Accounting for Managers Online MCQ Set 17

QN01. Life of security simply refer to

  1. Yield
  2. Liquidity
  3. Maturity
  4. Safety
Answer

(C)Maturity

QN02. Ratio of present value of project’s future net cash flows to projects initial cash flow is

  1. Profitability index
  2. Internal rate of return
  3. Net present value
  4. Average rate of return
Answer

(A)Profitability index

QN03. The ______________ is responsible for accounting, maintaining and auditing of the accounts.

  1. Shareholders
  2. Treasurer
  3. Controller
  4. Board of Directors
Answer

(C)Controller

QN04. The financial ratio measured as EBIT/Interest expense is known as the firm's

  1. Profit margin
  2. Return on assets
  3. Interest coverage
  4. Earnings before interest and taxes (EBIT)
Answer

(C)Interest coverage

QN05. Fixed-based method is the subcategory of which of the following analysis.

  1. Ratio analysis
  2. Vertical analysis
  3. Horizontal analysis
  4. None of the above
Answer

(C)Horizontal analysis

QN06. Which of the following best represents the total inventory costs, T, where S is total usage of the inventory item for the period, Q is the q

  1. T = C (Q/2) + O (S/Q)
  2. T = SQRT [2 (O) (S) / C]
  3. T = SQRT [2 (C) (S) / O
  4. T = C (S/Q) + O (Q/2)
Answer

(A)T = C (Q/2) + O (S/Q)

QN07. Which of the following is NOT the present value of the bond?

  1. Intrinsic value
  2. Market price
  3. Fair price
  4. Theoretical price
Answer

(B)Market price

QN08. ______________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

  1. Financial management
  2. Profit maximization
  3. Agency theory
  4. Social responsibility
Answer

(A)Financial management

QN09. Oliver Incorporated has a current ratio equal to 1.6 and a quick ratio equal to 1.2. The company has $2 million in sales and its current liabilities are $1 million. What is the company’s inventory turnover ratio?

  1. 5.0
  2. 5.2
  3. 5.5
  4. 6.0
Answer

(A)5.0

QN10. Share and bonds floats in ______________

  1. Money market
  2. Capital market
  3. Commercial bank
  4. Equity market
Answer

(B)Capital market

QN11. Which of the following is NOT an example of hybrid equity?

  1. Convertible bonds
  2. Convertible debenture
  3. Common shares
  4. Preferred shares
Answer

(C)Common shares

QN12. What are the three interrelated areas of finance?

  1. Financial markets, option and forwards
  2. Investment, Financial management and Money & capital markets
  3. Banking, financial institutions and swap currency
  4. All of above
Answer

(B)Investment, Financial management and Money & capital markets

QN13. Convertible debt is debt that

  1. The issuing firm can pay off early
  2. The bondholder can sell back to the firm at a guaranteed price
  3. The bondholder can convert into shares
  4. All of above
Answer

(C)The bondholder can convert into shares

QN14. ______________ means value at some future time of a present amount of money evaluated at a given interest rate.

  1. Compounding
  2. Discounting
  3. Nominal rate
  4. Continuous rate
Answer

(A)Compounding

QN15. When the market's Required Rate of Return for a particular Bond is equal to its Coupon Rate, the Bond is selling at

  1. Premium
  2. Discount
  3. Par
  4. None
Answer

(C)Par

QN16. A Bond has a $1,000 Face Value, a Market Price of $1,115, and pays interest payments of $ 90 every year. What is the coupon rate?

  1. 4.50 %
  2. 6.75 %
  3. 7.39 %
  4. 9.00 %
Answer

(D)9.00 %

QN17. A bond with a $1,000 face value and an 8 percent annual coupon pays interest semi-annually. The bond will mature in 15 years. The nominal yield to maturity (i) is 11 percent. What is the price of the bond today?

  1. $ 784.27
  2. $ 781.99
  3. $ 1,259.38
  4. $ 739.19
Answer

(B)$ 781.99

QN18. The goal of fundamental analysts is to find securities

  1. Whose intrinsic value exceeds market price
  2. With a positive present value of growth opportunities
  3. With high market capitalization rates
  4. All of the above
Answer

(A)Whose intrinsic value exceeds market price

QN19. ______________ is the set of possible values that a random variable can assume and their association probabilities of occurrence.

  1. Expected Rate of Return
  2. Probability Distribution
  3. Variance
  4. Standard deviation
Answer

(B)Probability Distribution

QN20. Which of the following is not component of financial report?

