MCQOPTIONS
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MCQOPTIONS
This section includes 146 Mcqs, each offering curated multiple-choice questions to sharpen your Bachelor of Management Studies (BMS) knowledge and support exam preparation. Choose a topic below to get started.
| 51. |
The term capital structure refers to |
| A. | Long term debt, preferred stock and common stock equity |
| B. | Current asset and current liabilities |
| C. | Total asset minus liabilities |
| D. | Shareholder’s equity |
| Answer» B. Current asset and current liabilities | |
| 52. |
…….. isa type of takeover in which the acquiring company turns itself into a subsidiary of thepurchased company. |
| A. | Bailout takeover |
| B. | Reverse takeover |
| C. | Backflip |
| D. | Conglomerate |
| Answer» D. Conglomerate | |
| 53. |
Operating lease is favoured by the lessee in respect of assets which depreciate in value on accountof ….. |
| A. | Obsolescence |
| B. | Wear and tear |
| C. | Exhaustion |
| D. | Fire |
| Answer» B. Wear and tear | |
| 54. |
PAC stands for….. |
| A. | Persons acting on concert |
| B. | Promoters acting in concert |
| C. | Public announcement for consolidation |
| D. | Public acting concert |
| Answer» B. Promoters acting in concert | |
| 55. |
Composite leverage explains change in taxable income on account of change in sales |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 56. |
Financing methods for merger and acquisition exclude: |
| A. | Cash |
| B. | Convertible bond |
| C. | Vendor placing |
| D. | Overdraft |
| Answer» E. | |
| 57. |
If Microsoft were to acquire US Airways, the acquisition would be classified as a ,…….. |
| A. | Conglomerate |
| B. | Vertical |
| C. | Horizontal |
| D. | Concentric |
| Answer» B. Vertical | |
| 58. |
In walter model formula D stands for |
| A. | Dividend per share |
| B. | Direct dividend |
| C. | Dividend earning |
| D. | None of these |
| Answer» B. Direct dividend | |
| 59. |
According to …. principle the ideal pattern of capital structure is one that tends to minimize the costof financing. |
| A. | Control principle |
| B. | Cost principle |
| C. | Risk principle |
| D. | Flexibility principle |
| Answer» C. Risk principle | |
| 60. |
How is economic value added (EVA) calculated? |
| A. | It is the difference between the market value of the firm and the book value of equity. |
| B. | It is the firm's net operating profit after tax (NOPAT) less a dollar cost of capital charge. |
| C. | It is the net income of the firm less a dollar cost that equals the weighted average cost of capital multiplied by the book value of liabilities and equities. |
| D. | None of the above are |
| Answer» C. It is the net income of the firm less a dollar cost that equals the weighted average cost of capital multiplied by the book value of liabilities and equities. | |
| 61. |
LBO stands for…. |
| A. | Leveraged borrow outs |
| B. | Leveraged buy outs |
| C. | Leveraged buy offs |
| D. | Longterm buy outs |
| Answer» C. Leveraged buy offs | |
| 62. |
Stock dividend and bonus shares are synonymous terms. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 63. |
Financial risk arises when there is an involvement of ……in the capital structure |
| A. | Debt |
| B. | Equity |
| C. | Right issue |
| D. | Bonus issue |
| Answer» B. Equity | |
| 64. |
MVA stands for…. |
| A. | Maximum value added |
| B. | Minimum value added |
| C. | Market value added |
| D. | Most value added |
| Answer» D. Most value added | |
| 65. |
……… is not a financing method for merger and acquisition. |
| A. | Cash |
| B. | Vendor placing |
| C. | Convertible bond |
| D. | Factoring |
| Answer» E. | |
| 66. |
……. is the ratio in which an acquiring company will offer its own shares in exchange for the targetcompany’s share during merger . |
| A. | Swap ratio |
