MCQOPTIONS
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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Nominal rate which is quoted to consumers on loans is considered as |
| A. | annual percentage rate |
| B. | annual rate of return |
| C. | loan rate of return |
| D. | local rate of return |
| Answer» B. annual rate of return | |
| 2. |
Cash and equivalents, inventories and accounts receivables are classified as |
| A. | assets on balance sheet |
| B. | liabilities on balance sheet |
| C. | earnings on income statement |
| D. | payments on income statement |
| Answer» B. liabilities on balance sheet | |
| 3. |
Type of interest rates consist of |
| A. | nominal rates |
| B. | periodic rates |
| C. | effective annual rates |
| D. | all of above |
| Answer» E. | |
| 4. |
Rate of return which is required to satisfy stockholders and debt holders is classified as |
| A. | weighted average cost of interest |
| B. | weighted average cost of capital |
| C. | weighted average salvage value |
| D. | mean cost of capital |
| Answer» C. weighted average salvage value | |
| 5. |
In cash flow estimation, depreciation is considered as |
| A. | cash charge |
| B. | noncash charge |
| C. | cash flow discounts |
| D. | net salvage discount |
| Answer» C. cash flow discounts | |
| 6. |
Gross fixed asset expenditures is Rs 6000 and free cash flow is Rs 8000 then operating cash flows will be |
| A. | -Rs 14,000.00 |
| B. | Rs 2,000.00 |
| C. | Rs 14,000.00 |
| D. | -Rs 2,000.00 |
| Answer» C. Rs 14,000.00 | |
| 7. |
Cost which has occurred already and not affected by decisions is classified as |
| A. | sunk cost |
| B. | occurred cost |
| C. | weighted cost |
| D. | mean cost |
| Answer» B. occurred cost | |
| 8. |
The objective of financial management is to ______________. |
| A. | generate the maximum net profit |
| B. | generate the maximum retained earnings |
| C. | generate the maximum wealth for its shareholders |
| D. | generate maximum funds for the firm at the least cost. |
| Answer» D. generate maximum funds for the firm at the least cost. | |
| 9. |
Bonus share are not permitted unless the ____________ shares, if any, are made fully-paid. |
| A. | partly paid |
| B. | semi paid |
| C. | fully paid |
| D. | unpaid |
| Answer» B. semi paid | |
| 10. |
Marketable securities are primarily________. |
| A. | short-term debt instruments |
| B. | short-term equity securities |
| C. | long-term debt instruments |
| D. | long-term equity securities |
| Answer» B. short-term equity securities | |
| 11. |
Re-order level is ____________than safety level. |
| A. | higher |
| B. | lower |
| C. | medium |
| D. | fixed |
| Answer» B. lower | |
| 12. |
For which of the following factors are the debentures more attractive to the investors? |
| A. | The principal is redeemable at maturity |
| B. | A debenture-holder enjoys prior claim on the assets of the company over its shareholders in the event of liquidation |
| C. | trustee is appointed to preserve the interest of the debenture holders |
| D. | All the above. |
| Answer» E. | |
| 13. |
Capital budgeting is related to ________. |
| A. | long terms assets |
| B. | short term assets |
| C. | long terms and short terms assets |
| D. | fixed assets |
| Answer» B. short term assets | |
| 14. |
Future value interest factor takes ____________. |
| A. | Compounding rate |
| B. | Discounting rate |
| C. | Inflation rate |
| D. | Deflation rate |
| Answer» B. Discounting rate | |
| 15. |
Cash inflows are revenues of project and are represented by |
| A. | hurdle number |
| B. | relative number |
| C. | negative numbers |
| D. | positive numbers |
| Answer» E. | |
| 16. |
Required increasing in current assets and an increasing in current liabilities is subtracted to calculate |
| A. | change in net working capital |
| B. | change in current assets |
| C. | change in current liabilities |
| D. | change in depreciation |
| Answer» B. change in current assets | |
| 17. |
An example of a derivative security is ______. |
| A. | a common share of General Motors |
| B. | a call option on Mobil stock |
| C. | a commodity futures contract |
| D. | B and C |
| Answer» E. | |
| 18. |
Relevant cash flow which company expects when its will implement project is classified as |
| A. | irrelevant cash flow |
| B. | relevant cash flow |
| C. | incremental cash flow |
| D. | decrease cash flow |
| Answer» D. decrease cash flow | |
| 19. |
The company's cost of capital is called ________. |
| A. | Leverage |
| B. | Hurdle rate |
| C. | Risk rate |
| D. | Return rate |
| Answer» C. Risk rate | |
| 20. |
Situation in which new business reduces an existing business of firm is classified as |
| A. | non-cannibalization effect |
| B. | cannibalization effect |
| C. | external effect |
| D. | internal effect |
| Answer» C. external effect | |
| 21. |
The largest single institutional owner of common stocks is________. |
| A. | mutual funds |
| B. | insurance companies |
| C. | pension funds |
| D. | commercial banks |
| Answer» B. insurance companies | |
| 22. |
Treasury bills are traded in the __________. |
| A. | money market |
| B. | capital market |
| C. | government market |
| D. | regulated market |
| Answer» B. capital market | |
| 23. |
Dividends are paid________________. |
| A. | monthly |
| B. | quarterly |
| C. | semi-annually |
| D. | yearly |
| Answer» E. | |
| 24. |
When a company uses debt fund in its financial structure, it will lead to a change in |
| A. | Financial leverage |
| B. | Operating leverage |
| C. | Money market leverage |
| D. | Stock market leverage |
| Answer» B. Operating leverage | |
| 25. |
Falling interest rate leads change to bondholder income which is |
| A. | reduction in income |
| B. | increment in income |
