Question 1:- Management of long-term funds involve:
a) Inventory management
b) Cash Management
c) Working Capital policy
d) None of the above
Question 2:- The scope of Financial management covers:
a) Sources of finance
b) Financing mix
c) How firm should analyze, plan and control its financial affairs.
d) All the above
Question 3:- Capital Budgeting is within the scope of:
a) Financing decision
b) Investment decision
c) Dividend decision
d) All the above
Question 4:- The 6 A's of financial management are:
a) Anticipation, announcement, allocation, administering, analysis and accounting
b) Anticipation, announcement, ammunition, administering, analysis, and accounting
c) Anticipation, acquiring, allocation, administering, analysis and accounting
d) Anticipation, announcement, allocation, administering, analysis and affirmation
Question 5:- The activity concerned with planning, raising, controlling and administration of funds used in the business:
a) Financing decision
b) Corporate finance
c) Investment decision
d) Managerial Finance
Question 6:- What would be the future value of Rs. 6000 compounded annually for three years at 10%:
a) Rs. 7986
b) Rs. 6600
c) Rs. 7436
d) None of the above
Question 7:- Mr. Ramesh deposited Rs. 2000 at the end of every year for 5 years in his saving account, paying an interest of 5% interest compounded annually. Determine the sum of money he will have at the end of the 5th year.
a) 10536
b) 12650
c) 11054
d) None of the above
Question 8:- The following roles are performed by the treasurer:
a) Portfolio management
b) Tax management
c) Internal audit
d) all the above
Question 9:- The conflict of interest between the agent and the owner is known as:
a) Difference of opinion
b) Shareholder conflict
c) Agency conflict
d) None of the above
Question 10:- The term discounting in the concept of time value of money is:
a) The technique of finding the present value
b) The technique of finding the future value
c) The percentage used to factor the cash flows
d) Applying the discount rate on the cash flows
Question 11:- A stream of payment having no maturity date would be called:
a) Cash flow
b) Perpetuity
c) Annuity
d) Terminal value
Question 12:- AIMA wishes to institute a scholarship of Rs. 15000 for exceptional students. We wish to know the present value which would yield the said amount in perpetuity, discounted at 9%
a) 166,667.00
b) 150,000.00
c) 120,000.00
d) 1,800,000.00
Question 13:- Q.No.13-15 A debenture of Rs. 2000 is issued by a company for a period of five years. The rate of interest payable by the company on the debenture is 7% p.a. The appropriate capitalization rate is 10%. The present value of the interest is:
a) 303.03
b) 530.74
c) 140
d) 86.94
Question 14:- The present value of the principal at the end of 5 years is:
a) 1800
b) 1400
c) 1242
d) 1772
Question 15:- The value of the debenture should be:
a) 1772.74
b) 1087.03
c) 1382
d) 2302
Question 16:- The following approached used to value equity:
a) Dividend capitalization approach
b) Earning capitalization approach
c) Both are used
d) None are used
Question 17:- A firm deposits Rs. 50 lakhs at the end of each year for 4 years at the interest rate of 16% compounded quarterly. What is the compound value at the end of the 4th year:
a) 9,365,000.00
b) 13,990,000.00
c) 9,465,000.00
d) 9,565,000.00
Question 18:- The cost of capital is:
a) Sum total of all sources of capital
b) Sum total of total capital used by the company divided by the no. of sources
c) Weighted average of the various sources of capital.
d) Weighted average of the various sources of capital used by the company.
