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. |
_According to put call parity relationship, a call option minus put option in addition with present value of exercise is equal to$? |
| A. | binomial property |
| B. | constant property |
| C. | constant and variable property |
| D. | stock |
| Answer» E. | |
| 2. |
_Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be$? |
| A. | 0.1123 times |
| B. | 11.23% |
| C. | 11.23 times |
| D. | Rs 11.23 |
| Answer» C. 11.23 times | |
| 3. |
_For each component of capital, a required rate of return is considered as$? |
| A. | component cost |
| B. | evaluating cost |
| C. | asset cost |
| D. | asset depreciation value |
| Answer» B. evaluating cost | |
| 4. |
_Stock selling price is Rs 45, an expected dividend is Rs 10 and an expected growth rate is 8% then cost of common stock would be$? |
| A. | 55.00% |
| B. | 35.00% |
| C. | 30.00% |
| D. | 30.22% |
| Answer» E. | |
| 5. |
_Retention ratio is 0.60 and return on equity is 15.5% then growth retention model would be$? |
| A. | 14.90% |
| B. | 25.84% |
| C. | 16.10% |
| D. | 9.30% |
| Answer» E. | |
| 6. |
_Variability for expected returns for projects is classified as$? |
| A. | expected risk |
| B. | stand-alone risk |
| C. | variable risk |
| D. | returning risk |
| Answer» C. variable risk | |
| 7. |
_Right of common stockholders to purchase additional stock issued by company is classified as$? |
| A. | common right |
| B. | pre-emptive right |
| C. | purchase right |
| D. | selling right |
| Answer» C. purchase right | |
| 8. |
_Method and model used to analyze relationship between rates of return and risk is classified as$? |
| A. | capital asset pricing model |
| B. | portfolio asset pricing model |
| C. | asset market pricing model |
| D. | portfolio pricing model |
| Answer» B. portfolio asset pricing model | |
| 9. |
_Expected returns weighted average on assets in portfolio is considered as$? |
| A. | weighted portfolio |
| B. | expected return on portfolio |
| C. | coefficient of portfolio |
| D. | expected assets |
| Answer» C. coefficient of portfolio | |
| 10. |
_Constant growth rate is 9.5% and an expected rate of return is 13.5% then expected dividend yield would be$? |
| A. | 23.00% |
| B. | 1.42% |
| C. | 4.00% |
| D. | 14.50% |
| Answer» D. 14.50% | |
| 11. |
_Preferred dividend is Rs 50 and required rate of return is 2.5% then value of preferred stock would be$? |
| A. | Rs 20.00 |
| B. | Rs 125.00 |
| C. | Rs 2,000.00 |
| D. | Rs 52.50 |
| Answer» D. Rs 52.50 | |
| 12. |
_Collection of money from investors and spending money in other investment activities is classified as$? |
| A. | future funds |
| B. | hedge funds |
| C. | retirement funds |
| D. | pension funds |
| Answer» C. retirement funds | |
| 13. |
_Low default-risk security issued by financially secure firms is classified as$? |
| A. | U.S treasury bills |
| B. | commercial paper |
| C. | certificate of deposit |
| D. | mutual funds |
| Answer» C. certificate of deposit | |
| 14. |
_Method of matching orders by posting orders of buying and selling is classified as$? |
| A. | electronic communication network |
| B. | electronic dealer network |
| C. | electronic stock network |
| D. | electronic order network |
| Answer» B. electronic dealer network | |
| 15. |
_Federal Reserve policy and federal surplus or deficit of budget affect the$? |
| A. | cost of production |
| B. | cost of money |
| C. | opportunity cost |
| D. | inflation risk |
| Answer» C. opportunity cost | |
| 16. |
_Setup cost is a type of __________ cost.$? |
| A. | fixed |
| B. | variable |
| C. | semi variable |
| D. | carrying |
| Answer» B. variable | |
| 17. |
_The price to book value ratio tends to be close for_____________.$? |
| A. | high-tech companies |
| B. | banks |
| C. | utilities |
| D. | service companies |
| Answer» C. utilities | |