| C. | matured income |
| D. | frequent income |
| Answer» B. increment in income | |
| 26. |
Bonds that have high liquidity premium are usually have |
| A. | inflated trading |
| B. | default free trading |
| C. | less frequently traded |
| D. | frequently traded |
| Answer» D. frequently traded | |
| 27. |
Low price for earning ratio is result of |
| A. | low risky firms |
| B. | high risky firms |
| C. | low dividends paid |
| D. | high marginal rate |
| Answer» B. high risky firms | |
| 28. |
Investors can normally afford to assume larger risks in the ____ phase of the life- cycle. |
| A. | accumulation |
| B. | consolidation |
| C. | spending |
| D. | gifting |
| Answer» C. spending | |
| 29. |
Discounted cash flow analysis is also classified as |
| A. | time value of stock |
| B. | time value of money |
| C. | time value of bonds |
| D. | time value of treasury bonds |
| Answer» C. time value of bonds | |
| 30. |
Which exchange member is assigned to a specific trading post? |
| A. | Commission broker |
| B. | Floor trader |
| C. | Specialist |
| D. | Dealer |
| Answer» D. Dealer | |
| 31. |
The long-run objective of financial management is to________. |
| A. | maximize earnings per share |
| B. | maximize the value of the firm's common stock |
| C. | maximize return on investment |
| D. | maximize market share |
| Answer» C. maximize return on investment | |
| 32. |
A premium charged by lenders for securities that cannot be converted into cash is classified as |
| A. | required premium |
| B. | liquidity premium |
| C. | marketability premium |
| D. | Both B and C |
| Answer» E. | |
| 33. |
Growth in earnings per share is primarily resultant of growth in |
| A. | dividends |
| B. | asset value |
| C. | fundamental value |
| D. | yearly value |
| Answer» B. asset value | |
| 34. |
Risk per unit of return or stand alone risk is represented by |
| A. | coefficient of standard |
| B. | coefficient of return |
| C. | coefficient of variation |
| D. | coefficient of deviation |
| Answer» D. coefficient of deviation | |
| 35. |
An individual stock required return is equal to risk free rate plus bearing risk premium is an explanation of |
| A. | security market line |
| B. | capital market line |
| C. | aggregate market line |
| D. | beta market line |
| Answer» B. capital market line | |
| 36. |
Current value of portfolio is Rs 550 and to cover an obligation of call option is Rs 200 then value of stock would be |
| A. | Rs 350.00 |
| B. | Rs 275.00 |
| C. | Rs 750.00 |
| D. | Rs 1,000.00 |
| Answer» D. Rs 1,000.00 | |
| 37. |
A price for equity is called |
| A. | interest rate |
| B. | cost of equity |
| C. | debt rate |
| D. | investment return |
| Answer» C. debt rate | |
| 38. |
Financial Management is mainly concerned with ______________. |
| A. | All aspects of acquiring and utilizing financial resources for firms activities |
| B. | Arrangement of funds |
| C. | Efficient Management of every business |
| D. | Profit maximization |
| Answer» B. Arrangement of funds | |
| 39. |
An official entity that represents bondholders and ensures stated rules in indenture is classified as |
| A. | trustee |
| B. | trust |
| C. | stated entity |
| D. | owner entity |
| Answer» B. trust | |
| 40. |
Protective covenant devised in market to reduce event risk and to control debt cost is classified as |
| A. | super poison covenant |
| B. | super poison put |
| C. | super poison call |
| D. | super poison redemption |
| Answer» C. super poison call | |
| 41. |
Real risk-free rate is applicable when it is expected that there will be |
| A. | high inflation |
| B. | low inflation |
| C. | no inflation |
| D. | none of above |
| Answer» E. | |
| 42. |
Cost of new debt or marginal debt is also classified as |
| A. | historical rate |
| B. | embedded rate |
| C. | marginal rate |
| D. | Both A and B |
| Answer» E. | |
| 43. |
In estimating value of cash flows, compounded future value is classified as its |
| A. | terminal value |
| B. | existed value |
| C. | quit value |
| D. | relative value |
| Answer» B. existed value | |
| 44. |
The focal point of financial management in a firm is _________. |
| A. | the number and types of products or services provided by the firm |
| B. | the minimization of the amount of taxes paid by the firm |
| C. | the creation of value for shareholders |
| D. | the dollars profits earned by the firm |
| Answer» D. the dollars profits earned by the firm | |
| 45. |
In order to determine the compound growth rate of an investment over some period, an investor would calculate the_____________. |
| A. | arithmetic mean |
| B. | geometric mean |
| C. | calculus mean |
| D. | arithmetic median |
| Answer» C. calculus mean | |
| 46. |
_____________is concerned with the interrelationships between security returns. |
| A. | random diversification |
| B. | correlating diversification |
| C. | Friedman diversification |
| D. | Markowitz diversification |
| Answer» E. | |
| 47. |
The fixed proportion of working capital should be generally financed from the ____ capital sources. |
| A. | fixed |
| B. | variable |
| C. | semi-variable |
| D. | borrowed |
| Answer» E. | |
| 48. |
The relevant risk for a well-diversified portfolio is____________. |
| A. | interest rate risk |
| B. | inflation risk |
| C. | business risk |
| D. | market risk |
| Answer» E. | |
| 49. |
Tendency of measuring correlation of two variables is classified as |
| A. | tendency coefficient |
| B. | variable coefficient |
| C. | correlation coefficient |
| D. | double coefficient |
| Answer» D. double coefficient | |
| 50. |
Coefficient of variation is used to identify an effect of |
| A. | risk |
| B. | return |
| C. | deviation |
| D. | Both A and B |
| Answer» E. | |