McqMate
| 501. |
In India ,preference shares must be redeemed within a period |
| A. | 3 year of issue |
| B. | 6 years of issue |
| C. | 10 years of issue |
| D. | 20 years of issue |
| Answer» C. 10 years of issue | |
| 502. |
Dividend yield method the cost of equality is ascertained as a percentage of |
| A. | Expected dividend |
| B. | IRR |
| C. | WACC |
| D. | Expected profits |
| Answer» A. Expected dividend | |
| 503. |
In the case of existing shares cost of equity is computed under dividend yield method by dividing dividend per share with |
| A. | Face value |
| B. | Market value |
| C. | Net proceeds |
| D. | None of these |
| Answer» B. Market value | |
| 504. |
The weighted average cost of new or additional capital is called |
| A. | Opportunity cost |
| B. | Composite cost |
| C. | Marginal cost |
| D. | Average cost |
| Answer» C. Marginal cost | |
| 505. |
The ratio between debt and equity in the total capitalization is called |
| A. | Capital gearing |
| B. | Capitalization |
| C. | Capital structure |
| D. | Financial structure |
| Answer» A. Capital gearing | |
| 506. |
Capital composition of a company including long term, medium term and short term finances |
| A. | Capital gearing |
| B. | Capitalization |
| C. | Capital structure |
| D. | Financial structure |
| Answer» D. Financial structure | |
| 507. |
According NO1 theory, increase in EBIT will |
| A. | Increase the value of the firm |
| B. | Decrees the value of firm |
| C. | Not affect value |
| D. | Increase when debt is increased |
| Answer» A. Increase the value of the firm | |
| 508. |
According NO1 theory ,value of firm is |
| A. | Related to its capital structure |
| B. | Not related to its capital structure |
| C. | Related to debt |
| D. | Related to overall cost of capital |
| Answer» B. Not related to its capital structure | |
| 509. |
--------------- theory says that the value of a firm will be different stages of growth |
| A. | Net income |
| B. | NOI |
| C. | M M theory |
| D. | Traditional theory |
| Answer» D. Traditional theory | |
| 510. |
Redundant working capital means |
| A. | Optimum working capital |
| B. | Shortage of working capital |
| C. | Idle working capital |
| D. | None of these |
| Answer» C. Idle working capital | |
| 511. |
Floating capital means |
| A. | Liquid capital |
| B. | Permanent working capital |
| C. | Redundant working capital |
| D. | Gross working capital |
| Answer» A. Liquid capital | |
| 512. |
According to ------------- approach, cash inflow from assets should match with the cash outflow required to acquire them. |
| A. | Aggressive approach |
| B. | Hedging approach |
| C. | Conservative approach |
| D. | Optimization |
| Answer» B. Hedging approach | |
| 513. |
The appropriate objective of an enterprise is : |
| A. | Maximization of sales |
| B. | Maximization of owners wealth |
| C. | Maximization of profits |
| D. | None of these |
| Answer» B. Maximization of owners wealth | |
| 514. |
The job of finance manager is confined to: |
| A. | Raising of funds |
| B. | Management of cash |
| C. | Raising of funds and their effective utilization |
| D. | None of the above |
| Answer» C. Raising of funds and their effective utilization | |
| 515. |
Financial decision involve |
| A. | Investment, financing and dividend decisions |
| B. | Investment, financing and sales decisions |
| C. | Financing, dividend and cash decisions |
| D. | None of the above |
| Answer» A. Investment, financing and dividend decisions | |
| 516. |
The possibility that a company will have lower than anticipated profits is called --------------------- |
| A. | Financial risk |
| B. | Operational risk |
| C. | Business risk |
| D. | Technological risk |
| Answer» C. Business risk | |
| 517. |
-------------------- refers to the risk associated with the capital structure composition |
| A. | Financial risk |
| B. | Operational risk |
| C. | Business risk |
| D. | Technological risk |
| Answer» A. Financial risk | |
| 518. |
When contribution is dividend with EBIT we get |
| A. | Operating leverage |
| B. | Financial leverage. |
| C. | P/V ratio |
| D. | EPS |
| Answer» A. Operating leverage | |
| 519. |
According to ------------------ the degree of leverage is irrelevant in determining the value of a firm |
| A. | MM theory |
| B. | Walter’s model |
| C. | Baumol’s model |
| D. | None of these |
| Answer» A. MM theory | |
| 520. |
--------------- leverage is obtained from the equation EBIT/EBT |
| A. | Operating leverage |
