Financial Management - Practice Test

[#1046] Which of the following statements is correct?

(A) A Higher Receivable Turnover is not desirable

(B) Interest Coverage Ratio depends upon Tax Rate

(C) Increase in Net Profit Ratio means increase in Sales

(D) Lower Debt-Equity Ratio means lower Financial Risk

Correct Answer

(D) Lower Debt-Equity Ratio means lower Financial Risk

[#1047] The Real Cashflows must be discounted to get the present value at a rate equal to:

(A) Money Discount Rate

(B) Inflation Rate

(C) Real Discount Rate

(D) Risk free rate of interest

Correct Answer

(C) Real Discount Rate

[#1048] If a firm has no debt, which one is correct?

(A) OL is one

(B) FL is one

(C) OL is zero

(D) FL is zero

Correct Answer

(B) FL is one

[#1049] Financial decision involves:

(A) Investment, financing and dividend decision

(B) Investment, financing and sales decision

(C) Financing, dividend and cash decision

(D) None of these

Correct Answer

(A) Investment, financing and dividend decision

[#1050] In binomial approach of option pricing model, fourth step is to create

(A) equalize domain of payoff

(B) equalize ending price

(C) riskless investment

(D) high risky investment

Correct Answer

(C) riskless investment

Explanation

Solution: In binomial approach of option pricing model, fourth step is to create riskless investment. An investment with a certain rate of return and no chance of default.

Financial Management - Study Mode

[#1046] Which of the following statements is correct?

Correct Answer

[#1047] The Real Cashflows must be discounted to get the present value at a rate equal to:

Correct Answer

[#1048] If a firm has no debt, which one is correct?

Correct Answer

[#1049] Financial decision involves:

Correct Answer

[#1050] In binomial approach of option pricing model, fourth step is to create

Correct Answer

Explanation