Business Finance

Internal sources of capital are those that are

In case the sales or project's investment deviates from expected ones, it needs

Match the following: List-I List-II a. Capital Budgeting 1. Time adjusted rate of return b. Profitability Index 2. Irreversible c. Internal rate of return 3. Benefit/cost d. Capital investment decisions 4. Planning capital expenditure

Which of the following option forbids the future pledging or mortgaging of any of the borrower's assets?

Which of the following lease refers to a short-term lease that is often cancelable? For example, a lease for office space represents this type of lease where the lease life is less than the useful life of the asset.

The capital budgeting generally refers to acquiring inputs with longer run returns. This definition is given by

Which term is used popularly for the situation when a speculator, being dominant in the market, expects a drop in the value of a particular currency, and he begins selling it forward?

Which one is not the source of external finance?

The dividend irrelevance argument of MM Model is based on

Which of the following forms of capital is called 'high risk, high reward capital'?

Consider the following characteristics. 1. High-risk, high-return opportunity 2. Small and medium-sized enterprise 3. Private equity stakes in start-ups 4. Investment fund The above attributes are found in

Under trade credit and instalment credit does not flow in

Forecasting technique of working capital include

Statement-I: Capital structure refers to the composition of long-term funds. Statement-II: It includes equity share capital, preference share capital, debentures, all debts, and all reserves.

Working capital represents the portion of current assets financed through long-term funds. This indicates 1. net working capital 2. gross working capital

Majority of retail forex trading happens in

Under the factoring arrangement, the factor

Modigliani and Miller's dividend policy of a firm is

The capital budgeting appraisal criterion most appropriate in the situation of capital rationing will be

Which of the following items is a model describing the relationship between risk and expected return (in this model the expected return is equal to the risk-free return plus a premium based on the systematic risk of the security)?

Finance is required for

The international monetary system can be defined as the institutional framework within which

Riskness of investing in . . . . . . . . is more than the riskness of investing in . . . . . . . .

Which is more appropriate for cost of retained earnings?

Debentures can best be described as a form of

A business concern should not have

The rate of dividend of preference shares is decided at the time of

. . . . . . . . refers to make up of a firm's capitalisation.

Match the items of List-I with the items of List-II . List-I List-II a. Maturity Financing 1. Trade credit and other payables that arise in the firm's day-to-day operations. b. Factoring 2. Financing and asset needs over time. c. Spontaneous Financing 3. A tool for accelerating the collection from the customers. d. Lockbox System 4. Seeking financial service to finance on its debtor's balances.

Public deposits are the deposits, that are raised directly from

Which of the following are part of investment decision by an organization? (1) Cost of capital (2) Measuring risk (3) Expansion and contraction of business activities (4) Buy, hire, or lease an asset

If an investor buybacks a volatile stock, which of the following should be the best option?

The dividend paid on preference share is not deductible expenditure for

Which of the following financial asset is/are traded in international financial market?

If an opposing position is taken in two positively correlated securities, it is called

According to Walter, a firm should pay 100% dividend, if

The working capital requirement (WCR) is

The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of

Which of the following statements are true in the context of securitization of assets?

Arrange the following in chronological order about the steps of capital budgeting process. 1. Project selection 2. Project evaluation 3. Project generation 4. Project execution

Which of the following techniques for appraisal of investment proposals are based on the time value of money?

In capital budgeting, the term 'capital rationing' implies

Match the items of List-I with those of List-II and indicate the correct answer: List-I List-II a. ABC analysis 1. Dividend decision b. Walter model 2. Capital budgeting decision c. Capital rationing 3. Capital structure decision d. Net operating income approach 4. Working capital management decision

Read the following statements: 1. Working capital is the amount of funds necessary to cover the cost of operating the enterprise. 2. Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another.

Which of the following option has a predominant share in the debt market in India?

Which of the following statements is correct for an aggressive financing policy for a firm relative to a former conservative policy?

Venture capital financing at the starting stage is generally not done through

Insufficient working capital in any enterprise may also result into 1. Failure to adapt to changes 2. Overcapitalisation 3. Reduced availability of trade and cash discounts 4. Reduced volume of production and sales Select the correct answer:

In case, the projects are divided under capital rationing an appropriate project appraisal method is

Insufficient working capital may result into which combination of the following? 1. Failures to adapt to changes. 2. Enhancement in credit-worthiness of the firm. 3. Reduced availability of trade and cash discounts. 4. Reduced volume of sales.

Over capitalization may not be as a result of which of the following?

Capital structure and leverage decisions come in the ambit of

Investment decision include

Which of the following is/are an external source of finance?

Which of the following statement(s) is/are incorrect?

Match the following. List-I List-II a. Qualitative 1. . . . . . . . . involves raising funds on the security of the company's. b. Gross working capital 2. Gross working capital is the . . . . . . . . approach. c. Commercial Banks 3. Total of current assets is called as . . . . . . . . d. Factoring 4. . . . . . . . . are also principal sources of working capital.

The internal sources of finance do not include:

Which of the following statement is/are correct?

The form of a discount allowed on the issue of debentures is in the nature of

. . . . . . . . is long-term planning for making and financing proposed capital outlays.

As per Section 62(1) of Companies Act, 2013, the mechanism by which companies can raise additional capital from existing shareholders is

A debenture mostly

Factors that are considered to solve the financial problems of business organisations are 1. cost of capital supply 2. importance and objectives of capital 3. different types of benefits Select the correct answer by using the options given below

Which of the following is/are not a current asset?

The rate of discount at which NPV of a project becomes zero is also known as

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders, and the amount to be retained in the firm. Reason (R): Dividend policy of the firm has its effect on both the long-term financing and the wealth of shareholders.

Which of the following examples best represents a passive dividend policy?

Match the following. List-I (Concepts) List-II (Meanings) a. Regular dividend policy 1. Part of divisible profits of a company, which is distributed among its shareholders b. Dividend 2. Application of planning and control functions to the finance function c. Capitalisation 3. Payment of dividend at usual rate d. Financial management 4. Refers to the process of determining the quantum of funds required for a firm

Arrange the following steps involved in capital budgeting in order of their occurrence i. Project selection ii. Project appraisal iii. Project generation iv. Follow up v. Project execution

Which of the following can be taken as the core principles of finance? (i) There is time value of money. (ii) There are risks and returns involved in financial decisions. (iii) Lower risk asks for higher returns. (iv) Risk is not volatile. (v) The market has increasingly become a more determining factor of finance decisions.

Which of the following sets out concisely the information about the scheme that a prospective investor ought to know before investing?

Insufficient working capital may result in which combination of the following? I. Failures to adapt to changes. II. Enhancement in credit-worthiness of the firm. III. Reduced availability of trade and cash discounts. IV. Reduced volume of sales.

Assertion (A): The weighted average cost of capital should be used as a hurdle rate for accepting or rejecting a capital budgeting proposal. Reason (R): By financing in the proportions specified and accepting the project, yielding more than the weighted average required return, the firm is able to increase the market price of its stock.