| B. | Price- earnings ratio |
| C. | Exchange ratio |
| D. | Enterprise value to sales ratio |
| Answer» B. Price- earnings ratio | |
| 67. |
In ……. Approach, the capital structure decision is relevant to the valuation of the firm. |
| A. | Net income |
| B. | miller and modigilani |
| C. | traditional |
| D. | net operating income |
| Answer» B. miller and modigilani | |
| 68. |
Traditional approach of capital structure is also known as…. |
| A. | Neutral approach |
| B. | Mixed approach |
| C. | Intermediate approach |
| D. | Parallel |
| Answer» D. Parallel | |
| 69. |
………is also known as dividend capitalisation model |
| A. | Walter’s model |
| B. | Gordon’s model |
| C. | Modiglani & Millers model |
| D. | None of these |
| Answer» C. Modiglani & Millers model | |
| 70. |
SVA stands for…. |
| A. | Share value accounted |
| B. | Statutory value addition |
| C. | Shareholder value added |
| D. | None of the above |
| Answer» D. None of the above | |
| 71. |
The positive incremental net gain associated with two firms enter into a merger is called …… |
| A. | Goodwill |
| B. | Merger cost |
| C. | Consolidation effect |
| D. | Synergy |
| Answer» E. | |
| 72. |
…..isan acquisition in which management team of the company purchases assets and operation theymanage. |
| A. | LBO |
| B. | MBO |
| C. | Demerger |
| D. | Stubs |
| Answer» C. Demerger | |
| 73. |
In …… approach says that capital structure decision is relevant to the valuation of the firm. |
| A. | Traditional |
| B. | Net income |
| C. | Modiglani and Millers |
| D. | Net operating income |
| Answer» C. Modiglani and Millers | |
| 74. |
Retained earnings are |
| A. | an Indication of a company’s liquidity |
| B. | the same as cash in the bank |
| C. | not important when determining dividends |
| D. | the cumulative earnings of the company after dividends |
| Answer» E. | |
| 75. |
This plan gives veto rights over the controlof changes to managers. |
| A. | Golden parachute |
| B. | Poison pills |
| C. | Dual class stock |
| D. | Super majority announcements |
| Answer» B. Poison pills | |
| 76. |
The distribution of shares in a subsidiary to existing parent company’s stockholder is called …… |
| A. | Bear hug |
| B. | Spin off |
| C. | Buy out |
| D. | Split off |
| Answer» C. Buy out | |
| 77. |
A lease agreement grants lessee the right to…. |
| A. | Own the asset |
| B. | Use the asset |
| C. | Own and use the asset |
| D. | Sell the asset |
| Answer» C. Own and use the asset | |
| 78. |
MOS stands for …. |
| A. | Marginal own source |
| B. | Money of seller |
| C. | Margin of safety |
| D. | Medium own source |
| Answer» D. Medium own source | |
| 79. |
A firm that acquires another firm as part of its strategy to sell off assets, cut costs, and operate theremaining assets more efficiently is engaging in __________. |
| A. | Strategic acquisition |
| B. | Two tier tender offer |
| C. | A financial acquisition |
| D. | Shark repellent |
| Answer» B. Two tier tender offer | |
| 80. |
Economic value added provides a measure of |
| A. | how much value is added by the economy |
| B. | how much value is added by operations |
| C. | how much a business affects the economy |
| D. | how much wealth a company is creating compared to its cost of capital. |
| Answer» E. | |
| 81. |
The acquisition of a firm in the same industry, but at a different stage of the production process iscalled |
| A. | Conglomerate |
| B. | Forward |
| C. | Vertical |
| D. | Horizontal |
| Answer» D. Horizontal | |
| 82. |
Who Introduced Net Income approach? |
| A. | David Durand |
| B. | Walter |
| C. | Gordon |
| D. | Modigliani and Miller |
| Answer» B. Walter | |
| 83. |
A critical assumption of NOI (Net operating income approach) to valuation is that… |
| A. | Debt and equity levels remain unchanged. |
| B. | Dividends increase at constant rate |
