison call
super poison redemption
Q.22
In time value of money, nominal rate is
not shown on timeline
shown on timeline
multiplied on timeline
divided on timeline
Q.23
Value of net income is Rs 124,500,000 and common shares outstanding are Rs 60,000,000 then earning per share will be
Rs 2.75
Rs 0.48
Rs 2.08
Rs 2.80
Q.24
Price per share is Rs 25 and cash flow per share is Rs 6 then price to cash flow ratio would be
0.24 times
4.16 times
4.16%
24.00%
Q.25
Low price for earning ratio is result of
low risky firms
high risky firms
low dividends paid
high marginal rate
Q.26
Payment divided by par value is classified as
divisible payment
coupon payment
par payment
per period payment
Q.27
An official entity that represents bondholders and ensures stated rules in indenture is classified as
trustee
trust
stated entity
owner entity
Q.28
Statement of cash flows are included
operating activities
investing activities
financing activities
all of above
Q.29
Reinvestment risk of bonds is higher on
short maturity bonds
high maturity bonds
high premium bonds
high inflated bonds
Q.30
Bonds that have high liquidity premium are usually have
inflated trading
default free trading
less frequently traded
frequently traded
Q.31
Company low earning power and high interest cost cause financial changes which have
high return on equity
high return on assets
low return on assets
low return on equity
Q.32
Ratios which relate firm's stock to its book value per share, cash flow and earnings are classified as
return ratios
market value ratios
marginal ratios
equity ratios
Q.33
An equation in which total assets are multiplied to profit margin is classified as
du DuPont equation
turnover equation
preference equation
common equation
Q.34
Coupon rate of convertible bond is
higher
lower
variable
stable
Q.35
Rate denoted as r* is best classified as
real risk-free interest rate
real-risk free nominal rate
real-risk free quoted rate
real-risk free nominal premium
Q.36
An outstanding bonds are also classified as
standing bonds
outdated bonds
dated bonds
seasoned bonds
Q.37
Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be
26.73%
25.73%
9.40%
9.00%
Q.38
Formula such as net income available for common stockholders divided by total assets is used to calculate
return on total assets
return on total equity
return on debt
return on sales
Q.39
An annual interest payment divided by current price of bond is considered as
current yield
maturity yield
return yield
earning yield
Q.40
If coupon rate is more than current rate of interest then bond will be sold
More than its par value
Seasoned par value
At par value
Below its par value
Q.41
Call provision practiced by company which states that call price will be paid is classified as
super refund provision
super put redemption
make-whole call provision
super call provision
Q.42
Bond which is offered below its face value is classified as
present value bond
original issue discount bond
coupon issued bond
discounted bond
Q.43
Risk of fall in income due to fall in interest rates in future is classified as
income risk
investment risk
reinvestment risk
mature risk
Q.44
Redemption option which protects investors against rise in interest rate is considered as
redeemable at deferred
redeemable at par
redeemable at refund
redeemable at finding
Q.45
If coupon rate is equal to going rate of interest then bond will be sold
at par value
below its par value
more than its par value
seasoned par value
Q.46
An operating cash flows is Rs 12000 and gross fixed asset expenditure is Rs 5000 then free cash flow will be
-Rs 7,000.00
Rs 7,000.00
Rs 17,000.00
-Rs 17,000.00
Q.47
Cost which has occurred already and not affected by decisions is classified as
sunk cost
occurred cost
weighted cost
mean cost
Q.48
Situation in which company replaces existing assets with new assets is classified as
replacement projects
new projects
existing projects
internal projects
Q.49
Real interest rate and real cash flows do not include
equity effects
debt effects
inflation effects
opportunity effects
Q.50
Gross fixed asset expenditures is Rs 6000 and free cash flow is Rs 8000 then operating cash flows will be
-Rs 14,000.00
Rs 2,000.00
Rs 14,000.00
-Rs 2,000.00
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