The Ratios showing the ability of a firm to pay its bills in short-run are called:
► Leverage Ratios
► Liquidity Ratios
► Profitability Ratios
► Market Value Ratios
Evaluating the size, timing and risk of future cash flows is the essence of :
► Capital Budgeting
► Capital Structure
► Inventory Control
► None of the given options
Corporation is dealing in furniture industry. It has an equity multiplier of 1.78
. The debt to equity ratio would be:
► 0.38 times
► 0.58 times
► 0.78 times
► 0.98 times
Involves the sale of used securities from one investor to another.
► Primary Market
► Secondary Market
► Tertiary Market
► none of the given options
SNT Corporation paid Rs. 28,900 as tax in 2006. If the tax rate was 34%, what was the
Taxable income of the corporation during 2006?
► Rs. 90,000
► Rs. 85,000
► Rs. 65,000
► Rs. 77,000
______________ pays no coupon at all and is offered at a price that is much lower than its stated value.
► Government Bond
► Floating Rate Bond
► Zero Growth Bond
► None of the given options
Which of the following statement provides a financial summary of the firm’s operating?
Results during a specified period.
► Balance Sheet
► Income Statement
► Cash Flow Statement
► Retained Earning Statement
Depreciation expense does not reflect a cash outflow but still shown as an expense on the
income statement to serve as a:
► Cash inflow
► Cash outflow
► Tax Shield
► Interest Shield
Investors demand extra yield on a taxable bond as a compensation for the unfavorable tax
treatment, known as:
► Taxability premium
► Inflation premium
► Interest Rate Risk Premium
► None of the given options
If you invest Rs. 150 in a bank on an interest rate of 14%. How much will you have in
your account after 5 years ?
► Rs. 78
► Rs.163
► Rs. 207
► Rs. 289
Financial institutions facilitate individuals and firms in:
- Borrowing
- Lending
- pooling of risks
- All of the given options
————- are issued by state and local governments.
- Treasury bonds
- Municipal bonds
- Corporate bonds
- Personal bonds
You are expecting to receive Rs.5000 in 3 years. If the interest rate increases, the
Present value of that future amount to you would:
- fall
- Rise
- remain unchanged
- cannot be determined without more information
——————- is not the function of the treasurer:
- Preparation of financial statements
- Investor relationships
- Cash management
- Obtaining finances
Sara is interested in purchasing Tom’s factory. Since Sara is a poor negotiator,
Hires Maria to negotiate a purchase price. Identify the parties to this transaction
The given options, according to agency theory:
- Sara is the agent.
- Maria is the principal.
- Tom is the agent and Maria is the principal
- Sara is the principal and Maria is the agent.
—————– is not an advantage of separation of ownership and
Management of corporations.
- Corporations can exist forever.
- Facilitate transfer of ownership without affecting the operations of the firm
- Hire professional managers
- Incur agency costs
A firm is having difficulty in controlling its operating expenses. Which ratio category
in given options will most directly reflect this problem?
- Liquidity
- Profitability
- Market value
- Turnover
A firm’s investment decision is also called the:
- financing decision
- Capital budgeting decision
- Liquidity decision
- Debt financing
Total tax amount is Rs.4000. Average tax rate is Rs.4000 / 50000 = 8.0%. Marginal tax
Rate will be:
- 39%
- 34%
- 15%
- 25%
In context of inflation and returns, the relationship between real and nominal returns
is described by:
- Fisher Effect
- Ricardo Effect
- Robbins Effect
- Fredrick Effect
A major disadvantage of the corporate form of organization is the ______________.
► Inability of the firm to raise large sums of additional capital
► Double taxation of dividends
► Limited liability of shareholders
► Limited life of the corporate firm
Which one of the following current asset is not treated as a cash flow from operating activities?
► Trade receivable
► Cash and cash equivalent
► Inventory
► Short term investment
Suppose you can earn a 7.2 percent interest rate per year. According to the rule of 72, it will at
Approximately ___________ years to double your money.
► 5.00
► 7.20
► 10.00
► 100.0
Rahim Corporation has a cash coverage ratio of 7 times. It’s earning before interest and tax is
Rs.900 million. It has total assets of Rs.3 billion. The company has a policy of charging 5 % annual
depreciation. By using the above information, what would be the interest expense for the year?
► 90 million
► 120 million
► 140 million
► 150 million
Suppose ZM Corporation has a debt to equity ratio of 1.50 times. It has the return on assets of 14%. The return on equity would be ____________.
► 25%
► 30%
► 35%
► 40%
Lets Tulips Corporation has return on assets for the year is 14 % .The Corporation has a policy to
retain 40 percent of their income. Then the Corporations internal growth rate would be
___________.
► 5.246 %
► 5.754 %
► 5.932 %
► 6.589 %
If the interest rate is 24 % compounded quarterly, what would be the 5-year discount factor?
► 3.10585
► 3.20714
► 3.50152
► 3.80153
Suppose you expect to receive Rs.3,000 per year forever. The opportunity rate is 12 %.The present
Value of this would be ______________.
► Rs.20,000
► Rs.23,000
► Rs.25,000
► Rs.28,000
The bonds are classified as ___________ if the maturity of the bond is less than 10 years when
Issued.
► Term finance certificate
► Debentures
► Notes
► None of the given options
___________ is a kind of bond that allows the holder to force the issuer to buy the bond back at a stated price.
► Convertible bond
► Floating rate bond
► Income bond
► Put bond