| 18. |
_The cash management refers to management of ___________.$? |
| A. | cash only |
| B. | cash and bank balances |
| C. | cash and near cash assets |
| D. | fixed assets |
| Answer» D. fixed assets | |
| 19. |
_The optimal portfolio is the efficient portfolio with the______________.$? |
| A. | lowest risk |
| B. | highest risk |
| C. | highest utility |
| D. | least investment |
| Answer» D. least investment | |
| 20. |
_The random walk hypothesis is most related to the___________.$? |
| A. | weak-form EMH |
| B. | semi strong-form EMH |
| C. | semi weak-form EMH |
| D. | strong-form EMH |
| Answer» B. semi strong-form EMH | |
| 21. |
_Excess working capital results in ________.$? |
| A. | Block of cash |
| B. | Loosing interests |
| C. | Lack of production |
| D. | Lack of smooth flow of production |
| Answer» B. Loosing interests | |
| 22. |
_The bonus issue is made to make the nominal value and the __________ value of the shares of the company.$? |
| A. | Face |
| B. | Market |
| C. | Stock |
| D. | Real |
| Answer» C. Stock | |
| 23. |
_Under trading means.$? |
| A. | Having low amount of working capital |
| B. | High turnover of working capital |
| C. | Sales are less compared to assets employed |
| D. | Low turnover of working capital |
| Answer» E. | |
| 24. |
_Effective cost of debentures is _________ as compared to shares.$? |
| A. | higher |
| B. | lower |
| C. | equal |
| D. | medium |
| Answer» C. equal | |
| 25. |
_The factor(s) which affect(s) P/E ratio is/are __________.$? |
| A. | Growth rate |
| B. | Debt proportion |
| C. | Retention ratio |
| D. | All of the above |
| Answer» E. | |
| 26. |
_A major difference between individual and institutional investors is their very different_______.$? |
| A. | approaches to market analysis |
| B. | evaluations of return |
| C. | time horizons |
| D. | types of securities held in their portfolios |
| Answer» D. types of securities held in their portfolios | |
| 27. |
_In a statement of cash flows, a company investing in short-term financial investments and in fixed assets results in$? |
| A. | increased cash |
| B. | decreased cash |
| C. | increased liabilities |
| D. | increased equity |
| Answer» C. increased liabilities | |
| 28. |
_In time value of money, periodic rate is$? |
| A. | not shown on timeline |
| B. | shown on timeline |
| C. | multiplied on timeline |
| D. | divided on timeline |
| Answer» C. multiplied on timeline | |
| 29. |
_Payment of security if it is made at end of each period such as beginning of year is classified as$? |
| A. | annuity due |
| B. | payment fixed series |
| C. | ordinary annuity |
| D. | deferred annuity |
| Answer» B. payment fixed series | |
| 30. |
_During planning period, a marginal cost for raising a new debt is classified as$? |
| A. | debt cost |
| B. | relevant cost |
| C. | borrowing cost |
| D. | embedded cost |
| Answer» C. borrowing cost | |
| 31. |
_An annuity with an extended life is classified as$? |
| A. | extended life |
| B. | perpetuity |
| C. | deferred perpetuity |
| D. | due perpetuity |
| Answer» C. deferred perpetuity | |
| 32. |
_A stock which is hybrid and works as a cross between debt and common stock is considered as$? |
| A. | hybrid stock |
| B. | common liabilities |
| C. | debt liabilities |
| D. | preferred stock |
| Answer» E. | |
| 33. |
_Payment if it is divided with interest rate will be formula of$? |
| A. | future value of perpetuity |
| B. | present value of perpetuity |
| C. | due perpetuity |
| D. | deferred perpetuity |
| Answer» C. due perpetuity | |
| 34. |
_Total amount of depreciation charged on long term assets is classified as$? |
| A. | accumulated depreciation |
| B. | depleted depreciation |
| C. | accumulated appreciation |
| D. | accumulated appreciation schedule |
| Answer» B. depleted depreciation | |
| 35. |
