140+ Advanced Financial Management 2 Solved MCQs

1.

Capital Market deals with __________

A. Short Term Funds
B. Medium and Long Term Funds
C. Both a and b
D. None of the Above
Answer» B. Medium and Long Term Funds
2.

In Secondary segment of Capital Market ____________

A. Fresh Capital is raised
B. Trading of outstanding securities is done
C. Both a & b
D. None of the above
Answer» B. Trading of outstanding securities is done
3.

Which of the following is a role of Capital Market?

A. Capital Formation
B. Promotion of Industrial Growth
C. Development of backward areas of the country
D. All of the Above
Answer» D. All of the Above
4.

Funds can be raised in Primary Market through

A. Public Issue by Prospectus
B. Private Placements
C. Rights Issues
D. All of the Above
Answer» D. All of the Above
5.

Primary Market is a market for :

A. New Issues
B. Outstanding Securities
C. Land Records
D. None of the above
Answer» A. New Issues
6.

When an organization opts to convert private capital in to public capital, it is called _____________

A. Going Out
B. Being Open
C. Being Listed
D. Going Public
Answer» D. Going Public
7.

Bonus Shares enable the company to restructure its capital.

A. True
B. False
C. none
D. none
Answer» A. True
8.

Which of the following enables issuers to reap benefits arising from price and demand discovery?

A. Public Issue by Prospectus
B. Book Building
C. Listing
D. None of the above
Answer» B. Book Building
9.

Which one of the following is not a feature of a Stock Exchange?

A. Organised Market
B. Dealing only Through Authorised Members
C. Necessary to remain present physically for dealing
D. Necessary to obey Rules and Bye-laws
Answer» C. Necessary to remain present physically for dealing
10.

SENSEX is an Index of which Stock Exchange?.

A. NSE
B. OTCEI
C. MCX
D. None of the above
Answer» D. None of the above
11.

Inclusion of a security in the official list of a stock exchange is called _________ and for that the company has to apply with ___________.

A. Listing, Managing Committee of Stock Exchange
B. Enrollment, Managing Committee of Stock Exchange
C. Listing, Board of Directors of Stock Exchange
D. Registration, ROC
Answer» A. Listing, Managing Committee of Stock Exchange
12.

____________ was set up, as a strong need was felt to protect the interest of investors and to have a systematic and organized working of the securities market in India.

A. Bombay Stock Exchange
B. National Stock Exchange
C. Over the Counter Exchange of India
D. Securities and Exchange Board of India
Answer» D. Securities and Exchange Board of India
13.

Collateral value of eligible Listed Securities is considered on ….

A. Average market price
B. Marked to market basis
C. Reputation of the promoters
D. None of the above
Answer» B. Marked to market basis
14.

SBTS stands for

A. Securities Buying and Trading Society
B. Software Based Trading Services
C. Selling and buying through screen
D. Screen Based Trading System
Answer» D. Screen Based Trading System
15.

Which is a mean to reduce the floating equity stock in the market?

A. Sell off
B. Negotiate
C. Buy Back
D. All of the above
Answer» C. Buy Back
16.

Which Stock Exchange of India was the first to grant permission to brokers for internet trading?

A. National Stock Exchange
B. Bombay Stock Exchange
C. Ahmedabad Stock Exchange
D. Kolkata Stock Exchange
Answer» A. National Stock Exchange
17.

Which Stock Exchange of India is based on the model of NASDAQ?

A. BSE
B. NSE
C. ASE
D. OTCEI
Answer» D. OTCEI
18.

At present securities are issued in which form?

A. Rematerialised
B. Dematerialized
C. Bank Credit
D. None of the Above
Answer» B. Dematerialized
19.

One of the features of Capital Market is ‘Ready and Continuous market’ which provides _____________ to the investors.

A. Safety
B. Long term Guarantee
C. Liquidity
D. None of the above
Answer» C. Liquidity
20.

In ____________ market fresh capital is raised.

A. Primary
B. Secondary
C. Intermediary
D. National
Answer» A. Primary
21.

Which is the market for financial assets that are close substitutes for money?

A. Monetary Market
B. Money Market
C. Capital Market
D. Currency Market
Answer» B. Money Market
22.

Return on Treasury Bills is ___________

A. Coupon Rate
B. Difference between Issue Price and Par Value
C. Negotiated
D. All of the above
Answer» B. Difference between Issue Price and Par Value
23.