  1. Balance sheet
  2. Notes of the account
  3. Comparative figure of previous period
  4. None of the given option
Answer

(D)None of the given option

QN21. If you want to deposit money into bank, what will be yours choice?

  1. Compounding annually
  2. Compounding Semi-annually
  3. Compounding monthly
  4. Compounding daily
Answer

(D)Compounding daily

QN22. Interest paid (earned) on both the original principal borrowed (lent) and previous interest allowed (earned) is often referred to as ______________.

  1. Compound interest
  2. Double interest
  3. Simple interest
  4. Present value
Answer

(A)Compound interest

QN23. Which of the following is the activity which finance people are involved

  1. Investing decisions
  2. Marketing decisions
  3. Promotion decisions
  4. Non of Above
Answer

(A)Investing decisions

QN24. The Bailey Brothers want to issue 20-year, zero coupon bonds that yield 9 percent. What price should it charge for these bonds if the face value is $1,000?

  1. $ 157.25
  2. $ 163.70
  3. $ 178.43
  4. $ 194.49
Answer

(C)$ 178.43

QN25. When bonds are issued, under which of the following category the value of the bond appears?

  1. Equity
  2. Fixed assets
  3. Short term loan
  4. Long term loan
Answer

(D)Long term loan

QN26. What type of long-term financing most likely has the following features: (1) it has an infinite and finite life (2) it pays dividends, and (3) its cash flows are expected to be a constant annuity stream.

  1. Long-term debt
  2. Preferred stock
  3. Common stock
  4. None of the given option
Answer

(B)Preferred stock

QN27. PV of lump sum is simply termed as current value ofor

  1. Present payment
  2. Future payment
  3. Annuity payment
  4. Discount payment
Answer

(B)Future payment

QN28. ______________ Ratios are used to measure a firm’s ability to meet short-term obligations.mpor

  1. Asset management ratios
  2. Debt management ratios
  3. Liquidity ratios
  4. Equity ratios
Answer

(C)Liquidity ratios

QN29. Creditors turnover ratios comes under the category of

  1. Activity ratios
  2. Asset management ratios
  3. All of the above
  4. None of the above
Answer

(C)All of the above

QN30. Dividend is approved by the shareholder in the ______________ at the recommendation of the directors.

  1. Annual general meeting
  2. Director meeting
  3. Statutory meeting
  4. Special meeting
Answer

(A)Annual general meeting

QN31. If bank giving 12% interest rate per year, then per month it will be

  1. 1%
  2. 12%
  3. 5%
  4. 6%
Answer

(A)1%

QN32. Market value determines

  1. On running business
  2. When company closedown
  3. Before establishment of business
  4. When asset sold individually
Answer

(A)On running business

QN33. The Yield to Maturity on a bond is

  1. Equal to the Coupon Rate divided by the Market Price
  2. The Current Required Market Rate
  3. Equal to the Annual Interest divided by the Face Value
  4. Another name for the coupon rate.
Answer

(B)The Current Required Market Rate

QN34. Muhammad Ali just received an interest payment that is equal to 7 percent of his Rs. 20,000 in Bond investment. This 7 percent is best described as a

  1. Real Return
  2. Deflated Return
  3. Coupon Return
  4. None
Answer

(C)Coupon Return

QN35. A decrease in the firm's receivable turnover ratio means that ______________.

  1. Inventories have gone up
  2. It is collecting credit sales more slowly than before
  3. Cash sales have gone down
  4. None of above
Answer

(B)It is collecting credit sales more slowly than before

QN36. Marketable Securities, Account Receivables and Inventory are listed as

  1. Current Asset
  2. Current Liabilities
  3. Long Term Asset
  4. Long term liabilities
Answer

(A)Current Asset

QN37. The Coupon Rate for a Bond is best defined as the

  1. Annual interest divided by the current market price
  2. Annual interest divided by the face value
  3. Annual interest divided by the clean market price
  4. All of Above
Answer

(B)Annual interest divided by the face value

QN38. Which of the following is considered a Profitability measure?

  1. Days Sales in Inventory
  2. Fixed Asset Turnover
  3. Cash Coverage Ratio
  4. Return on Assets
Answer

(D)Return on Assets

QN39. Quick ratios are also called ______________

  1. Super ratios
  2. Acid-test ratios
  3. Cash ratios
  4. None of the above
Answer

(B)Acid-test ratios

QN40. Bond secured by lien on real property is

  1. Debenture
  2. Euro bond
  3. Mortgage bond
  4. Convertible bond
Answer

(C)Mortgage bond

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