Financial Management - Study Mode
[#201] In situation of bankruptcy, stock which is recorded above common stock and below debt account is
Correct Answer
(B) preferred stock
Explanation
Solution: In situation of bankruptcy, stock which is recorded above common stock and below debt account is preferred stock. Preferred stock refers to a class of ownership that has a higher claim on assets and earnings than common stock has.
[#202] If security pays Rs 5,000 in 20 years with 7% annual interest rate, PV of security by using formula is
Correct Answer
(B) Rs 1,292.10
Explanation
Solution: Present Value = FV / ( 1 + r/100 )ⁿ = 5000 / ( 1 + 7/100)²⁰ = Rs. 1292.10
[#203] An interest rate which is quoted by brokers, banks and other financial institutions is classified as
Correct Answer
(C) nominal rate
Explanation
Solution: An interest rate which is quoted by brokers, banks and other financial institutions is classified as nominal rate. Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can also refer to the advertised or stated interest rate on a loan, without taking into account any fees or compounding of interest.
[#204] Company who sells products to customer without demanding immediate payment but record it in balance sheet as
Correct Answer
(B) account receivable
Explanation
Solution: Company who sells products to customer without demanding immediate payment but record it in balance sheet as account receivable. Accounts receivable is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers.
[#205] Nominal rate which is quoted to consumers on loans is considered as
Correct Answer
(A) annual percentage rate
Explanation
Solution: Nominal rate which is quoted to consumers on loans is considered as annual percentage rate. An annual percentage rate (APR) is the annual rate charged for borrowing or earned through an investment. APR is expressed as a percentage that represents the actual yearly cost of funds over the term of a loan.