McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Commerce (M.com) , Bachelor of Management Studies (BMS) .
| 101. |
…… is the process under which an existing large company purchases the business of another small company doing similar business. |
| A. | Merger |
| B. | Acquisition |
| C. | Absorption |
| D. | Take over |
| Answer» C. Absorption | |
| 102. |
Combination of two or more organisations in the same industry is called….. |
| A. | Horizontal merge |
| B. | Vertical merger |
| C. | Concentric |
| D. | Conglomerate |
| Answer» A. Horizontal merge | |
| 103. |
………is the combination of two or more organisation in a related industry but do not offer same product. |
| A. | Horizontal |
| B. | Vertical |
| C. | Concentric |
| D. | Conglomerate |
| Answer» C. Concentric | |
| 104. |
The acquisition of a firm in the same industry, but at a different stage of the production process is called |
| A. | Conglomerate |
| B. | Forward |
| C. | Vertical |
| D. | Horizontal |
| Answer» C. Vertical | |
| 105. |
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» D. Synergy | |
| 106. |
If Microsoft were to acquire US Airways, the acquisition would be classified as a ,…….. |
| A. | Conglomerate |
| B. | Vertical |
| C. | Horizontal |
| D. | Concentric |
| Answer» A. Conglomerate | |
| 107. |
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» B. Spin off | |
| 108. |
……. is the ratio in which an acquiring company will offer its own shares in exchange for the target company’s share during merger . |
| A. | Swap ratio |
| B. | Price- earnings ratio |
| C. | Exchange ratio |
| D. | Enterprise value to sales ratio |
| Answer» A. Swap ratio | |
| 109. |
…….. isa type of takeover in which the acquiring company turns itself into a subsidiary of the purchased company. |
| A. | Bailout takeover |
| B. | Reverse takeover |
| C. | Backflip |
| D. | Conglomerate |
| Answer» C. Backflip | |
| 110. |
PAC stands for….. |
| A. | Persons acting on concert |
| B. | Promoters acting in concert |
| C. | Public announcement for consolidation |
| D. | Public acting concert |
| Answer» A. Persons acting on concert | |
| 111. |
This strategy enables the existing shareholders of the target company to buy additional shares at a high discount rate. |
| A. | Flip- in |
| B. | Flip over |
| C. | Spin out |
| D. | Spin off. |
| Answer» A. Flip- in | |
| 112. |
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» A. Golden parachute | |
| 113. |
White knight relates to …… |
| A. | Green mail |
| B. | Crown Jewel |
| C. | Litigation |
| D. | People pill |
| Answer» B. Crown Jewel | |
| 114. |
Whichof the following is a pre offer take-over defences? |
| A. | Crown Jewel |
| B. | People pill |
| C. | Poison pill |
| D. | PAC man defence |
| Answer» C. Poison pill | |
| 115. |
Which of the following is a post offer take- over defence? |
| A. | Poison pills |
| B. | Golden parachute |
| C. | White knight |
| D. | Dual class stock |
| Answer» C. White knight | |
| 116. |
The process by which company or organisation is divided and thereby becomes an independent business is called ….. |
| A. | Spin out |
| B. | Spin off |
| C. | Split off |
| D. | Sell off |
| Answer» A. Spin out | |
| 117. |
The process of converting a subsidiary into an independent entity is called…. |
| A. | Spin out |
| B. | Split off |
| C. | Sell off |
| D. | Spin off |
| Answer» D. Spin off | |
| 118. |
LBO stands for…. |
| A. | Leveraged borrow outs |
| B. | Leveraged buy outs |
| C. | Leveraged buy offs |
| D. | Longterm buy outs |
| Answer» B. Leveraged buy outs | |
| 119. |
…..isan acquisition in which management team of the company purchases assets and operation they manage. |
| A. | LBO |
| B. | MBO |
| C. | Demerger |
| D. | Stubs |
| Answer» B. MBO | |
| 120. |
NOPAT stands for…. |
| A. | Net organisation profit after tax |
| B. | Net operating profit after tax |
| C. | Net operation profit after a term |
| D. | None of the above |
| Answer» B. Net operating profit after tax | |
| 121. |
IGR stands for…. |
| A. | Interest growth rate |
| B. | Internal gearing rate |
| C. | Internal growth rate |
| D. | None of the above |
| Answer» C. Internal growth rate | |
| 122. |
SGR stands for |
| A. | Sustainable growth rate |
| B. | Statutory growth rate |
| C. | Stable growth rate |