Question 19:- The cost of capital is used in:
a) Determination of the capital structure
b) Capital budgeting decision
c) Financial performance appraisal
d) all the above
Question 20:- The traditional approach for determining capital structure is:
a) The cost of equity is more important than the cost of debt
b) The cost of debt needs to be given more weight than the cost of equity.
c) The cost of capital is constant and independent of the level of financing.
d) The cost of capital is varying and dependent on capital structure
Question 21:- A firm employs debt and equity in equal proportions having cost of equity and debt as 14% and 6% respectively. What is the WACC:
a) 12%
b) 8%
c) 10%
d) none of the above
Question 22:- The cost of raising one additional cost of capital is called:
a) spot cost
b) Marginal cost of capital
c) Specific cost
d) Future cost
Question 23:- The discount rate that equates the present value of the cash inflow with the present value of cash outflow:
a) Average cost
b) Book cost
c) Implicit cost
d) Internal rate of return
Question 24:- For evaluating a project we can use the WACC only if:
a) The business risk and the project risk are the same.
b) The new project does not change the capital structure
c) Both conditions are adhered to
d) WACC cannot be used to evaluate a project.
Question 25:- The following statements are true:
a) The issue of additional equity shares is a source of debt
b) The retained earning is a source of equity
c) Both statements are true
d) None of the statements are true.
Question 26:- If the risk free rate is 10%, the expected return on market portfolio is 18% the cost of equity capital will be 18% when the beta is:
a) 0
b) 1.5
c) 0.5
d) 1
Question 27:- The following is true as regards risk-free rate:
a) Estimated as the difference between the average return on the market and the average rate of return
b) Calculated by regressing the monthly returns on the stock over monthly returns on the stock over the monthly returns of the market
c) It is estimated as the yield on a long-term government bond having a maturity of 10 years or more.
d) All statements are true.
Question 28:- The realized yield approach assumes the following:
a) Market price of equity shares changes at all times
b) A firms risk is changing at all times
c) Investors have an opportunity cost
d) none of the above statement is true
Question 29:- The Weighted average cost of capital is influenced by :
a) Capital structure
b) Dividend policy
c) Tax levels
d) All the above
Question 30:- A company has 6 lakhs outstanding shares of Rs. 10 each. On a reverse split of 2:4 the following will hold true:
a) The outstanding share will be 6 and value per share will be 40
b) The outstanding share will be 3 and value per share will be 40
c) The outstanding share will be 6 and value per share will be 10
d) The outstanding share will be 3 and value per share will be 10
a) Inventory management
b) Cash Management
c) Working Capital policy
d) None of the above
Question 2:- The scope of Financial management covers:
a) Sources of finance
b) Financing mix
c) How firm should analyze, plan and control its financial affairs.
d) All the above
Question 3:- Capital Budgeting is within the scope of:
a) Financing decision
b) Investment decision
c) Dividend decision
d) All the above
Question 4:- The 6 A's of financial management are:
a) Anticipation, announcement, allocation, administering, analysis and accounting
b) Anticipation, announcement, ammunition, administering, analysis, and accounting
c) Anticipation, acquiring, allocation, administering, analysis and accounting
d) Anticipation, announcement, allocation, administering, analysis and affirmation
Question 5:- The activity concerned with planning, raising, controlling and administration of funds used in the business:
a) Financing decision
b) Corporate finance
c) Investment decision
d) Managerial Finance
Question 6:- What would be the future value of Rs. 6000 compounded annually for three years at 10%:
a) Rs. 7986
b) Rs. 6600
c) Rs. 7436
d) None of the above
Question 7:- Mr. Ramesh deposited Rs. 2000 at the end of every year for 5 years in his saving account, paying an interest of 5% interest compounded annually. Determine the sum of money he will have at the end of the 5th year.