| B. | Financial leverage |
| C. | Combined leverage |
| D. | None of these |
| Answer» B. Financial leverage | |
| 521. |
Buying a security from low priced market and selling at high priced market is called ------------- |
| A. | Speculation |
| B. | Arbitrage |
| C. | Gangbling |
| D. | Investment |
| Answer» B. Arbitrage | |
| 522. |
The traditional approach of capital structure was propounded by ------------------- |
| A. | David Durand |
| B. | Solomon Ezra |
| C. | Modigilani-Mille |
| D. | None of these |
| Answer» B. Solomon Ezra | |
| 523. |
Net operating income(NOI) approach was propounded by ------------ |
| A. | Solomon Ezra |
| B. | David Durand |
| C. | Modigilani-Miller |
| D. | None of these |
| Answer» C. Modigilani-Miller | |
| 524. |
According to NOI theory, the value of the firm depends on ----------- |
| A. | Financial risk |
| B. | Operational risk |
| C. | Technological risk |
| D. | Business risk |
| Answer» D. Business risk | |
| 525. |
--------------- theory is applicable only when the dividend pay out ratio is 100% |
| A. | MM theory |
| B. | NOI theory |
| C. | Net income approach |
| D. | None of these |
| Answer» A. MM theory | |
| 526. |
Which is the limitation of traditional approach of financial management |
| A. | Ignores allocation of resources |
| B. | One sided approach |
| C. | More emphasis on long term problems |
| D. | All of these |
| Answer» D. All of these | |
| 527. |
The finance function is/are ---------------------- |
| A. | Determination of financial requirement of the firm |
| B. | Obtaining necessary finance from the appropriate sources at minimum possible cost |
| C. | The allocation of finance in different assets |
| D. | All of these |
| Answer» D. All of these | |
| 528. |
Financial management is a part of --------------------- |
| A. | Financial accounting |
| B. | Business management |
| C. | Accounting |
| D. | Tax law |
| Answer» B. Business management | |
| 529. |
The financial management is responsible for the |
| A. | Controlling of the Organization |
| B. | Organizing trading programs |
| C. | Recording the transaction |
| D. | Finance function of the firm |
| Answer» D. Finance function of the firm | |
| 530. |
Financial management includes ------------------- |
| A. | Measurement of performance |
| B. | Finance function |
| C. | Financial resources |
| D. | All of these |
| Answer» A. Measurement of performance | |
| 531. |
Profit maximization includes --------------------- |
| A. | It is indicator of economic efficiency |
| B. | Source of incentive |
| C. | Maximization of social benefit |
| D. | Measurement of success of business decisions |
| Answer» D. Measurement of success of business decisions | |
| 532. |
Function of finance officers includes ----------------------- |
| A. | Continuous credit |
| B. | Co-ordination in fund |
| C. | Preparation of cost account |
| D. | Adequate liquidity |
| Answer» D. Adequate liquidity | |
| 533. |
The term value implies the ------------ |
| A. | Task of estimating the worth of an asset |
| B. | Task of estimating the worth of a security |
| C. | Task of estimating the value of a business |
| D. | All of these |
| Answer» D. All of these | |
| 534. |
Which is a type of value |
| A. | Book value |
| B. | Retailer or wholesaler value |
| C. | Plant value |
| D. | Domestic value |
| Answer» A. Book value | |
| 535. |
Which is the approach of valuation |
| A. | Asset based approach to valuation |
| B. | Earnings based approach to valuation |
| C. | Market value based approach to valuation |
| D. | All f these |
| Answer» A. Asset based approach to valuation | |
| 536. |
Total assets – Total external liabilities equal to --------------------- |
| A. | Net asset |
| B. | Net liabilities |
| C. | Net cost |
| D. | Net depreciation |
| Answer» A. Net asset | |
| 537. |
The arrangement of working capital and current assets can be done only by ------------------- |
| A. | Short term sources |
| B. | Long term sources |
| C. | Cost of capital |
| D. | Financial plan |
| Answer» D. Financial plan | |
| 538. |
Which is the source of short term |
| A. | Trade credit |
| B. | Short term bank finance |
| C. | Public deposits |
| D. | All of these |
| Answer» D. All of these | |
| 539. |
Which is the type of trade credit |
| A. | Open account |
| B. | Bills of exchange |
| C. | Promissory note |
| D. | All of these |
| Answer» D. All of these | |
| 540. |
Which is the form of credit |
| A. | Overdraft |