Which of the following statements are false? 1. Share capital issued by a company for the first time is known as venture capital. 2. All venture capital funds in India are promoted by the government. 3. In addition to capital, venture capitalists provide managerial and technical support to the assisted firms. 4. The benefits of venture capital financing can be realizedin long-run only.

Participating preference shares are those participating in the

Consider the following statements. 1. Payback period method measures the true profitability of a project. 2. Capital rationing and capital budgeting mean the same thing. 3. Internal rate of return and time adjusted rate of return mean the same thing. 4. Rate of return method takes into account the time value of money. Which of the statement(s) given above is/are correct?

Match the following. List-I List-II a. Urgency method 1. It avoids in calculable risk and uncertainty in the long run b. Payback method 2. Also known as net gain method c. Unadjusted rate of return method 3. It is simple for the project with too large outlay d. Net present value method 4. Also known as financial statement method

Special Drawing Right (SDR) are

What is Hawala?

Which of the following pairs is/are not correct?

On the basis of the following information, what will be the EBIT corresponding to financial indifference point? Total capital outlay is Rs. 60,00,000 Financing Plans is 100% Equity is at Rs. 10/- per share Debt-equity ratio is 2 : 1 Rate of interest is 18% p.a. Corporate tax rate is 40%

The ratio of the standard deviation of a distribution to the mean of that distribution is referred to as

The main objective of employing financial leverage is to

Which of the following are the means of marketing new issues of securities? 1. By listing of securities. 2. Through jobbers and brokers. 3. By private placing of securities. 4. Through privileged subscription. Select the correct answer by using the options given below

Match the following. List-I List-II a. Market risk 1. It is known as insolvency risk b. Inflation risk 2. Risk caused due to demand and supply pressure c. Credit risk 3. Risk due to inability to meet firm's financial obligations d. Financial risk 4. Exchange in real value of return as a result of rise in production cost

Arbitrageurs in foreign exchange markets

A/An . . . . . . . . hedge protects the company from adverse exchange rate movements but allow the company to benefit from favoarable movements.

Net working capital refers to

Which of the following is a reason to hedge a portfolio?

Identify by the web-based financial software from the following.

The more the currency supply, the more will be

Which of the following project appraisal method is not based on the time value of money?

Bank pays interest on

Which risk arises, if a party discharges his obligations, but the counterparty defaults?

Which of the following are the types of hedging strategies?

Equity shareholders are called

Which is the most popular technique of working capital forecast?

Which one of the following is not the objective of UTI?

Opportunity cost refers to

Net working capital is the excess of current assets over

Which combination represents the assumptions of Walter's Dividend Model? I. The company has a very long or perpetual life. II. All earnings are either reinvested internally or distributed as dividend. III. There is no floatation cost for the company. IV. The cost of capital of the company is constant.

Identity the incorrect statement from the following:

Operating leverage and financial leverage of a firm are 3 and 2, respectively. If the sale increases by 6%, then earnings before tax will rise by

The following is an example of the core principle 'information is the basis for decisions.'

The maturity period of a commercial paper usually ranges from

Which method of stock repurchase occurs when the buyer purchases securities through a brokerage house?

A portfolio having two risky securities can be turned risk less, if

Indicate the correct combination of discounting techniques from the following techniques of capital budgeting decision. I. Profitability Index II. Net Present Value III. Accounting Rate of Return IV. Internal Rate of Return

Which of the following is not a source of conflict in the project ranking in capital budgeting decision as per NPV and IRR?

How should the Minimum Lease Payment (MLP) of a land and building lease get apportioned?

Risk, as it relates to working capital, means there is jeopardy to the firm for not maintaining sufficient current assets to

Assertion (a): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV and PI methods may givecontradictory results. Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns and project lives. Indicate the correct answer:

Every business undertaking requires funds for

The profitability index of a project is the ratio of the present value of cash inflows to

A set of possible values a random variable can assume, and their associated probabilities of occurrence are referred to as

If a bank thinks lending money to a certain business is risky, it will

Which method is a 'crude rule thumb' of capital budgeting?

Which is not the technique of capital structure analysis?

Debt financing is a cheaper source of finance because of

Which of the following is not included in the assumptions on which Myron Gordon proposed a model on stock valuation?

Under the terms of finance lease

The potential effect of exchange rate fluctuations on FDI is expressed as

We should keep our savings with banks because

Government grants are generally offered to businesses in

The capital budgeting technique that explicitly incorporates an estimated interest rate into its basic computations is the

Which of the following can be defined as the prominent sources of variable working capital? (i) Trade creditors (ii) Bank loan (iii) Commercial Papers (iv) Depreciation (v) Tax liabilities

Which of the following can be defined as the variability of return on stocks or portfolios, not explained by general market movement. It is avoidable through diversification.

Capital market line is

The total accounting value of the capital regularly employed in the business is called as

Benefits from adopting a common European currency include 1. reduced transaction costs. 2. elimination of exchange rate risk. 3. increased price transparency that will promote Europe wide competition. Select the correct answer by using the options given below

Maximum bonus ratio is

The governmental bodies may have approved lists of securities in which certain institutions (like pension funds) should invest. The companies whose securities appear on these lists:

Modigliani and Miller argue that dividend decision

Match the items of the following lists and suggest the correct answer: List-I List-II a. Payback Rate of Return 1. Discounted Cash Flow Technique b. Internal Rate of Return 2. Compounded values of investments and returns c. Benefit Cost Ratio 3. Crude method for project evaluation d. Net Terminal Value Method 4. Varying-sized projects evaluation

The traditional approach towards the valuation of a company assumes that

Match the following. List-I List-II a. Equity shares 1. Deposits, raised by business directly from public b. Inter-corporate Deposits 2. Deposit made by one company with another for a period upto six months c. Trade Credit 3. Permanent source of capital for a company d. Public Deposits 4. Facilitates the purchase of raw material without immediate payment

Under the Brettonwoods system

Which of the following would not be financed from working capital?

The sales of a firm are Rs. 74 Iakh, the variable costs are Rs. 40 lakh, the fixed costs are Rs. 8 Iakh. The operating leverage of the firm will be

Which of the following is not a source of short-term finance?

When a company is liquidated, the debenture holders have a prior right for

Which of the following is not a type of swap agreement?

The optimum capital structure of a company is planned as per considerations of I. Profitability II. Solvency III. Marketability of shares IV. Control

Match the following with the most suitable option. List-I List-II a. Modigliani-Miller Approach 1. Commercial paper b. Net Operating Income Approach 2. Working capital c. Short-term money market instruments 3. Capital structure d. Factoring 4. Arbitrage

The cost of new debt or marginal debt is called

When a company has surplus reserves but does not have adequate liquidity, then the company capitalises its reserves as

Under the Walter Model, if the rate of return is greater than the cost of capital, then what should be the impact of it?

Which of the following statements is false?

"The cost of capital declines when the degree of financial leverage increases." Who advocated it?

Which of the following factor(s) is/are responsible for overcapitalisation?

In case cost of capital is 10%, EPS is Rs. 10, IRR is 8%, and Retention Ratio is 60%, then the value of equity share as per Gordon's Model will be

Trading on equity refers to the following situation

In capital budgeting, the term capital rationing implies

Which of the following is not an application of working capital?