| C. | Overall cost of capital is independent of the degree of leverage |
| D. | Interest expenses and taxes are included in calculation |
| Answer» D. Interest expenses and taxes are included in calculation | |
| 84. |
Economic value added indicates…. |
| A. | Value added to economy |
| B. | Financial performance based on residual wealth |
| C. | Net profit |
| D. | Expected amount of dividend |
| Answer» C. Net profit | |
| 85. |
The ways in which mergers and acquisitions occur do not include: |
| A. | Conglomerate takeover |
| B. | Vertical integration |
| C. | Diversification |
| D. | Horizontal integration |
| Answer» D. Horizontal integration | |
| 86. |
The policy on quantum of dividend to be distributed as dividend is termed as …… |
| A. | Profit sharing policy |
| B. | Appropriation |
| C. | Dividend policy |
| D. | Distribution policy |
| Answer» D. Distribution policy | |
| 87. |
A set of guidelines about dividend is known as _____ _____. |
| A. | dividend policy |
| B. | profit |
| C. | loss |
| D. | expenses |
| Answer» B. profit | |
| 88. |
There are two approaches to dividend policy _____ _____. |
| A. | relevance, irrelevance |
| B. | final dividend |
| C. | interims dividend |
| D. | annual dividend |
| Answer» B. final dividend | |
| 89. |
XBRL stands for _____ _____ _____ _____. |
| A. | u.s securities exchange communication adopted a final rule for adoption |
| B. | ifsb released an expanded ifrs, xbrl |
| C. | extensible business reporting language |
| D. | ifar |
| Answer» D. ifar | |
| 90. |
XBRL presents solution to _____ problem. |
| A. | registered company |
| B. | government corporation |
| C. | communication |
| D. | unregistered company |
| Answer» D. unregistered company | |
| 91. |
The project with _____ co-efficient of variation should be selected. |
| A. | lesser |
| B. | management |
| C. | higher |
| D. | medium |
| Answer» B. management | |
| 92. |
Under standard deviation _____ of cash flow is ascertained. |
| A. | dispersion |
| B. | subjective |
| C. | objective |
| D. | comparative |
| Answer» B. subjective | |
| 93. |
Capital rationing is selection of investment proposal under _____. |
| A. | constraint |
| B. | weakness of capital market |
| C. | funds are scare today |
| D. | very strong |
| Answer» B. weakness of capital market | |
| 94. |
_____ provides details of compliance of corporate governance. |
| A. | annual report |
| B. | board of directors |
| C. | independent audit committee |
| D. | employees |
| Answer» B. board of directors | |
| 95. |
Investment in venture capital fund carries _____% risk. |
| A. | 1.5 |
| B. | 2 |
| C. | 1 |
| D. | 0.5 |
| Answer» B. 2 | |
| 96. |
MPBF refers to |
| A. | maximum permissible bank finance |
| B. | minimum permissible bank financ |
| C. | bank overdraft |
| D. | cash credit |
| Answer» B. minimum permissible bank financ | |
| 97. |
The manner in which an organization's assets are financed is referred to as its- |
| A. | capital structure |
| B. | financial structure |
| C. | asset structure |
| D. | owners structure |
| Answer» C. asset structure | |
| 98. |
The term "capital structure" refers to: |
| A. | current assets & current liabilities |
| B. | long-term debt, preferred stock, and common stock equity |
| C. | total assets minus liabilities |
| D. | shareholde rs\ equity |
| Answer» C. total assets minus liabilities | |
| 99. |
Black & White Ltd. Has a cost of equity of 11% and a pre-tax cost of debt of 8.5%. The firm's target Weighted average cost of capital is 9% and its tax rate is 35%. What is the firm's target debt-equity ratio? |
| A. | 0.6203 |
| B. | 0.5756 |
| C. | 0.5572 |
| D. | 0.5113 |
| Answer» C. 0.5572 | |
| 100. |
NPV of a proposal, as calculated by RADR real CE Approach will be: |
| A. | same |
| B. | unequal |
| C. | zero |
| D. | equal |
| Answer» D. equal | |