| B. | Cash credit |
| C. | Discounting of trade bills |
| D. | Loans and advances |
| Answer» A. Overdraft | |
| 541. |
Which is the characteristics of share capital |
| A. | Getting permanent capital |
| B. | Payment of dividend is not compulsory |
| C. | No mortgage of property |
| D. | Limited liability |
| Answer» A. Getting permanent capital | |
| 542. |
The ownership capital of Joint Stock Companies is dividend in its -------------- |
| A. | Equity shares |
| B. | Debentures |
| C. | Bonds |
| D. | Debentures and preference shares |
| Answer» D. Debentures and preference shares | |
| 543. |
The payment of dividend is not compulsory on ------------------ |
| A. | Equity share capital and preference share capital |
| B. | Bonds |
| C. | Debentures |
| D. | Share capital |
| Answer» D. Share capital | |
| 544. |
The capital raised through equity share is ---------- for the company |
| A. | Floating capital |
| B. | Variable capital |
| C. | Temporary capital |
| D. | Permanent or fixed capital |
| Answer» D. Permanent or fixed capital | |
| 545. |
The control and management of the company is in the hands of ---- |
| A. | Debenture holders |
| B. | Bondholders |
| C. | Equity shareholders |
| D. | Employees |
| Answer» C. Equity shareholders | |
| 546. |
Who have the last right on the company assets |
| A. | Bondholders |
| B. | Equity shareholders |
| C. | Debenture holders |
| D. | Preference shareholders |
| Answer» B. Equity shareholders | |
| 547. |
The equity shareholders are owners of --------------------- |
| A. | Residual income of the company |
| B. | Cost of asset |
| C. | Limited liability |
| D. | Cost of capital |
| Answer» A. Residual income of the company | |
| 548. |
Which is the advantage of the share capital |
| A. | Permanent capital by sharing risk |
| B. | No fixed burden of dividend by all of these |
| C. | All of these |
| D. | None of these |
| Answer» D. None of these | |
| 549. |
When the expansion of business and income is there, then the market value increases which result in ------------------ |
| A. | Capital gain by capital loss |
| B. | Capital expense |
| C. | Reserves |
| D. | None of these |
| Answer» A. Capital gain by capital loss | |
| 550. |
If the company announces dividend then it is necessary to pay if |
| A. | Within a certain time |
| B. | Within five years |
| C. | Within six years |
| D. | Within seven years |
| Answer» A. Within a certain time | |
| 551. |
Which ratio explains that how much portion of earning is distributed in the form of dividend |
| A. | Dividend per Share Ratio |
| B. | Pay Out Ratio |
| C. | Earning yield Ratio |
| D. | Equity Capital Ratio |
| Answer» B. Pay Out Ratio | |
| 552. |
Preference shares are those shares whose holders have ------------- |
| A. | Certain common rights |
| B. | Certain preferential Rights |
| C. | Return on capital ownership on shares |
| D. | Return on capital |
| Answer» B. Certain preferential Rights | |
| 553. |
When preference shareholders have a right to convert their preference shares in to equity shares after a pre-decided dare such shares are called -------- shares. |
| A. | Participating |
| B. | Convertible |
| C. | Redeemable |
| D. | Irredeemable |
| Answer» A. Participating | |
| 554. |
Which is the element of cumulative convertible preference shares? |
| A. | The rate of dividend will be 10% |
| B. | The rate of dividend is 20% |
| C. | No risk |
| D. | No return |
| Answer» A. The rate of dividend will be 10% | |
| 555. |
----------- have veto power to protect their preferential rights |
| A. | Preference shareholder |
| B. | Debenture holders |
| C. | Common preference share |
| D. | Right shares |
| Answer» C. Common preference share | |
| 556. |
The company can reduce its capital by ------------- |
| A. | Convertible share |
| B. | Payment of loan |
| C. | Redemption of redeemable preference shares |
| D. | Payment of interest |
| Answer» A. Convertible share | |
| 557. |
Which is the type of dividend? |
| A. | Cash dividend |
| B. | Interest |
| C. | Profit cum reserve |
| D. | Flexible capital |
| Answer» A. Cash dividend | |
| 558. |
The dividend on equity shares is only paid when dividend on ---------- has already been paid |
| A. | Equity shares |
| B. | Preference shares |
| C. | Bond |
| D. | Debenture |
| Answer» B. Preference shares | |
| 559. |
Which shares are not redeemed during lifetime of the company? |
| A. | Equity shares |
| B. | Preference shares |
| C. | Redeemable pre-shares |