Positive NPV in project appraised by a firm may not occur an account of

A firm wants to know the Degree of Operating Leverage (DOL). They have the following information Current level of sales: 6,000 units Break-even point sales: 4,000 units What would be the DOL?

Financial leverage is measured by:

The concepts of cost of capital is/are very important from which point of view?

Working capital(s) is/are also called

Which of the following statement is incorrect?

Match the items of the following two lists and suggest the correct answer: List-I List-II a. Realized Yield Method 1. Cost of equity share capital b. Taxation 2. Cost of equity capital c. Cost of total capital employed 3. Cost of debt capital d. Dividend growth is a consideration 4. Weighted cost of capital

The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as . . . . . . . .

The cost of capital of a firm is

Which of the following is the variability of return on stocks or portfolios associated with changes in return on the market as a whole?

The modern approach to financial management is (i) The total fund requirement of the firm. (ii) The asset to be acquired. (iii) The payment of dividend to the shareholders.

A Crawling Peg System means

The time value of money supports the comparison of cash flows recorded at different time period by

Which one of the following is the main objective of IFCI?

"The cost of capital is the minimum rate of return which a firm requires as a condition for undertaking an investment." This definition is given by

Arrange the following steps of operation cycle in correct order 1. Conversion of a accounts receivables into cash. 2. Conversion of work-in-progress into finished goods. 3. Conversion of raw-material into work-in-progress. 4. Conversion of finished goods into accounts receivable.

Which of the following is not a disclosure requirement for finance leases?

Which of the following options are a part of preference shares?

Under dividend reinvestment plan (DRIP):

A company may raise the financial capital in the primary market through

Which of the following is concerned with the maximization of a firm's stock price?

If the going rate of interest is above the coupon rate, the bond will sell

Monetary policy for the countries using the euro as a currency is now conducted by

Since, investors can diversify away their . . . . . . . . risks, they have to be compensated only for . . . . . . . . risk.

Astatistical measure of the variability of a distribution around its mean is referred to as

Currency swap is a method of

Which country is not using the euro?

The degree of financial leverage reflects the responsiveness of

The equity shareholders are the residual claimants of all earnings left after meeting all prior

How many Greeks used for hedging portfolios of options with underlying assets?

Under the lease agreement, the lease gets the right to

Which of the following is defined as the key feature of Islamic Finance?

Which of the following is not a type of foreign exchange exposure?

Three forms of trade credit include

What are the main benefits given to participating preference shareholders?

. . . . . . . . varies inversely with profitability.

Assertion (A): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV, and PI methods may give contradictory results. Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns, and project lives. Indicate the correct answer.

Operating cycle can be shortened by increasing

Match the following. List-I List-II a. Capital budgeting 1. Time adjusted rate of return b. Profitability index 2. Irreversible c. Internal rate of return 3. Benefit/cost d. Capital investment decisions 4. Planning capital expenditure

Which of the following is not the major objectives of the International Monetary Fund?

Which of the following assumptions is not covered in Walter's Model of the dividend policy?

To say that the forward market lacks liquidity means that

The immediate (two days) exchange of one currency for another is a

Which of the following risk is termed as foreign exchange risk?

Assertion (A): A company should pay dividend to its shareholders. Reason (R): Dividends are heavilly taxed than capital gains.

Permanent working capital is generally financed through

We adopt the philosophy analogous to hedging (maturity matching). Which of the following is the most appropriate form for financing a new capital investment in plant and equipment?

Which among the following is the correct full form of SIDO set up in 1973?

Debentures are long-term Borrowings of a Company. In debenture, interest payable is

Which of the following sections of the Companies Act, 2013, defines shares?

Which one of the following statement is false?

Which one the following assumptions is not covered in the Walter's model of the Dividend Policy?

Dividend capitalisation model was developed by

If the earnings of company are stable then it can easily follow

Which of the following refers to the institutional arrangements countries adopt to govern exchange rates?

Securitisation market in India includes.

Interest rate risk is a type of

In 2015, the RBI issued regulations known as the Rupee Bond Guidelines allowing Indian issuers to raise funding through the issuance of rupee-denominated debt instruments. These instruments are now widely referred to as

Which of the following indicates the concept of net working capital?

Cost of capital does not mean

"Hardcore working capital" is also called

The following method cannot be used for managing translation exposure.

Finance made available by specialised financial institutions is called

Which one of the following is not a method of calculating the cost of equity capital?

The process of allocation or distribution of available capital funds over various capital projects according to their ranks and profitability is called

Share capital is

Match the items given in the two lists. List-I List-II a. Debt securities 1. Floating Rate Bonds without any explicit interest rate b. Company issuing such bonds experiences less financial distress 2. Zero-Coupon Bonds c. Coupon rate quoted as a mark-up on the given rate 3. Income Bonds

Assertion (A): The risk condition exists when decision-makers have absolutely no idea of what the results of an implemented alternative would be. Reason (R): When operating under complete uncertainty condition, decision-makers usually find that sound decisions are a matter of chance. In the context of the two statements, which one of the following is correct?

When there is acceleration of payment of strengthening currencies, and speeding up the receipt of weakening currencies, then there is

Which is the following is not a method of issuing ordinary shares?

The forms of discounted cash flow technique for the appraisal of capital investments include

Who gave the concept of monetarism?

Which of the following is not true with reference to capital budgeting?

A contract that requires the investor to sell securities on a future date is called a

Which of the following statements is/are incorrect?

When supplier extend credit to the buyer, it is called

The degree of super-leverage would be calculated by

Forward contracts are risky because they

When domestic currency appreciates, it benefits . . . . . . . . and harms . . . . . . . .

Match the following. List-I List-II a. Depreciation funds 1. Its use has increased in recent years due to use of trade squeeze b. Provision for taxation 2. Some authors do not accept them as a source of funds, but it is not reasonable c. Accrued expenses 3. It can be used during the intermittent period d. Trade credit 4. The firm can postpone the payment of expenses for short periods

The beta factor is a measure of systematic risk. It means the element of risk cannot be avoided by

A company might prefer to raise more debt capital rather than equity capital for:

All of the following are types of financial instruments except

The segments of international financial market include 1. Foreign Exchange Market 2. International Arbitrage Market 3. International Money Market 4. International Bond Market Select the correct answer by using the options given below

The instrument chosen for enhancement of international liquidity is

Which of the following are rules to use when choosing between forward contracts and currency options?

The overall capitalization rate and the cost of debt remain constant for all degrees of financial leverage. It is advocated by

In which of the following ways should the discount rate be adjusted to increase a given future value?

Net present value is equal to

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is

The cost of issuing new stock is called

The date of settlement for a foreign exchange transaction is referred to as

Securitisation is a process in which assets are sold to a bankruptcy remote . . . . . . . . in return for an immediate cash payment.

