Which of the following equation is known as Cash Flow (CF) identity?
Select correct option:
CF from Assets = CF to Creditors – CF to Stockholder
CF from Assets = CF to Stockholders – CF to Creditors
CF to Stockholders = CF to Creditors + CF from Assets
CF from Assets = CF to Creditors + CF to Stockholder
One would be indifferent between taking and not taking the investment when:
Select correct option:
NPV is greater than Zero
NPV is equal to Zero
NPV is less than Zero
All of the given options
Which of the following is (are) a non-cash item(s) ?
Select correct option:
Revenue
Expenses
Depreciation
All of the given options
Which of the following is NOT a shortcoming of Payback Rule?
Select correct option:
Time value of money is ignored
It fails to consider risk differences
Simple and easy to calculate
None of the given options
You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?
Select correct option:
Rs. 1,000 because it has the higher future value
Rs. 1,000 because you receive it sooner
Rs. 1,050 because it is more money
Either because both options are of equal value
What is the effective annual rate of 7 percent compounded monthly?
Select correct option:
7.00 percent
7.12 percent
7.19 percent
7.23 percent
Which of the following forms of business organizations is created as a distinct legal entity owned by one or more individuals or entities?
Select correct option:
Sole-proprietorship
General Partnership
Limited Partnership
Corporation
Business risk depends on which of the following risk of the firm’s assets ?
Select correct option:
Systematic Risk
Diversifiable Risk
Unsystematic Risk
None of the given options
Which of the following type of risk can be eliminated by diversification?
Select correct option:
Systematic Risk
Market Risk
Unsystematic Risk
None of the given options
Which of the following measure reveals how much profit a company generates with the money shareholders have invested?
Select correct option:
Profit Margin
Return on Assets
Return on Equity
Debt-Equity Ratio
Which of the following is(are) the basic area(s) of Finance?
Select correct option:
Financial institutions
International finance
Investments
All of the given options
Which of the following is the return that firm’s creditors demand on new borrowings ?
Select correct option:
Cost of debt
Cost of preferred stock
Cost of common equity
Cost of retained earnings
Systematic Risk is also known as:
Select correct option:
Diversifiable Risk
Market Risk
Residual Risk
Asset-specific Risk
ABC Corporation has two shareholders; Mr. Aamir with 50 shares and Mr. Imran with 70 shares. Both want to be elected as one of the four directors but Mr. Imran doesn’t want Mr. Aamir to be director. How much votes would Mr. Aamir be able to cast as per cumulative voting procedure?
Select correct option:
70
120
200
280
Which of the following is the process of planning and managing a firm’s long-term investments?
Select correct option:
Capital Structuring
Capital Rationing
Capital Budgeting
Working Capital Management
Which of the following refers to the cash flows that result from the firm’s day-to-day activities of producing and selling?
Select correct option:
Operating Cash Flows
Investing Cash Flows
Financing Cash Flows
All of the given options
The coupon rate of a floating-rate bond is capped and upper and lower rates are called:
Select correct option:
Float
Collar
Limit
Surplus
Which of the following is the acronym for GAAP?
Select correct option:
Generally Applied Accountability Principles
General Accounting Assessment Principles
Generally Accepted Accounting Principles
General Accepted Assessment Principles
Which of the following strategy belongs to restrictive policy regarding size of investments in current assets?
Select correct option:
To maintain a high ratio of current assets to sales
To maintain a low ratio of current assets to sales
To less short-term debt and more long-term debt
To more short-term debt and less long-term debt
Quick Ratio is also known as:
Select correct option:
Current Ratio
Acid-test Ratio
Cash Ratio
None of the given options
Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?
Select correct option:
Sole-proprietorship
Partnership
Corporation
None of the given options
If you have Rs. 30 in asset A and Rs. 120 in another asset B, the weights for assets A and B will be __ and __ respectively.
Select correct option:
20%; 80%
37%; 63%
63%; 37%
80%; 20%
Which of the following terms refers to the costs to store and finance the assets?
Select correct option:
Carrying costs
Shortage costs
Storing costs
financing costs
Which one of the following statement is INCORRECT regarding MACRS depreciation?
Select correct option:
Every asset is assigned to a particular class which establishes asset’s life for tax purposes.
Which of the following statement is CORRECT regarding compound interest?
Select correct option:
It is the most basic form of calculating interest.
It earns profit not only on principal but also on interest.
It is calculated by multiplying principal by rate multiplied by time.
It does not take into account the accumulated interest for calculation.
Mr. A has just recently started a business by investing a capital of Rs. 500,000. He will be the only owner of the business and also enjoy all the profits of the business. Which type of business is being employed by Mr. A?
Select correct option:
Sole-proprietorship
Partnership
Corporation
None of the given options
Time value of money is an important finance concept because:
Select correct option:
It takes risk into account
It takes time into account
It takes compound interest into account
All of the given options
The preferred stock of a company currently sells for Rs. 25 per share. The annual dividend of Rs. 2.50 is fixed. Assuming a constant dividend forever, what is the rate of return on this stock?
Select correct option:
5.00 percent
7.00 percent
8.45 percent
10.0 percent
Which of the following ratios are particularly interesting to short-term creditors?
Select correct option:
Liquidity Ratios
Long-term Solvency Ratios
Profitability Ratios
Market Value Ratios