| D. | All of these |
| Answer» A. Equity shares | |
| 560. |
“ A debenture is a document which either creates a debt or acknowledge it” . who said? |
| A. | Justice Chitty |
| B. | Tophan’s Company law |
| C. | J. Betty |
| D. | Hoston D |
| Answer» A. Justice Chitty | |
| 561. |
Which is the current liability? |
| A. | Bills payable |
| B. | Bank overdraft |
| C. | Creditors and proposed dividend |
| D. | All of these |
| Answer» D. All of these | |
| 562. |
Reserve is an --------------- |
| A. | Additional part of profit |
| B. | Additional loss |
| C. | Liability |
| D. | Cost |
| Answer» A. Additional part of profit | |
| 563. |
If there is over capitalization in the company, the redemption of debenture can lead to--------------- |
| A. | Cost of capital |
| B. | Balanced capital structure |
| C. | Equity |
| D. | Dividend |
| Answer» B. Balanced capital structure | |
| 564. |
The interest on debenture may be --------------- |
| A. | Fixed liability |
| B. | Flexible liability |
| C. | More cost |
| D. | Less cost |
| Answer» A. Fixed liability | |
| 565. |
The issue of debenture is done only by the -------------- |
| A. | New company |
| B. | New firm |
| C. | New partnership |
| D. | Established and reputed companies |
| Answer» D. Established and reputed companies | |
| 566. |
The debentures are used only by those companies whose ------------ |
| A. | Goodwill is more |
| B. | Goodwill is less |
| C. | Worth is less |
| D. | All of these |
| Answer» A. Goodwill is more | |
| 567. |
The debentures are issued on the security of ---------------- |
| A. | Fixed assets |
| B. | Fixed capital |
| C. | Current Assets |
| D. | Current liabilities |
| Answer» A. Fixed assets | |
| 568. |
Every debenture holders is a ---------------- |
| A. | Owner of the company |
| B. | Creditor of the company |
| C. | Supplier of the company |
| D. | Customer of the company |
| Answer» B. Creditor of the company | |
| 569. |
A company should arrange the capital structure in such a way that there is maximum flexibility in the capital and cost of capital is |
| A. | Maximum |
| B. | Minimum |
| C. | Expensive |
| D. | All of the above |
| Answer» B. Minimum | |
| 570. |
Term loans are those loans which are payable after one or more ______________ |
| A. | years |
| B. | Time |
| C. | Costly |
| D. | All of these |
| Answer» A. years | |
| 571. |
The redemption means |
| A. | The payment of amount |
| B. | The depreciation of the amount |
| C. | The allocation of cost |
| D. | All of these |
| Answer» A. The payment of amount | |
| 572. |
Refunding means |
| A. | Issue of new debenture |
| B. | Issue of capital |
| C. | Disposable cost |
| D. | Issue new debentures in place of old debentures |
| Answer» D. Issue new debentures in place of old debentures | |
| 573. |
Conversion means |
| A. | Debentures are converted in to equity shares |
| B. | Registration of cost |
| C. | Accounting the transaction |
| D. | Debenture holders are allotted equity shares |
| Answer» D. Debenture holders are allotted equity shares | |
| 574. |
Stock is -------------------- |
| A. | Current asset |
| B. | Fixed asset |
| C. | Fixed capital |
| D. | All of these |
| Answer» A. Current asset | |
| 575. |
Earnings means ----------------------- |
| A. | Profit |
| B. | Loss |
| C. | Capital |
| D. | Reserve |
| Answer» A. Profit | |
| 576. |
Face value per debenture less issue expenses equal to --------------- |
| A. | Net proceeds per debentures |
| B. | Cost of capital |
| C. | Loss |
| D. | Profit |
| Answer» A. Net proceeds per debentures | |
| 577. |
Capital budgeting means ---------------------------- |
| A. | Planning for capital asset |
| B. | Planning for sales |
| C. | Planning for cash |
| D. | Planning for profit |
| Answer» A. Planning for capital asset | |
| 578. |
Capital budgeting is the process of making investment decisions in the ---------- |
| A. | Sales |
| B. | Sales planning |
| C. | Cash |
| D. | Capital expenditure |
| Answer» D. Capital expenditure | |
| 579. |
Capital budgeting is -------------- |
| A. | Actually the process of making investment decision in capital expenditure |
| B. | A cost |
| C. | A sales |
| D. | A profit |
| Answer» A. Actually the process of making investment decision in capital expenditure | |
| 580. |
Capital budgeting is known as ----------------- |
| A. | Cost of sales |
| B. | Capital expenditure |
| C. | Cost of product |
| D. | Profit |
| Answer» B. Capital expenditure | |
| 581. |