Commercial Paper is generally issued by:

A. Reputed Corporates
B. Reputed and highly rated Corporates
C. RBI on behalf of the Central Government
D. None of the above
Answer» B. Reputed and highly rated Corporates
24.

Which Money Market instrument is a time deposit of specific maturity and issued in bearer form?

A. Commercial Paper
B. Commercial Bill
C. Certificate of Deposit
D. Call Money
Answer» C. Certificate of Deposit
25.

In which Money Market instrument default risk is absent?

A. Commercial Paper
B. Certificate of Deposit
C. Treasury Bills
D. Inter Corporate Deposits.
Answer» C. Treasury Bills
26.

Which of the following is considered to be the key segment of Indian Money Market?

A. Call Money
B. Commercial Bill
C. Inter-Corporate Deposit
D. Inter-Bank Participations
Answer» A. Call Money
27.

Which of the following is an important tool to finance credit sales?

A. Commercial Bill
B. Treasury Bill
C. Commercial Paper
D. Certificate of Deposit
Answer» A. Commercial Bill
28.

Credit Rating performs the function of credit risk evaluation reflecting the borrower’s expected capability to repay the debt as per terms of issue.

A. True
B. False
C. none
D. none
Answer» A. True
29.

Credit Rating is beneficial to :

A. Subscribers
B. Regulators
C. Issuers
D. All of the above
Answer» D. All of the above
30.

First Credit Rating Agency of India is ____________.

A. CRISIL
B. CARE
C. CARE
D. Moody’s Investor Service
Answer» A. CRISIL
31.

CARE stands for :

A. Credit Appraisal and Research Enterprise
B. Credit Analysis and Research Enterprise
C. Credit Analysis and Research Limited
D. Credit and Rating Enterprise.
Answer» C. Credit Analysis and Research Limited
32.

Which of the following is not a part of rating methodology?

A. Business Analysis
B. Financial Analysis
C. Management Evaluation
D. Subscriber Evaluation
Answer» D. Subscriber Evaluation
33.

ICRA was promoted by _____________ jointly with other leading investment institutions, commercial banks and financial service companies.

A. ICICI
B. IFCI
C. IDBI
D. LIC
Answer» B. IFCI
34.

CRISIL was set up in which year?

A. 1988
B. 1987
C. 1986
D. 1985
Answer» A. 1988
35.

A statement demonstrating the movement of funds into and out of the business during the course of accounting period is known as ___________

A. Cash Flow Statement
B. Fund Flow Statement
C. Adjusted Profit & Loss Statement
D. Statement of changes in Working Capital
Answer» B. Fund Flow Statement
36.

Analysis of funds is rightly called an Analysis of __________

A. Working Capital
B. Current Assets
C. Current Liabilities
D. None of the above
Answer» A. Working Capital
37.

Which of the following rules stands true while preparation of Schedule of changes in working
capital?
1) An increase in current assets increases working capital.
2) An increase in current assets decreases working capital.
3) An increase in current liabilities decreases working capital.
4) An increase in current liabilities increases working capital

A. 1 and 3
B. 1 and 4
C. 2 and 4
D. 1, 2,3 and 4
Answer» A. 1 and 3
38.

Among the following items, which represents the source of fund?

A. Increase in Capital
B. Borrowing / Loan
C. Profit from Business Operations
D. All of the above
Answer» D. All of the above
39.

Fund Flow Statement is also known as:

A. Statement of Funds Flow
B. Statement of Sources and Application of Funds
C. Statement of Sources and uses of Funds
D. All of the above
Answer» D. All of the above
40.

Which of the following are sources of funds? 1.Issue of Bonus Shares 2.Issue of Shares against the purchase of Fixed Assets 3. Conversion of Debentures into Shares 4.Conversion of Loans into Shares

A. A and C
B. A and D
C. All of the above
D. None of the above
Answer» D. None of the above
41.

Which of the following statements is true? 1. If the amount of good will increases during current year, the difference is treated as purchase of goodwill. 2. If the amount of good will decreases during current year, It will treated as written off.

A. Only 1
B. Only 2
C. Both 1 and 2
D. None of the above
Answer» C. Both 1 and 2
42.

Which of the following are treated as long term investments?

A. Non-current Investments
B. Trade Investments
C. Sinking Fund Investments
D. All of the above
Answer» D. All of the above
43.