Match List-I with List-II and select the correct answer: List-I List-II a. Realised yield method 1. Cost of equity share capital b. Taxation 2. Cost of equity capital c. Cost of total capital employed 3. Cost of debt capital d. Dividend growth is a consideration 4. Weighted cost of capital

Which of the following statement(s) is/are false? 1. Capital profits can never be distributed as dividends to the shareholders. 2. Dividends are paid out of profits and, therefore, do not affect the liquidity position of the firm. 3. Every company should follow the policy of low dividend payment. 4. Walter's model suggests that dividend payment dose not affect the market price of the share. Choose the correct answer

Operational techniques include

Which of the following statement is false?

Which of the following is an assumption of the APT?

Which of the following are the examples of systematical risk. 1. Elimination of Government Subsidy 2. Increase in bank rate 3. Labour problem 4. High levered fund Select the correct answer:

A company has issued 10% perpetual debt of Rs. 1,00,000 at 5% premium. If tax rate is 30%, then the cost of debt will be

Which one of the following is the most popular method for estimating the cost of equity?

Assertion (A): A furores contract specifies in advance the exchange rate to be used, but it is not as flexible as a forward contract. Reason (R): A futures contract is for a specific currency amount and a specific marurity date.

Which of the following is not a source of credit information of prospective customers?

Match the items of List-I with those of List-II and indicate the correct answer: List-I List-II a. Net income approach 1. Working capital management b. Profitability index 2. Over capitalisation c. Concentration banking 3. Capital structure planning d. Lower rate of return 4. Capital budgeting decision

An agreement to exchange of one currency for another in one month is a

Which of the following are key benefits of Differential Voting Rights (DVRs)?

Which one of the following emphasises the qualitative aspects of working capital maangement?

Assertion (A): The IRR of a project is the discount rate which reduces its NPV to zero. Reason (R): A project is worth accepting if the IRR exceeds the cost of capital.

Select the correct answer of the following statements Statement (I): A Global Depositary Receipt (GDR) is a bank certificate issued in more than one country for shares in a foreign company. Statement (II): A GDR is similar to American Depositary Receipt (ADR). Statement (III): GDRs are called EDRs when private markets are anempting to obtain euros.

Select the correct answer regarding motives for holding inventories by firms. 1. Transaction motive 2. Environmental motive 3. Precautionary motive 4. Speculative motive 5. Competitive motive

Which of the following approaches would be consistent with a hedging (maturity matching) approach to financing working capital?

Cost of capital from all the sources of funds is called

The profit made by the Government (or Central Bank) by issuing currency, especially the difference between the face value of coins and their production costs is called

Securitised assets carry a unique form of risk called

Match the following. List-I List-II a. Fixed capital 1. . . . . . . . . refers to make-up of a firm's capitalisation b. Normal rate of return 2. . . . . . . . . is the cause of over-capitalisation c. Liberal dividend policy 3. Earnings per share ÷ Market price per share = . . . . . . . . d. Capital structure 4. . . . . . . . . is the funds required for a acquisition of assets that are to be used over and over a long period

Examine the following statements. (i) Payback Period Method measures the true profitability of a project. (ii) Capital Rationing and Capital Budgeting mean the same. (iii) Internal Rate of Return and Time Adjusted Rate of Return are the same. (iv) Rate of Return Method takes into account the time value of money.

Which of the following is not one of the steps for currency exposure management?

Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current assets needs?

Financial signaling has been raised as an argument in the battle over the relevancy of dividends. Which of the following statements indicate financial signaling argument?

Preference shares

When an enterprise has an unhedged receivableor payable denominated in a foreign currency, and the settlement of the obligation has not yet taken place, that firm is said to have

Retained earning is . . . . . . . . a cost free source of capital.

Which of the following factor is not directly responsible for slowing down the growth of infrastructure?

Which of the following is a basic principle of finance as it relates to the management of working capital?

Statement-I: Working capital leverage measures the responsiveness of return on equity for changes in current assets. Statement-II: When the annual demand for an item is 3,200 units, the unit cost is Rs. 6, inventory carrying charges is 25% p.a., and the cost of one procurementis Rs. 50, the economic ordering quantity would be 700 units.

Which form of market efficiency states that current prices fully reflect all publicly available information?

Concessions, mainly multinational in character, come under the principle of

If the risk-free return (Rf) is 6%, the beta value is 1.5, and the market rate of return (Km) is 10%, the expected rate of return would be

Hedging in finance refers to protecting investments. What are the areas where hedging is applied? (i) Securities market (ii) Commodities market (iii) Interest Rates (iv) Currencies

Match the following. List-I (Concepts) List-II (Disadvantages) a. Undercapitalisation 1. Ignores time patterns of returns b. Overcapitalisation 2. Increase in speculative activities c. Profit maximisation 3. Decline in value of securities

Which of the following equates the present value of cash outflows and the present value of expected cash inflows from a project?

According to the APT, the value of the firm-specificfactor is expected to be, on average

When a lease transfers substantially all the risks and rewards of ownership to lessee, this is called

IPO and FPO are linked with

The ratio measuring earnings available to the holder of an ordinary share is

On the expiration date of the futures contract, the price of the contract

Which is the source of mid-term finance?

In the foreign exchange market, factors that shift the expected return schedule for foreign deposits include 1. a change in the foreign interest rate. 2. a change in the expected future exchange rate. 3. a change in the current exchange rate. Select the correct answer by using the options given below

Which of the following is not a source of long-term finance?

Sometimes, the investors would prefer to pay a stock dividend rather than a regular cash dividend. Which of the following statements are true in such kinds of decisions?

Long-term loans from the public is called

Total of all current assets is called

Which one of the following equates the present value of cash out flows and the present value of expected cash inflows from a project?

Formula for net cash inflow of a project is

Which of the following facts are true in the context of forfaiting? 1. Forfaiting enables exporters to receive immediate cash by selling their medium and long-term receivables - the amount an importer owes the exporterat a discount through an intermediary. 2. Banks never function as forfaiters. 3. Forfaiting protects against credit risk, transfer risk, and the risks posed by foreign exchange rate or interest rate changes.

Cost of equity share capital is more than cost of debt because

Which one of the following is an internal hedging technique?

For the computation of cost of equity, arrange the following measures in the ascending order of accuracy 1. Capital Asset Pricing Model 2. Dividend-Price Ratio 3. Earning-Price Ratio 4. Dividend-Price Plus Growth Ratio

It is very difficult to interpret news in foreign exchange markets because

Hedging transaction is indicated by

The advantage of forward contracts over future contracts is that they

Net working capital = . . . . . . . . - Current liabilities

MM theory in perfect market suggests that dividend payment

Shareholders demand higher returns in compensation for increased levels of risk. It should be called

The presence of fixed costs in the total cost structure of firm results in

A firm operating in India cannot hedge its foreign currency exposure through

'That personal leverage can replace corporate leverage' is assumed by

Which of the following statements regarding covariance is correct?

. . . . . . . . is considered as a creative capital performing economic functions different from other investment vehicles, primarily serving as the expansion capital.

In a certainty-equivalent approach, risk-adjusted cash flows are discounted at

While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?