Capital budgeting is ------------------------ |
| A. | Related to long time |
| B. | Related to short time |
| C. | A profit |
| D. | A sales |
| Answer» A. Related to long time | |
| 582. |
Capital budgeting actually the process of making investment decisions in ----------- |
| A. | Production process and style |
| B. | Sales planning |
| C. | Fixed asset |
| D. | Current asset |
| Answer» C. Fixed asset | |
| 583. |
Capital budgeting is also known as -------------------- |
| A. | Investment decision making |
| B. | Capital expenditure decisions |
| C. | Planning capital expenditure |
| D. | All of these |
| Answer» D. All of these | |
| 584. |
“Capital budgeting is long term planning for making and financing proposed capital outlays”. Who said? |
| A. | Charles T. Horngreen |
| B. | Philippatos |
| C. | J Betty |
| D. | Lynch |
| Answer» A. Charles T. Horngreen | |
| 585. |
Capital budgeting investment decision involves ----------------------- |
| A. | Long term function |
| B. | Long term asset |
| C. | Capital expenditure |
| D. | All of these |
| Answer» A. Long term function | |
| 586. |
Which is the element of capital budgeting decision |
| A. | Long term effect |
| B. | Long term investment |
| C. | Capital expenditure |
| D. | Large investment |
| Answer» D. Large investment | |
| 587. |
Capital budgeting process involves -------------------- |
| A. | Final approval |
| B. | Performance review |
| C. | Establishing priorities |
| D. | All of these |
| Answer» D. All of these | |
| 588. |
Which is the step of capital budgeting process? |
| A. | Project generation |
| B. | Project evaluation |
| C. | Project selection |
| D. | Project execution |
| Answer» D. Project execution | |
| 589. |
Which is the traditional method of capital budgeting |
| A. | Payback period |
| B. | Pay out method |
| C. | Accounting method |
| D. | All of these |
| Answer» D. All of these | |
| 590. |
Which is the time adjusting method of capital budgeting |
| A. | NPV method |
| B. | IRR method |
| C. | Profitability Index Method |
| D. | All of these |
| Answer» D. All of these | |
| 591. |
If the annual cash inflows are constant, the payback period can be computed by dividing cash outlay by ---------------- |
| A. | Annual cash inflow |
| B. | Profit |
| C. | Expenses |
| D. | Annual sales flows |
| Answer» D. Annual sales flows | |
| 592. |
If a project requires Rs.20,000 as initial investment and it will generate an annual inflow of Rs.2,000 for the 20 years, the pay back period will be ------------------ |
| A. | 10 years |
| B. | 20 years |
| C. | 9 years |
| D. | 2 years |
| Answer» A. 10 years | |
| 593. |
Projects which yields the highest earnings are ------------------ |
| A. | Selected |
| B. | Rejected |
| C. | Budgeted |
| D. | All of these |
| Answer» A. Selected | |
| 594. |
The present value of total cash inflows should be compared with present value of ---------------------- |
| A. | Cash inflows |
| B. | Cash outflows |
| C. | Investment |
| D. | Income |
| Answer» B. Cash outflows | |
| 595. |
The proposal is accepted if the profitability index is more than ----- |
| A. | One by zero |
| B. | Three |
| C. | Five |
| D. | Ten |
| Answer» A. One by zero | |
| 596. |
The proposal is rejected in case the profitability index is ------------ |
| A. | Less than one |
| B. | Less than zero |
| C. | Less than two |
| D. | Less than five |
| Answer» A. Less than one | |
| 597. |
The present value of all inflows are cumulated in ------------------- |
| A. | Order of sales by order of cash |
| B. | Order of time |
| C. | Order of investment |
| D. | All of these |
| Answer» C. Order of investment | |
| 598. |
The performance report supplement with date on non-financial performance measures includes ------------------ |
| A. | Market performance measures |
| B. | Quality measures |
| C. | Delivery measures |
| D. | All of these |
| Answer» D. All of these | |
| 599. |
The investment of long term funds is made after a careful assessment of the various projects through ------------------- |
| A. | Cost of capital |
| B. | Fund flow |
| C. | Capital budgeting by sales |
| D. | Marketing planning |
| Answer» C. Capital budgeting by sales | |
| 600. |
Which is the objective of a firm’s finance management? |
| A. | The maximization of firm’s profit |
| B. | The maximization of firm’s value |
| C. | The maximization of firm’s wealth |
| D. | All of these |
| Answer» D. All of these | |
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