The balance of fixed assets of Breej Ltd. at the end of 2018 and 2019 were Rs 5,70,800 and Rs 6,15,300. During the year 2019 a machinery costing Rs 60,000 was sold. Determine the purchase of fixed assets.

A. Rs. 1,04,500
B. Rs. 1,40,500
C. Rs. 1,64,500
D. Rs. 44,500
Answer» A. Rs. 1,04,500
44.

For Ram Industries, the balance of property has beenRs 20,000 and Rs 17,000 in 2018 and 2019 respectively. The profit on sale of property of Rs 2000 is credited to Capital Reserves Account. New property costing Rs 5000 bought in 2019. Determine sale proceeds forproperty.

A. Rs. 3,000
B. Rs. 10,000
C. Rs. 7,000
D. Rs. 15,000
Answer» B. Rs. 10,000
45.

For Meghal Industries Ltd. opening balance for Provision for Taxation is Rs. 18,000 and closing balance is Rs. 15,000. During the year Taxed paid wereRs. 10,000. What is the current year’s Provision for Taxation made from the profit?

A. Rs. 3,000
B. Rs. 13,000
C. Rs. 7,000
D. Rs. 23,000
Answer» C. Rs. 7,000
46.

Which of the following are Non-current Assets?

A. Land, Building and Plant
B. Bills Receivable
C. Debtors
D. Pre-paid Expenses
Answer» A. Land, Building and Plant
47.

Which of the following are Current Liabilities?

A. Sundry Creditors
B. Bank Overdraft
C. Outstanding Salaries
D. All of the Above
Answer» D. All of the Above
48.

When a part of the Fixed Assets is sold during the year, the Profit on sale is shown on the credit side of which Account?

A. Adjusted Profit and Loss Account
B. Profit and Loss Account
C. Fixed Assets Accounts
D. Liabilities Accounts
Answer» A. Adjusted Profit and Loss Account
49.

The Funds Flow and Cash Flow statements fail to give a clear idea about profitability of the company.

A. True
B. False
C. none
D. none
Answer» A. True
50.

Among the following items which item is shown on the debit side of Adjusted Profit and Loss Account?

A. Depreciation and other Non-cash Adjustments
B. Appropriation of Profit
C. Provision for Taxation
D. All of the Above
Answer» D. All of the Above
51.

Among the following items which does NOT represent the Application of Funds?

A. Payment of Interim Dividend
B. Payment of Supervisor’s Salary
C. Issue of Share Capital
D. Payment of Taxes
Answer» C. Issue of Share Capital
52.

Until February 1973, which one of the following was prevalent in World Monetary System?

A. Free Floating Exchange Rate System
B. Adjustable Peg Exchange Rate System
C. Bench marking Exchange Rate System
D. None of the above
Answer» B. Adjustable Peg Exchange Rate System
53.

Which one of the following is NOT referred to as ‘Major’ or ‘Hard’ Currency?

A. US Dollar
B. French Frank
C. Euro
D. India Rupee
Answer» D. India Rupee
54.

Rs. 75.17/USD is which type of quotation?

A. Indirect Quote
B. Direct Quote
C. Bilateral Quote
D. Cross Quote
Answer» B. Direct Quote
55.

In a two way foreign exchange quotation, the difference between ask and bid prices is called ____________.

A. Difference
B. Margin
C. Spread
D. None of the above
Answer» C. Spread
56.

Below data is available: Spot Exchange Rate 6 Month’s Forward Rate Rs./USD 75.17 Rs. 75.00 So, the forward rate is at ___________________

A. Premium
B. Discount
C. At Par
D. None of the above
Answer» B. Discount
57.

From the data given below which option is true? Spot 1 month’s Forward Rs./GBP 94.85 94.95

A. 1 month’s forward is at 1.27% premium
B. 1 month’s forward is at 0.11% premium
C. 1 month’s forward is at 1.27% discount
D. 1 month’s forward is at 0.11% discount
Answer» A. 1 month’s forward is at 1.27% premium
58.

The rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies are derived when a quote of home currency (or desired currency) to any other currency is not available in the Foreign Exchange market is called ____________.

A. Direct Quote
B. Exchange Rate
C. Cross Rate
D. Dependent Rate
Answer» C. Cross Rate
59.

Which of the below mentioned contract is a standardized contract?

