Q1: In the long run, a successful acquisition is one that
Answer: increases financial leverageAnswer
Q2: In the long run, the U.S. dollar appreciates if
Answer: U.S. prices fall and the U.S. increases tariffs on importsAnswer
Q3: In the short run model of exchange rate determination, if we consider the U.S. European exchange rate (euros per dollar), if the European Central Bank unexpectedly boosts interest rates, then this will cause the
Answer: dollar to appreciateAnswer
Q4: Insurance companies are regulated by which institution
Answer: IRDAAnswer
Q5: Interest rates in India during the year 2001 have
Answer: gone downAnswer
Q6: Interest-rate parity refers to the concept that, where market imperfections are few
Answer: Interest rates across countries will eventually be the sameAnswer
Q7: International Finance is
Answer: different from domestic financeAnswer
Q8: Investing in interest-bearing instruments in foreign exchange and earning a profit due to interest rate and exchange rate differentials is
Answer: Interest arbitrageAnswer
Q9: Investment bankers perform the following role(s___
Answer: All These—a. Market new stock and bond issues for firmsAnswer
b. Provide advice to the firms as to market conditions, price, etc
c. Design securities with desirable properties
Q10: Investor invest more in stock during their
Answer: mid career levelAnswer
Q11: IRR gives a rate of return that reflects the___of the project
Answer: ProfitabilityAnswer
Q12: is equal to (common shareholders’ equity/common shares outstanding)
Answer: Book value per shareAnswer
Q13: is the amount of money per common share that could be realized by breaking up the firm, selling the assets, repaying the debt, and distributing the remainder to shareholders
Answer: Liquidation value per shareAnswer
Q14: Lease which includes a third party (a lender) is known as
Answer: Inverse LeaseAnswer
Q15: Light Construction Machinery Company has an expected ROE of 11%. The dividend growth rate will be___if the firm follows a policy of paying 25% of earnings in the form of dividends
Answer: 0.08%Answer
Q16: Liquidity ratio computed by eliminating inventories from current assets is
Answer: Quick ratioAnswer
Q17: Loans made by the Federal Reserve to depository institutions are in the form of
Answer: reservesAnswer
Q18: Longer the manufacturing cycle___the investment in working capital
Answer: LargerAnswer
Q19: Low Tech Company has an expected ROE of 10%. The dividend growth rate will be___if the firm follows a policy of paying 40% of earnings in the form of dividends
Answer: 0.06%Answer
Q20: Market price of equity share of a company is Rs. 25 and the dividend expected a year hence is Rs. 10. The expected rate of dividend growth is 5%. The cost of equal capital to company will be
Answer: 0%Answer
Q21: Market-determined exchange rates are best represented by a system of
Answer: floating exchange ratesAnswer
Q22: Maximum duration of a treasury bill can be
Answer: 365 daysAnswer
Q23: Medtronic Company has an expected ROE of 16%. The dividend growth rate will be___if the firm follows a policy of paying 70% of earnings in the form of dividends
Answer: 0.05%Answer
Q24: Members of the Board of Governors of the Federal Reserve System obtain their positions through
Answer: appointment by the U.S. President and approval by the SenateAnswer
Q25: Money has time value because
Answer: d. Both (a) and (b) above.Answer
Q26: Money has time value since
Answer: All These—Money in hand today is more certain than money to be got tomorrowAnswer
The value of money gets discounted as time goes by
Q27: Money is defined as
Answer: All These—(a) Anything that is generally accepted in payment for goods and services or in the repayment of debtAnswer
(b) Bills of exchange
(c) A risk less repository of spending power
Q28: Mutual funds are described as___in the SEBI Regulations, 1996
Answer: TrustsAnswer
Q29: Mutual funds are valued with help of their
Answer: NAV’sAnswer
Q30: Mutual funds can borrow
Answer: Both b and cAnswer
Q31: Mutual funds can lend funds in the form of
Answer: SecuritiesAnswer
Q32: Mutual Funds investor can not earn following return
Answer: Fixed interest earningAnswer
Q33: Mutual Funds provide the benefits of
Answer: All these—a. Portfolio managementAnswer
b. Diversification
c. Investment Avenues
Q34: Mutual funds should be recommended as
Answer: Investments to achieve long term goalsAnswer
Q35: Mutual funds that charge a sales commission when shares are purchases are called
Answer: Loaded fundsAnswer
Q36: Narsimhan Committee recommendations were in relation to which of the following institutions
Answer: BanksAnswer
Q37: NBFC offer higher rate of interest because of
Answer: the risk involvedAnswer
Q38: Negative networking capital signifies that