In which of the following stock exchanges, the GDRs are listed? 1. London Stock Exchange 2. New York Stock Exchange 3. Luxembourg Stock Exchange 4. Bombay Stock Exchange 5. Singapore Stock Exchange 6. Hong Kong Stock Exchange Select the correct answer using the options given below

A management philosophy incorporating a 'pull' system of producing or purchasing components and products in response to customer demand describes

Where desired rate of return is/are not known, which method of present value technique is adopted?

Capital structure designing has nothing to do with

There are 19 nations part of the Eurozone. The EU member nations are expected to meet some economic conditions set in the Maastricht Treaty in 1992. Those conditions are also called

The core of the Brettonwoods system was the

Which of the following items describes an index measure of systematic risk?

Match the following. List-I (Term) List-II (Source) a. Long-term 1. Factoring Bank b. Medium-term 2. Debentures c. Short-term 3. Lease financing

Assertion (A): Investors in the capital market seem to be inclined to fixed income securities. Reason (R): Debt instruments now have an active secondary market.

Cost of depreciation fund is the

Which of the following types of debt instruments are allowed in venture capital?

Form of Government International of finance is

Short-term loans are for a period of

A long-term cash flow improvement may not be achieved by

Arrange the following in the proper order for decision under capital budgeting. (i) Estimating the cost and benefits of proposals. (ii) Deciding the investment objective. (iii) Selecting the best investment proposal. (iv) Applying the capital budgeting decision technique.

Match the items of List-I with the items of List-II and indicate the correct option. List-I List-II a. Term Finance 1. Providing finance to new or existing industrial units to encourage the commercial application of technology or expansion. b. Refinance 2. Delivering of banking services at an affordable cost to the vast sections of disadvantaged and low-income groups. c. Financial 3. Providing replenishment finance to eligible institutions for their loans to industrial concerns. d. Venture Capital 4. Providing finance to the borrowers for expansion and modernization of plant and equipment.

Risk of two securities with different expected return can be compared with

Assertion (A): Capital Account convertibility is introduced only sometimes, after the introduction of convertibility on the current account, when the exchange rate of the currency of a country is relatively stable. Reason (R): Capital Account convertibility is necessary for faster growth and development of the economy, and it makes foreign exchange rate more stable.

Which of the following is not a means of diversified marketing?

Assertion (A): The financial statements prepared on a historical cost basis, results in an erosion of capital in the long run. Reason (R): Maintaining the books of accounts as per the current purchasing power technique only may contain the inflationary pressure. Which is the correct statement?

In SARFAESI Act, 'E' stands for

What is the popular term used for a type of option in Foreign Exchange Market which provides the holder with the right to purchase or sell foreign currency at the most favourable exchange rate realized over the life of the option?

Which of the following refers to cash inflow under the payback period method?

In the Fiat system

Finance is related to

Which of the following are key characteristics of ordinary shares in limited companies?

Which form of market efficiency states that current security prices fully reflect all information, both public and private?

Which form of market efficiency states that current prices fully reflect the historical sequence of prices?

What prompted Bretton woods Agreement?

Match the following. List-I (Capital Structure Principles) List-II (Features) a. Cost principle 1. Management chooses such combination of sources of financing, which can easily adapt to changes b. Risk principle 2. While designing the structure, the finance manager remembers that existing management control and ownership remains undisturbed c. Control principle 3. Reliance is placed more on equity for financing capital requirements than excessive use of debts d. Flexibility principle 4. Cost of capital structure should be minimised and Earning Per Share (EPS) should be maximised

One difference between a financial lease and operating lease is that

Assertion (A): The comparative cost theory is static in character. Reason (R): The comparative cost theory is based on fixed supplies of factors of production.

In the foreign exchange market, the . . . . . . . . of one country is traded for the . . . . . . . . of another country.

Which of the following are the main benefits of non-voting shares to a company?

The Finance Act, 2020, changed the method of dividend taxation. Which of the following facts are related to dividend taxation?

Which of the following can be defined as the cost of capital from an investor's point of view?

In an agreement to exchange one currency for another in three months at a fixed price, the price is the . . . . . . . .

ADRs and GDRs are an excellent means of investment to invest in India for

The appropriate ratio for indicating liquidity crisis is

Interim cash inflows are reinvested at a rate of return equal to the internal rate of return is the built-in mechanism for

Match List-I with List-II and select the correct answer: List-I List-II a. Modigliani Miller approach 1. Commercial papers b. Net operating income approach 2. Working capital management c. Short-term money market instrument 3. Capital structure d. Factoring 4. Arbitrage

Which one of the following assumptions is not included in the James E. Walter Valuation model?

Which of the following is an implicit cost of increasing proportion of debt of a company?

Indicate the cost of equity capital based on capital asset pricing model with the following information. Beta coefficient 1.40 Risk free rate of interset 9% Expected rate of return on equity in the market 16%

Profitability index of a project is the ratio of present value of cash inflows to

Dividend irrelevance hypothesis implied in the

The international monetary system went through several distinct stages of evolution. These stages are summarised, in alphabetic order, as follows 1. Bimetallism 2. Brettonwoods system 3. Classical gold standard 4. Flexible exchange rate regime 5. Interwar period The chronological order that they actually occurred is

If we move from present value to calculate the future value, we can use the concept of compounding rate. If we were to move from future value towards the calculation of present value, the concept used will be

Who proposed a model to apply economic order quantity concept of inventory mangement to determine the optimum cash holding in a firm?

The cost of capital from all the sources of funds is called

Which of the following concepts deals with discounted cash flows?

Which of the following are the main features of Zero Coupon Bonds? 1. They are called deep discount bonds. 2. The price paid by investors is less than their face value. 3. The bonds are redeemed at par.

Which combination of the following represents the assumptions of the Walter's dividend model? 1.The company has a very long or perpetual life. 2. All earnings are either reinvested intemally or distributed as dividend. 3. There is no floatation cost for the company. 4. Cost of capital of the company is constant. Select the correct one:

Which one of the following is not the internal factor affecting the weighted average cost of capital of a firm?

Which of the following statements is most correct?

The concept of bimetallism, with gold and silver full-bodied coins in circulation continued up to the year

Hedging with options is best recommended for

From investor's point of view, the cost of capital is

The following situation may occur when there is an increase in the number of shares outstanding by reducing the par value of the stock.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was enacted in which year?

Which of the following statement(s) is/are correct?

Arrange the following terms of working capital cycle involves in correct sequence. 1. Acquisition of raw material 2. Finished goods 3. Receivables 4. Cash 5. Work-in-progress

Which of the following statements is true?

Which of the following can be defined as the term of a finance lease?

What does 'Yield to Maturity' in the context of bonds indicate?

Our firm has a philosophy that is analogous to hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs?

A firm with high operating leverage has

Once we define working capital as current assets, it can be further classified according to

Indicate the incorrect statement (i) Credit risk is a loss on account of a default of repayment of a loan. (ii) Liquidity risk is the risk on account of the mismatches of cash inflow and outflow in a firm. (iii) Basic risk is the risk in a firm owing to the differences in the index to which financial assets and liabilities are tied up. (iv) Hedging risk for a long position is accomplished by taking a short position and vice versa.