A. Futures Contract
B. Forward Contract
C. Both a and b
D. None of the above
Answer» A. Futures Contract
60.

An Option which can be exercised only on the maturity date is known as __________.

A. Put Option
B. American Option
C. European Option
D. Call Option
Answer» C. European Option
61.

There is a close link between the interest rates in two countries and the forward rate premium or discount. The theory about this is :

A. Purchasing Power Parity
B. Expectations Theory
C. Covered Interest Arbitrage and interest Rate Parity
D. None of the above.
Answer» C. Covered Interest Arbitrage and interest Rate Parity
62.

According to Fisher effect, the nominal rate is equal to the real interest rate plus an adjustment for ______________

A. FD Rate
B. Spot Rate
C. Inflation
D. Premium
Answer» C. Inflation
63.

The acquisition of existing firms or plants as a means of FDI is called ___________.

A. Green Field Investments
B. Dark Zone Investments
C. Growing Zone Investments
D. Brown Field Investments
Answer» D. Brown Field Investments
64.

McDonald’s purchasing farms in India to grow potatoes is which type of FDI?

A. Green Field
B. Agriculture
C. Vertical
D. Horizontal
Answer» C. Vertical
65.

When an American Company acquires a division or unit of Indian company, the US is said to be a ______________ Country.

A. Sending
B. Receiving
C. Promoting
D. None of the above
Answer» A. Sending
66.

An act of buying currency in one market at a lower price and selling it in another at higher price resulting in equilibrium in exchange rates of different currencies is called _________________.

A. Hedging
B. Speculation
C. Trading
D. Arbitrage
Answer» D. Arbitrage
67.

Which of these are considered as nerve centres of foreign exchange activity.

A. London, New York and Tokyo
B. London, New Jersey and Mumbai
C. London, New York and Moscow
D. London, New York and Delhi
Answer» A. London, New York and Tokyo
68.

Who are key participants of Foreign Exchange Market?

A. Importers & Exporters
B. Traders and Foreign Exchange Brokers
C. Speculators
D. All of the above
Answer» D. All of the above
69.

When the exposed position in a foreign currency is covered through borrowing or lending in the money market, it is called ______________.

A. Borrowing-Lending technique
B. Futures Contract
C. Currency Swap
D. Money Market Hedge
Answer» D. Money Market Hedge
70.

An efficient Capital Market provides operational efficiency through…

A. Simplified transaction procedure
B. Lowering settlement timings
C. Lowering transaction costs
D. All of the above
Answer» D. All of the above
71.

Full form of WDM segment is ………..

A. Wholesale Debt Market
B. Wholesale Debenture Market
C. Wholesale Demand Management
D. Wholesale Deposit Market
Answer» A. Wholesale Debt Market
72.

A facility of carrying forward the transaction from one settlement to another in BSE was called _______

A. Carry forward
B. Badla
C. Vayda
D. Forward
Answer» B. Badla
73.

For Book Building Process a merchant banker is appointed as a __________

A. Book Keeper
B. Book Writer
C. Book Runner
D. None of the Above
Answer» C. Book Runner
74.

Which one of the below is NOT a category of participant in the Primary Capital Market?

A. Issuers of securities
B. Investors in securities.
C. Traders of securities
D. Intermediaries
Answer» C. Traders of securities
75.

Which of the below financial product / instrument cab be traded in the secondary market?

A. Equity Shares
B. Commercial Paper
C. Bonds
D. All of the above
Answer» D. All of the above
76.

__________________ is a benchmark Indian Stock Market Index that represents the weighted average of 50 of the largest Indian Companies listed on the National Stock Exchange.

A. SENSEX
B. NIFTY
C. SIFTY
D. INDEX
Answer» B. NIFTY
77.

What is the full form of ECB?

A. External Commercial Borrowings
B. External Commercial Bonds
C. Equity Capital Balance
D. None of the Above
Answer» A. External Commercial Borrowings
78.

For listed companies the prices are publically arrived at on the basis of demand and supply and hence stock exchange quotations reflect the real value of the security.

A. True
B. False
C. none
D. none
Answer» A. True
79.

SEBI started its actual functioning when…..

A. It was set up in 1988
B. RBI gave it a permission in 1989
C. SEBI Act was passed in 1992
D. It was registered
Answer» C. SEBI Act was passed in 1992
80.