_Bonds issued by small companies tend to have$? |
| A. | high liquidity premium |
| B. | high inflation premium |
| C. | high default premium |
| D. | high yield premium |
| Answer» B. high inflation premium | |
| 36. |
_Type of bond which pays interest payment only when it earns is classified as$? |
| A. | income bond |
| B. | interest bond |
| C. | payment bond |
| D. | earning bond |
| Answer» B. interest bond | |
| 37. |
_Bonds having zero default risk are classified as$? |
| A. | U.S bonds |
| B. | return security |
| C. | issued security |
| D. | treasury bonds |
| Answer» E. | |
| 38. |
_Value generally promises to pay at maturity date and a firm borrows is considered as bonds$? |
| A. | bond value |
| B. | per value |
| C. | state value |
| D. | par value |
| Answer» E. | |
| 39. |
_Bonds issued by government and backed by U.S government are classified as$? |
| A. | issued security |
| B. | treasury bonds |
| C. | U.S bonds |
| D. | return security |
| Answer» C. U.S bonds | |
| 40. |
_Coupon rate of bond is also called$? |
| A. | nominal rate |
| B. | premium rate |
| C. | quoted rate |
| D. | both a and c |
| Answer» E. | |
| 41. |
_Bonds that can be converted into shares of common stock are classified as$? |
| A. | convertible bonds |
| B. | stock bonds |
| C. | shared bonds |
| D. | common bonds |
| Answer» B. stock bonds | |
| 42. |
_Required rate of return in calculating bond's cash flow is also classified as$? |
| A. | going rate of return |
| B. | yield |
| C. | earning rate |
| D. | Both A and B |
| Answer» E. | |
| 43. |
_The dividend-payout ratio is equal to __________.$? |
| A. | the dividend yield plus the capital gains yield |
| B. | dividends per share divided by earnings per share |
| C. | dividends per share divided by par value per share |
| D. | dividends per share divided by current price per share. |
| Answer» C. dividends per share divided by par value per share | |
| 44. |
_The formula for cost of debt is __________.$? |
| A. | I x ( 1 - t) |
| B. | I+p |
| C. | I-P |
| D. | Ixp |
| Answer» B. I+p | |
| 45. |
_If an investor is attempting to buy a stock that is very volatile, it would be best to use___________.$? |
| A. | market order |
| B. | limit order |
| C. | stop-loss order |
| D. | contingency order. |
| Answer» C. stop-loss order | |
| 46. |
_If interest rates rose, you would expect ____________ to also rise.$? |
| A. | business risk |
| B. | financial risk |
| C. | liquidity risk |
| D. | inflation risk |
| Answer» D. inflation risk | |
| 47. |
_Which of the following is not related to overall market variability?$? |
| A. | Financial risk |
| B. | Interest rate risk |
| C. | Purchasing power risk |
| D. | Market risk |
| Answer» B. Interest rate risk | |
| 48. |
_Arbitrage is the level processing technique introduced in _________.$? |
| A. | Net income approach |
| B. | MM approach |
| C. | Operating approach |
| D. | Traditional approach |
| Answer» C. Operating approach | |
| 49. |
_Which of the following is/are false regarding capital structure theory as stated by Miller and Modigliani?1) If agency costs are considered, the expected agency costs increases as the debt-equity ratio decreases.2) With the given assumptions, there is no optimal capital structure.3) In the presence of taxes, the market value of the firm decreases by the tax shield of debt$? |
| A. | Only 1st statement |
| B. | Only 2nd statement |
| C. | Both 1st and 3rd statements |
| D. | All the three statements. |
| Answer» E. | |
| 50. |
_Which of the following is a basic principle of finance as it relates to the management of working capital?$? |
| A. | Profitability varies inversely with risk |
| B. | Liquidity moves together with risk |
| C. | Profitability moves together with risk |
| D. | Profitability moves together with liquidity |
| Answer» D. Profitability moves together with liquidity | |