Business Finance - Study Mode

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[#511] Which of the following equations gives the amount of operating cycle where, R stands for raw material storage period W for work in progress holding period F for finished goods storage period D for receivables (debtors) collection period C for credit period allowed by suppliers (creditors)?

(A) R + W + F + D - C

(B) R + W + F + D + C

(C) R + W - F + D - C

(D) R + W + F - D - C

Correct Answer

(A) R + W + F + D - C

[#512] Which one of the following is not matched? List I List II i. Interest is a deductible expense a. Cost of debt capital ii. Realized Yield Approach b. Cost of equity capital iii. Extended Yield Approach c. Retained earnings iv. Dividend Capitalization Approach d. Cost of preference share capital

(A) i and a

(B) ii and b

(C) iii and c

(D) iv and d

Correct Answer

(D) iv and d

[#513] . . . . . . . . means using short-term forward contracts to off set 'paper' gains and losses on the long-term assets and liabilities of foreign subsidiaries.

(A) Hedging transaction exposure

(B) Hedging balance sheet exposure

(C) Hedging economic exposure

(D) Hedging cost exposure

Correct Answer

(B) Hedging balance sheet exposure

[#514] Match the items of List-I with the items of List-II and select the correct answer: List-I List-II a. Liquidity risk 1. Risk related to purchasing power of income b. Business risk 2. Risk related to firm's capital structure c. Financial risk 3. Risk related to inability to pay its dues on time d. Inflation risk 4. Risk related to fluctuation in profits

(A) a-2, b-3, c-4, d-1

(B) a-1, b-4, c-3, d-2

(C) a-3, b-2, c-4, d-1

(D) a-3, b-4, c-2, d-1

Correct Answer

(D) a-3, b-4, c-2, d-1

[#515] The payoffs for financial derivatives are linked to

(A) Securities that will be issued in the future

(B) The volatility of interest rates

(C) Previously issued securities

(D) Government regulations specifying allowable rates of return

Correct Answer

(C) Previously issued securities