| D. | Suitable growth rate |
| Answer» A. Sustainable growth rate | |
| 123. |
Financial leverage indicates disproportionate change in taxable income as a result of change in…… |
| A. | Operating income |
| B. | Operating leverage |
| C. | Interest |
| D. | Tax |
| Answer» A. Operating income | |
| 124. |
The term trading on equity is generally used for …. .…financial leverage |
| A. | Unfavourable |
| B. | Moderate |
| C. | Less than 1 |
| D. | Favourable |
| Answer» D. Favourable | |
| 125. |
MOS stands for …. |
| A. | Marginal own source |
| B. | Money of seller |
| C. | Margin of safety |
| D. | Medium own source |
| Answer» C. Margin of safety | |
| 126. |
The ideal situation is to have high financial leverage and low operating leverage. |
| A. | False |
| B. | True |
| C. | none |
| D. | all |
| Answer» B. True | |
| 127. |
Composite leverage explains change in taxable income on account of change in sales |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 128. |
Dividend on preference share capital is ignored while calculating operating leverage. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 129. |
Trading on equity implies having a ------ debt-equity ratio. |
| A. | Low |
| B. | Medium |
| C. | High |
| D. | Normal |
| Answer» C. High | |
| 130. |
………. on capital is called cost of capital. |
| A. | Minimum expected return |
| B. | Normally expected return |
| C. | Higher expected return |
| D. | None of these |
| Answer» A. Minimum expected return | |
| 131. |
Which among the following method is based on time value of money? |
| A. | Pay-back period |
| B. | Post pay-back profitability |
| C. | Discounted cash flow method |
| D. | ARR method |
| Answer» C. Discounted cash flow method | |
| 132. |
Under net present value criteria, a project is approved if …… |
| A. | NPV is positive |
| B. | The funds are unlimited |
| C. | Both A & B |
| D. | None of these |
| Answer» A. NPV is positive | |
| 133. |
The return available from the project after the pay-back period is not considered in the case of …… |
| A. | Net present value |
| B. | Profitability index |
| C. | Internal rate of return |
| D. | Pay-back period method |
| Answer» D. Pay-back period method | |
| 134. |
Internal rate of return and net present value are synonymous terms. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 135. |
Ind AS deals with Lease finance is ____ |
| A. | Ind AS 17 |
| B. | Ind AS 117 |
| C. | Ind AS 102 |
| D. | Ind AS 115 |
| Answer» D. Ind AS 115 | |
| 136. |
……..is a long term lease and the lessee will be paying much more than the cost of the property or equipment to the lessor in the form of lease charges. |
| A. | Operating lease |
| B. | Financial lease |
| C. | Leveraged lease |
| D. | Direct lease |
| Answer» B. Financial lease | |
| 137. |
………is also known as dividend capitalisation model |
| A. | Walter’s model |
| B. | Gordon’s model |
| C. | Modiglani & Millers model |
| D. | None of these |
| Answer» B. Gordon’s model | |
| 138. |
SVA stands for…. |
| A. | Share value accounted |
| B. | Statutory value addition |
| C. | Shareholder value added |
| D. | None of the above |
| Answer» C. Shareholder value added | |
| 139. |
Financial risk arises when there is an involvement of ……in the capital structure |
| A. | Debt |
| B. | Equity |
| C. | Right issue |
| D. | Bonus issue |
| Answer» A. Debt | |
| 140. |
The concept of EVA has been developed by ……. |
| A. | Alfred marshal |
| B. | Benjamin Fleming |
| C. | Stern Steward |
| D. | Charles H Dow |
| Answer» C. Stern Steward | |
| 141. |
Use of more debt capital rather than equity capital is called…… |
| A. | Risk taking |
| B. | Operating leverage |
| C. | Combined leverage |
| D. | Financial leverage |
| Answer» D. Financial leverage | |
| 142. |
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» C. Dividend policy | |
| 143. |
Operating leverage is not favourable when ……… |
| A. | Fixed costs are more than contribution |
| B. | Fixed cost is less than variable cost |
| C. | Fixed cost and variable cost are equal |
| D. | None of the above cases |
| Answer» A. Fixed costs are more than contribution | |
| 144. |
Stock dividend and bonus shares are synonymous terms. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
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