Which technique is common used to estimate the cash flow in multinational capital budgeting?

Which of the following is not a type of financial lease arrangement?

Interim cash inflows are reinvested at a rate of return equal to the internal rate of return is the built-in-mechanism for

Hedging in the futures market

When interest rates fall, a bank perfectly hedging its portfolio of treasury secure futures market

A profitability index (PI) of .95 for a project means

Which of the following is false? Companies repurchase their own shares:

Arrange the following in chronological order about the events of operating cycle. 1. Conversion of accounts receivable into cash. 2. Conversion of finished goods into accounts receivable. 3. Conversion of raw materials into work-in-process. 4. Conversion of work-in-process into finished goods.

Which of the following statements are true? Indicate the correct answer. 1. Tax shield on depreciation and interest is an important valuable both for lessor and lessee. 2. A lessee may evaluate the lease options as against the buying option. 3. Sale and lease back and leveraged lease are types of financial lease. 4. Lease or financing is a type of capital budgeting decision from the point of view of the lessee. Select the correct answer

Under the Capital Asset Pricing Model, the return required from security is related to

Which of the following are the main features of a 'bought out deal' in the context of corporate funding? (i) It is a method of offering securities to the public through a sponsor or underwriter. (ii) A bank, financial institution, or an individual can never not be a sponsor. (iii) The securines are listed in one or more stock exchanges within a time-frame mutually agreed upon by the company and the sponsor. (iv) The bought out deals facilitate better investor protection. (v) As the sponsor may occupy a large number of shares, it may trouble the company.

Objectives of management of working capital include

Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy?

Spy stands for

Which is not a form of short-term spontaneous credit?

Which of the following statement is correct?

A portfolio comprises two securities and the expected return on them is 12% and 16% respectively. Determine return of portfolio if first security constitutes 40% of total portfolio.

Which of the following methods does not consider the profitability of the whole life of the project?

Which of the following is not an indication a lease is a finance lease?

Dividends are earnings for shareholders and they expect reasonable earnings from their

Which of the following combination is suitably attributed to the statement that stakeholders should expect a fair return on their investment? (i) Optimization of Profit (ii) Social Responsibility of Business (iii) Competition Theory of Business (iv) Walter's Theory

Which of the following statements is not correct?

Match the following. List-I List-II a. Net income approach 1. Also known as 'Intermediate Approach' b. Net operating income approach 2. Change in the capital structure of a company does not affect the market value of the company and overall cost of capital c. Traditional approach 3. It provide analytical sound and logically consistent behavioural justification for their hypothesis d. Modigliani Miller approach 4. A firm can minimise the overall cost of capital by using debt financing to the maximum extent

Dividend policy of a company mainly concerns with 1. Dividend payout and/or 2. Stability of dividend Select the correct answer using the options given below

The risks that cannot be eliminated by diversification are

If NPV is positive, the IRR will be

Efficient portfolios can be defined as those portfolios which for a given level of risk provides

The issues in international capital budgeting include 1. Exchange rate risk 2. Political risk 3. Geographical risk 4. Parent vs project cash flow

Which of the following sources of finance has an implicit cost ofcapital?

Negative net working capital means assets are not being used effectively, and a company may face a liquidity crisis. This implies

When assessing economic exposure, financial managers should consider how variations in exchange rates influence . . . . . . . .

Dividend irrelevance argument of MM model is based on

Negative net working capital implies that

What are the main objectives of financing decision? 1. To get optimal working capital figure. 2. To get optimal capital structure. 3. To make the company exposed to high risk. 4. To keep the cost of capital lowest. 5. To make the value of share highest.

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders and the amount to be retained in the firm. Reason (R): Dividend policy of the firm has its effect on both the long term financing and the wealth of shareholders.

Which of the following dividend promises to pay the shareholders at a future date?

Which of the following is an internal source of finance?

Which of the following portfolio statistics statements is correct?

The cost of equity share capital is more than the cost of debt because

A lease is likely to be most beneficial to both parties when

Consider the following statements. In case of overcapitalisation, 1. market value of shares come down from its face value. 2. organisation failed to earn sufficient profit. Which of the statement(s) given above is/are correct?

International liquidity comprises which of the following? (i) Gold held by central banks (ii) Gold held by families (iii) Forex reserve held by commercial banks (iv) Mineral wealth (v) SDRs (vi) Borrowing facilities (vii) NRIs and FDRs (viii) Credit facilities available under SWAP

XYZ Co earns Rs. 10 per share, capitalised at 10% and has a return on investment of 12%. What is the optimum dividend payout ratio as per Walter's dividend policy model?

Which of the following is the systematic risk?

Match the items of List-I with the items of List-II , and find out the correct matching. List-I List-II a. $$frac{{{ ext{Contribution}}}}{{{ ext{EBIT}}}}$$ 1. Financial leverage b. $$frac{{{ ext{EBIT}}}}{{left( {{ ext{Earning before tax}}}
ight){ ext{EBT}}}}$$ 2. Super-leverage EBIT c. $$frac{{{ ext{Contribution}}}}{{{ ext{EBIT}}}}$$ 3. Operating leverage

Investment in machines require

Statement-I: In the payback period method, the risk of the project is adjusted by lessening the target payback period. Statement-II: Sensitivity analysis helps in the calculation of the net present value of the proposal.

Which combination of the following two statements (A) and (R) is correct? Assertion (A): The IRR of a project is the discount rate which reducesits NPV to zero. Reason (R): A project is worth accepting if the IRR exceeds the cost of capital.

Match the following: List-I List-II a. Matching approach 1. Dividend Policy b. Structural ratios 2. Inventory Management c. Ordering quantity 3. Financing Working Capital d. Bonus shares 4. Capital Structure

The single European currency, the euro, was adopted by 11 member nations on 1 st January, . . . . . . . .

For a layman, factoring and forfaiting perform the same basic function. Factoring mostly deals with

Combined leverage can be used to measure the relationship between

Assertion (A): Acompany should pay a minimum dividend to its shareholders. Reason (R): Dividends are heavily taxed than capital gains.

Which is a payment of additional shares to shareholders in lieu of cash?

The cost debt financing is generally . . . . . . . . the cost preferred or common equity financing.

The point of tangency between risk return indifferences curves and efficient frontier highlights.

Which of the following is not the internal factor affecting the weighted average cost of capital of a firm?

Loans to limited companies

Which of the following can be defined as different stages of Working Capital Operating Cycle?

Which is not the long-term source of working capital?

The three different types of forex transactions are

A company can improve (lower) its debts to total assets ratio by doing which of the following?

Which of the following is not a method for calculating or ascertaining the amount of purchase consideration?

Which of the following committees has given the concept of core current assets, and also suggested three alternatives for working out the maximum permissible of bank funding?

For a foreign exchange of specific currency, the non-hedged position is classified as

The term 'capital structure' implies

Arrange the following stages of securitisation in series. 1. To find out a Spy or new SPY is formed. 2. To determine which assets are to be securitised. 3. To acquire the receivables under an agreement at their discounted value. 4. To collect the fund from investors and issue securities in return.