Full Form of NEAT is

A. National Exchange for Automated Trading
B. National Equity Automated Trading
C. National Exchange for Analysis and Trading
D. None of the Above
Answer» A. National Exchange for Automated Trading
81.

What is the full form of NSDL

A. National Stock Dealing Ltd.
B. National Securities Dealers Ltd.
C. National Securities Depository Ltd.
D. National Stock and Debt Ltd.
Answer» C. National Securities Depository Ltd.
82.

Market making is a unique concept of which stock exchange of India?

A. NSE
B. BSE
C. ISE
D. OTCEI
Answer» D. OTCEI
83.

Capital Market in India plays a role in developing integration among:

A. Real Sector and Financial Sector
B. Long-term and Short-term interest costs
C. Equity and Debt Instruments
D. All of the above
Answer» D. All of the above
84.

Sentence A – Through Rights issue fresh capital can be raised and Sentence B – Through a Bonus Issue Fresh capital can be raised.

A. Only Sentence A is true
B. Both Sentences A and B are true
C. Only Sentence of B is true
D. Both Sentences A and B are False
Answer» A. Only Sentence A is true
85.

Book Building is basically ____________ of shares.

A. An auction
B. A process of listing
C. Credit rating
D. None of the Above
Answer» A. An auction
86.

In the process of Book Building if the public portion gets oversubscribed,…..

A. The size of the Public Portion is raised
B. The allotment is made on a proportionate basis
C. The placement portion is cancelled
D. None of the above
Answer» B. The allotment is made on a proportionate basis
87.

Stock Futures, Stock Options, Index Futures and Index Options are ___________

A. Bonds
B. Combination of Equity and Debt
C. Equity Derivatives
D. None of the Above
Answer» C. Equity Derivatives
88.

Which Stock Exchange of India was set up with an objective to meet the current international standards of securities market?

A. BSE
B. ISE
C. OTCEI
D. NSE
Answer» D. NSE
89.

To provide a focal point for central bank (RBI) intervention for influencing liquidity and general level of interest rates in the economy is an important function of

A. Secondary Market
B. Money Market
C. Capital Market
D. Forex Market
Answer» B. Money Market
90.

Indigenous bankers and money lenders are constituents of _____________

A. Organised Money Market
B. Organised Stock Market
C. Unorganised Money Market
D. None of the Above
Answer» C. Unorganised Money Market
91.

The purchase and sell of which of the following instrument is effected through Subsidiary General Ledger (SGL) account?

A. Treasury Bills
B. Options
C. Equity Shares
D. All of the Above
Answer» A. Treasury Bills
92.

Minimum Subscription amount of a Certificate of Deposit is ___________.

A. Rs. 25,000
B. Rs. 50,000
C. Rs. 1,00,000
D. Rs. 5,00,000
Answer» C. Rs. 1,00,000
93.

Which instrument was introduced in year 1990 with a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowings?

A. Certificate of Deposit
B. Commercial Paper
C. Commercial Bill
D. None of the Above
Answer» B. Commercial Paper
94.

When money is lent for more than a day and up to 14 days it is called as __________

A. Demand Money
B. Call Money
C. Put Money
D. Notice Money
Answer» D. Notice Money
95.

What type of relationship is there between call rates and short-term money market instruments such as CDs and CPs?

A. Inverse
B. Direct
C. Negative
D. None of the Above
Answer» A. Inverse
96.

_______________ is an important tool to finance credit sales?

A. Commercial Bill
B. Commercial Paper
C. Certificate of Deposit
D. None of the Above
Answer» A. Commercial Bill
97.

Which instrument involves high risk and high returnsand helps corporates in solving temporary capital crisis without many formalities?

A. Equity Shares
B. Term Loan
C. Inter-corporate Deposits
D. All of the Above
Answer» C. Inter-corporate Deposits
98.

Which of the following are money market instruments?

A. Treasury Bills
B. Commercial Bills
C. Call Money
D. All of the Above
Answer» D. All of the Above
99.

What is the full form of CRISIL?

A. Credit Rating and Investment Services of India Limited
B. Credit Rating Information Services of India Limited
C. Credit Rating Institution for Small Industries Limited
D. Credit Rating Information Sector of India Limited
Answer» B. Credit Rating Information Services of India Limited
100.

ICRA was incorporated in which year?

A. 1990
B. 1991
C. 1992
D. 1993
Answer» B. 1991
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