a) 10536
b) 12650
c) 11054
d) None of the above
Question 8:- The following roles are performed by the treasurer:
a) Portfolio management
b) Tax management
c) Internal audit
d) all the above
Question 9:- The conflict of interest between the agent and the owner is known as:
a) Difference of opinion
b) Shareholder conflict
c) Agency conflict
d) None of the above
Question 10:- The term discounting in the concept of time value of money is:
a) The technique of finding the present value
b) The technique of finding the future value
c) The percentage used to factor the cash flows
d) Applying the discount rate on the cash flows
Question 11:- A stream of payment having no maturity date would be called:
a) Cash flow
b) Perpetuity
c) Annuity
d) Terminal value
Question 12:- AIMA wishes to institute a scholarship of Rs. 15000 for exceptional students. We wish to know the present value which would yield the said amount in perpetuity, discounted at 9%
a) 166,667.00
b) 150,000.00
c) 120,000.00
d) 1,800,000.00
Question 13:- Q.No.13-15 A debenture of Rs. 2000 is issued by a company for a period of five years. The rate of interest payable by the company on the debenture is 7% p.a. The appropriate capitalization rate is 10%. The present value of the interest is:
a) 303.03
b) 530.74
c) 140
d) 86.94
Question 14:- The present value of the principal at the end of 5 years is:
a) 1800
b) 1400
c) 1242
d) 1772
Question 15:- The value of the debenture should be:
a) 1772.74
b) 1087.03
c) 1382
d) 2302
Question 16:- The following approached used to value equity:
a) Dividend capitalization approach
b) Earning capitalization approach
c) Both are used
d) None are used
Question 17:- A firm deposits Rs. 50 lakhs at the end of each year for 4 years at the interest rate of 16% compounded quarterly. What is the compound value at the end of the 4th year:
a) 9,365,000.00
b) 13,990,000.00
c) 9,465,000.00
d) 9,565,000.00
Question 18:- The cost of capital is:
a) Sum total of all sources of capital
b) Sum total of total capital used by the company divided by the no. of sources
c) Weighted average of the various sources of capital.
d) Weighted average of the various sources of capital used by the company.
Question 19:- The cost of capital is used in:
a) Determination of the capital structure
b) Capital budgeting decision
c) Financial performance appraisal
d) all the above
Question 20:- The traditional approach for determining capital structure is:
a) The cost of equity is more important than the cost of debt
b) The cost of debt needs to be given more weight than the cost of equity.
c) The cost of capital is constant and independent of the level of financing.
d) The cost of capital is varying and dependent on capital structure
Question 21:- A firm employs debt and equity in equal proportions having cost of equity and debt as 14% and 6% respectively. What is the WACC:
a) 12%
b) 8%
c) 10%
d) none of the above
Question 22:- The cost of raising one additional cost of capital is called:
a) spot cost
b) Marginal cost of capital
c) Specific cost
d) Future cost
Question 23:- The discount rate that equates the present value of the cash inflow with the present value of cash outflow:
a) Average cost
b) Book cost
c) Implicit cost
d) Internal rate of return
Question 24:- For evaluating a project we can use the WACC only if:
a) The business risk and the project risk are the same.
b) The new project does not change the capital structure
c) Both conditions are adhered to
d) WACC cannot be used to evaluate a project.
Question 25:- The following statements are true:
a) The issue of additional equity shares is a source of debt
b) The retained earning is a source of equity
c) Both statements are true
d) None of the statements are true.
Question 26:- If the risk free rate is 10%, the expected return on market portfolio is 18% the cost of equity capital will be 18% when the beta is:
a) 0
b) 1.5
c) 0.5
d) 1
Question 27:- The following is true as regards risk-free rate:
a) Estimated as the difference between the average return on the market and the average rate of return
b) Calculated by regressing the monthly returns on the stock over monthly returns on the stock over the monthly returns of the market
c) It is estimated as the yield on a long-term government bond having a maturity of 10 years or more.
d) All statements are true.
Question 28:- The realized yield approach assumes the following:
a) Market price of equity shares changes at all times
b) A firms risk is changing at all times
c) Investors have an opportunity cost
d) none of the above statement is true
Question 29:- The Weighted average cost of capital is influenced by :
a) Capital structure
b) Dividend policy
c) Tax levels
d) All the above
Question 30:- A company has 6 lakhs outstanding shares of Rs. 10 each. On a reverse split of 2:4 the following will hold true:
a) The outstanding share will be 6 and value per share will be 40
b) The outstanding share will be 3 and value per share will be 40
c) The outstanding share will be 6 and value per share will be 10
d) The outstanding share will be 3 and value per share will be 10
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