Under a conservative financing policy, a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a 'dip' in temporary current assets causes total assets to fall below the total long-term financing?

Dividend is the share of profit of company dividend amongst its

When creditors of an enterprise have claim only on the assets owned by the enterprise, and not on the assets of the owners of the enterprise, that enterprise is

Match the following. List-I (Forms of Dividend Payment) List-II (Features) a. Cash dividend 1. The fair value of the additional shares issued is based on their fair market value when the dividend is declared b. Stock dividend 2. On the date of payment, the company issues dividend payments c. Property dividend 3. It creates a note payable d. Scrip dividend 4. You record this distribution at the fair market value of the assets distributed

Which of the following agencies define the market value of shares?

The main reasons for adjustments in capital structures include

Which of the following combinations of rules stands true while preparing a schedule of changes in working capital?

Need for budgeting arise due to

Under which of the following exchange rate systems, exchange rates are either held constant or allowed to fluctuate only within very narrow boundaries?

When a company gives an option to its shareholders to receive dividend either in cash or kind, then it is called

Efficient frontier comprises of

Which method does not consider the time value of money?

In 2 years, I am set to receive Rs. 1,00,000. If the interest rate were to suddenly decrease, the present value of that future amount to me would

A firm's cost of capital is the

There are important differences between translation, transaction and economic exposure. Which of the following statements regarding these differences is true?

The working capital ratio is

The concept of cost of capital can also be explained in terms of . . . . . . . . cost.

Beta factors based on historical data may be a poor basis for future decision making. It is on the basis of evidence that suggests

Transaction costs include

Match the following. List-I List-II a. Gross working capital 1. Difference of current assets and current liabilities b. Net working capital 2. It is referred to as "hardcore working capital" c. Permanent working capital 3. It is the excess of working capital over permanent working capital d. Variable working capital 4. Total current assets

Which of the following statements are true on wealth maximization? (i) It takes into account the long-term approach. (ii) It recognizesthe risk of uncertainty. (iii) It takes into account the time value of money. (iv) It takes into account the returns. (v) It ignores stock market prices.

If a firm moves from a 'conservative' working capital policy to an 'aggressive' policy, it should expect

A multinational company that is faced with mild interference upto complete confiscation of all assets is encountering

External source of finance do not include

A company has issued 10% perpetual debt of Rs. 1 lac at 5% premium. If the tax rate is 30%, then the cost of debt will be

Under a flexible exchange rate regime, governments can retain monetary policy independence because the external balance will be achieved by

Risk of a portfolio can be minimized by which one of the following?

Which of the following methods of capital budgeting assumes that cash-inflows are reinvested at the project's rate of return?

By hedging a portfolio, a bank manager

Match the following. List-I List-II a. Depreciation funds 1. . . . . . . . . is comparatively cheap. b. Public deposits 2. . . . . . . . . is the internal source of financing short-term working capital. c. Term loans 3. . . . . . . . . have been very popular among Indian companies. d. Bank credit 4. . . . . . . . . are resources raised for a period from 3 to 5-7 years.

Which of the following is the most appropriate form for financing a new capital investment in plant and equipment?

Which of the following are the main benefits to originators in the context of asset-based securitization? (i) Securitization improves returns on capital. (ii) Securitization lowers the borrowing costs. (iii) Securitization releases additional capital for expansion. (iv) Securitization improves asset or liability. (v) Securitization improves credit risk management.

Which of the following is not a fundamental assumption made by Modigliani and Miller?

Arbitrage pricing theory may be more suitable for a company since it is based on the assumption that returns are determined by a number of factors to which a particular risk premium is attached. These factors are

Which of the following is an example of owner's fund?

Hedging is used by companies to

Which one of the following emphasizes the qualitative aspects of working capital management?

Which one of the following is not a merit of net present value?

The method by which a firm may protect itself against economic exposure is

In 2002, ICICI merged with ICICI Bank through a reverse merger process. The mam objective of the merger was to make ICICI a

Permanent working capital

A(n) . . . . . . . . is the expected cash dividend that is normally paid to shareholders.

Which of the following are the main features of an operating lease? (i) Operating lease is off-balance-sheet financing. (ii) The lease period is shorter than the useful life of the leased asset. (iii) The lease agreement will never have a cancellation clause. (iv) The operating lease is also called service lease.

The main advantages of hedging are (i) Limiting losses (ii) Increases liquidity (iii) Lowers margin outlay (iv) Exchange rate fluctuations (v) Application of different tax rates (vi) Covering political risk in foreign investments

"Dividend is not relevant in determining the value of the company". Who held this opinion?

The foreign exchange market is referred to as a market where one country's currency is exchanged for another currency. The currency exchange is usually made through the following methods

Which one of the following formulas used for calculating average rate of return?

Financial leverage in a firm is positively affected by

The most common approach for analyzing the capital structure of a firm is

Which of the following period in yearsis called Classical Gold Standard?

Examine the following statements and choose the correct answer: Assertion (A): The American style option, compared to the European style, provides more freedom to option holders in exercising the option. Reason (R): The American style option can be exercised only at a specified date which is generally the expiration date.

Match the following: List-I List-II a. Certificate of deposits 1. 91 days, 182 days and 364 days b. Debentures 2. 3 to 5 months c. Treasury bills 3. 1 to 270 days d. Commercial papers 4. Longer periods, i.e. n years

The principal reason for the existence of leasing is that

After tax cost of debt capital is calculated by

Internal source of finance do not include

Statement I: Working capital leverage measures the responsiveness of return on equity for changes in current assets. Statement II: When the annual demand for an item is 3,200 units, unit cost Rs. 6, inventory carrying charges 25% per annum and cost of one procurement Rs. 150, the economic ordering quantity would be 700 units.

Which of the following is not a feature of payback period method?

Concentration banking is a method of

In certainty equivalent approach, adjusted cash flows are discounted at

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)?

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

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

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

The payoffs for financial derivatives are linked to

Which of the following is not an approach to the capital structure?

In contrast to the capital asset pricing model, arbitrage pricing theory

Discounted cash flow criteria for investment appraisal does not include

Match the following. List-I (Measurements of Cost of Capital) List-II (Features) a. Cost of debt 1. Its calculation is relatively difficult task b. Cost of preference share capital 2. The amount of interest payment should be matched with the net cash proceeds of the debt c. Cost of equity share capital 3. The shareholders have to incur some brokerage cost for investing the dividends received d. Cost of retained earnings 4. The rate of dividend payable on these shares is fixed well in advance at the time of their issue

Once the changeover to the euro was completed by 1 st July, 2002, the legal-tender status of national currencies in the euro zone

The larger fluctuations in portfolio value of foreign exchange of financial institutions leads to

Which of the following is taken as the best approach to finance the long-term minimum needs of the working capital?

Which of the following risks should be identified in international trade to be hedged?

Which of the following is not very much relevant in dividend decision?

The ratio that helps in assessing how effectively an enterprise uses resources provided by its owners is

Capital expenditure is one which is intended to benefits . . . . . . . . periods.

Which of the following options illustrates the use of a hedging approach to financing assets?

Which of the following can be termed as the components of total portfolio risk?

Under rigid dividend policy, the rate of dividend is . . . . . . . .

The payments over the lease term the lessee can or must make, is called

The lease where the lessee maintains and insures the leased asset rather than the lessor in a full-service lease is

The primary goal of financial management is

The dividend irrelevance theorem to share valuation was propounded by

Underwriters of the security issues are required to

Which of the following is/are, the source(s) of short-term finance?

Which of the following statements are true in the context of dilution of equity shares?

Which of the following can be termed as the source of permanent working capital?

'Dividend is not relevant in determining the value of the company'. Who among the following held this opinion?

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to

In case, cost of capital is 10%, EPS Rs. 10, IRR 8% and retention ratio is 60%, then the value of equity share as per Gordon's Model will be

Which of the following variables is not known in internal rate of return method of capital budgeting?

The euro zone is remarkably comparable to the United States in terms of

Which of the following is included in international liquidity? 1. Foreigner exchange reserve. 2. Borrowing capacity of the various countries. 3. Gold reserves.

Which of the following statement is not correct?

Statement I: In payback period method, the risk of the project is adjusted by lessening the target payback period. Statement II: Sensitivity analysis helps in calculation of net present value of the proposal.

Indicate the cost of equity capital, based on the capital asset pricing model, with the following information: Beta coefficient - 1.40 Risk-free rate of interest - 9% Expected Rate of Return on equity in the market - 16%

Which of the following is not among the assumptions of the Modigliani-Miller Model?

A survey of Chief Financial Officers found that the most commonly used hedging technique is

Which of the following statements are true in the context of Special Purpose Vehicles?

Which of the following would be consistent with a more aggressive approach to financing working capital?

For calculating the cost of preference shares capital, the dividend of preference share is divided by . . . . . . . . and multiplied by 100.

Which ratio explains how many portions of earning is distributed in the form of a dividend?

The semi-strong form of the efficient markets hypothesis asserts that stock prices

The Arbitrage Pricing Theory is an equilibrium model developed by

Which of the following premiums is called the difference between the expected return on common stock and a current yield of treasury bonds?

Which of the following concept measures the variability in returns for a given security in relation to variation in returns in the market returns as a whole?

Capital budgeting is also known as

Which of the following function is performed by multilateral netting?

Patterns of capital structure include

Financial Instruments issued with detachable warrants and redeemable after certain period are known as:

The starting point for understanding how exchange rates are determined is a simple idea called . . . . . . . ., which states-if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it.

Which of the following is not true in the context of a leveraged lease?

The amount of current assets required to meet a firm's long-term minimum need is referred to as . . . . . . . . working capital.

In securitisation, which of the following is/are not a benefit to the issuer? 1. Off-balance sheet treatment. 2. Frees up regulatory capital. 3. Higher credit ratings and lower borrowing costs. 4. Provides Collateral security. 5. Transfer of Credit risk. Select the correct answer by using the options given below

Translation exposure arises in respect of items translated at

The following equation helps us in finding working capital?

The conservative approach is a risk-free strategy of working capital financing that helps in maintaining a higher level of current assets and higher working capital. Which of the following is consistent with a conservative approach to financing working capital?

Funds required for purchasing current assets is an example of

Which of the followingis not a clear difference between debenture holders and shareholders of a company?

Which of the following is not used to estimate cost of equity capital?

Dividend capitalization model was developed by

Finance leases are accounted for in a similar manner to

Assertion (A): Weighted average cost of capital should be used as a hurdle rate for accepting or rejecting a capital budgeting proposal. Reason (R): It is because by financing in the proportions specified and accepting the project, yielding more than the weighted average required return, the firm is able to increase the market price of its stock.

Which of the following can be defined as the example of direct finance?

Which of the following is a long-term lease that is not cancelable and its life often matches the useful life of the asset?

Which capital investors are long-term investors who are prepared to take the risk that the entrepreneurial projectcan fail?

The total return on a security is equal to the following

An example of Euro currency is

Long-term sources of finance are also required for

A leased asset should be depreciated over the

Match the following. List-I List-II a. Payback method 1. Give due weightage to the profitability of project b. Unadjusted rate of return method 2. Predetermination of earnings is not necessary c. NPV method 3. It avoids in calculable risk and uncertainty d. IRR method 4. Its calculation is much simpler

Advantages of adequate working capital funds include

Some equity schemes take opposite positions in different market segments, such that a return is earned while remaining risk neutral. They are called

Select the correct answer regarding the motives for holding inventories by firms. 1. Transaction motive 2. Environmental motive 3. Precautionary motive 4. Speculative motive 5. Competitive motive

"Capital budgeting is concerned with designing and carrying through a systematic investment programme." Who said it?

The portion of eamings which is distributed among shareholders in the form of dividend is called

Which one of the following methods of capital budgeting assumes that cash inflows are reinvested at the project's rate of return?

Match List-I with List-II and select the correct answer: List I List II a. Extended Fund Facility 1. 1986 b. Compensatory Financing Facility 2. 1963 c. Compensatory and Contingency Facility 3. 1988 d. Structural Adjustment Facility 4. 1974

The elimination of riskless profit opportunities in the futures market is

From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques. 1. Profitability index 2. Net present value 3. Accounting rate of return 4. Internal rate of return

Which of the following techniques for appraisal of investment proposals are based on time value of money? 1. Accounting rate of return 2. Internal rate of return 3. Profitability index method 4. Earnings per share Select the correct answer:

In a traditional approach, which of the following statement is true in the context of the average cost of capital?

Match List-I with List-II and select the correct answer: List-I List-II a. Payback rate of return 1. Discounted cash flow technique b. Internal rate of return 2. Cornpounded values of investments and returns c. Benefit cost ratio 3. Crude method for project evaluation d. Net terminal value method 4. Varying sized projects evaluation

Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure. Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.

Cash flow management involves 1. Lock-box system 2. Marketable securities 3. Playing the float 4. Concentration bank account Select the correct answer:

Match the items of List-I with List-II and indicate the correct answer: List-I List-II a. ABC Analysis 1. Dividend Decision b. Walter Model 2. Capital Budgeting Decision c. Capital Rationing 3. Capital Structure Decision d. Net Operating Income Approach 4. Working Capital Management Decision

Which of the following is/are included under causes of undercapitalisation?

The concept of present value is based on the

Stock dividend . . . . . . . . the number of equity shares.

The potential for an increase or decrease in the parent's net worth and reported net income caused by a change in exchange rates since the last consolidation of international operations is a reflection of

. . . . . . . . method is also known as time adjusted rate of return method.

Which of the following are termed as permanent facilities for the general balance of payment's support?

In case the projects are divisible under capital rationing, an appropriate project appraisal method is

Match the statements in List-I with dividend models in List-II as follows: List-I List-II a. Dividend Capitalization Approach 1. Traditional Model b. Dividend policy has a bearing on the share valuation 2. Gordon Model c. Stock market places more weight on dividends than on retain earnings 3. Walter Model d. Dividend payout is irrelevant to the value of the firm 4. Modigliani and Miller Model