Answer: All These—The value of current ratio is less than unityAnswer
Short term funds are diverted for long term purposes
Q39: Net profit is equal to
Answer: Both (a) and (b)Answer
Q40: Net Profit Ratio Signifies
Answer: Operational ProfitabilityAnswer
Q41: Net working capital is
Answer: excess of gross current assets over current liabilitiesAnswer
Q42: Net working capital refers to
Answer: Current assets minus current liabilitiesAnswer
Q43: NOI Approach advocates that the degree of debt financing is
Answer: IrrelevantAnswer
Q44: NPA in the context of banking sector stand for
Answer: Non performing assetsAnswer
Q45: Of what is sinking fund an example of
Answer: AnnuityAnswer
Q46: Of which of the following basis can a funds flow statement prepared
Answer: All These—Total resource basisAnswer
Working capital basis
Cash basis
Q47: On the commercial bank balance sheet, which of the following is an asset
Answer: deposits with Federal ReserveAnswer
Q48: One difference between Operating and Finance lease is
Answer: There is often a call option in financial leaseAnswer
Q49: One large company that holds many different banks as subsidiaries is called a (an)
Answer: bank holding companyAnswer
Q50: One means for a company to “go private” is
Answer: the leveraged buyout (LBO)Answer
Q51: One of the following, what is not true in respect of factoring
Answer: Factor provides cost free finance to sellerAnswer
Q52: One of the problems with attempting to forecast stock market values is that
Answer: the level of uncertainty surrounding the forecast will always be quite highAnswer
Q53: Open market operations are of two types
Answer: dynamic and defensiveAnswer
Q54: Open Market Operations have an objective of
Answer: management of monetary policyAnswer
Q55: Operating cycle approach is based on the assumption that production and sales occur on___
Answer: Continuous basisAnswer
Q56: Operating cycle can be delayed by
Answer: All These—Increase in WIP periodAnswer
Decrease in credit payment period
Q57: Operating leases usually have terms that include
Answer: Only answers ‘a’. and ‘c.’ aboveAnswer
Q58: Operating leverage measures the sensitivity of the___to changes in quantity
Answer: Earnings before interest and taxAnswer
Q59: Options and Futures trading in India was started in the Year
Answer: 2000Answer
Q60: P/E of which of these stocks is usually high
Answer: Growth stocksAnswer
Q61: P/E Ratio means
Answer: market price is to EPS ratio (price earning ratio)Answer
Q62: Payback period___tine value of money
Answer: IgnoresAnswer
Q63: Post completion audit is___in the phases of capital budgeting decisions
Answer: Last stepAnswer
Q64: Power within the Federal Reserve is essentially located in
Answer: Washington, D.CAnswer
Q65: Primary Market refers to
Answer: A subset of money market, where the government issues new T-billsAnswer
Q66: Prime duty of merchant banker is
Answer: None of these—Maintaining records of clientsAnswer
Giving loans to clients
Working as a capital market intermediary
Q67: Prudential norms relate to which of the following
Answer: Norms related to Management of bank funds in a systematic mannerAnswer
Q68: Punjab National Bank Mumbai Branch quoted USD 1= Rs 50.5000/52.5050. Which is the bid rate for USD
Answer: 50.5Answer
Q69: Purchasing-power parity (PPP) refers to___
Answer: the concept that the same goods should sell for the same price across countries after exchange rates are taken into accountAnswer
Q70: RBI allowed general public to purchase government securities at
Answer: Minimum priceAnswer
Q71: Registrar to the issue
Answer: recommends the basis of allotmentAnswer
Q72: Reinsurance refers to which of the following
Answer: Insurance taken on something which is already insuredAnswer
Q73: Retained earnings are
Answer: An indication of a company’s liquidityAnswer
And
earnings of a company that are not paid out to stockholders
Q74: Retired investors should
Answer: Not invest in securities which bear risk of capital erosionAnswer
Q75: Risk in Capital budgeting implies that the decision-maker knows___of the cash flows
Answer: ProbabilityAnswer
Q76: Risk- Return trade off implies
Answer: taking decisions in a way which optimizes the balance between risk and returnAnswer
Q77: Risk-return trade-off implies
Answer: Taking decisions in a way which optimizes the balance between risk and returnAnswer
Q78: SEBI would not vet offer documents seeking listing on
Answer: OTCEIAnswer
Q79: Secondary Market refers to
Answer: A subset of the capital market, where the equities are tradedAnswer
Q80: Share prices
Answer: the increasing or decreasing move be zigzagAnswer
Q81: Since 1955, Treasury bond yields and earnings yields on stocks were___
Answer: positively correlatedAnswer
Q82: SLR stands for
Answer: Statutory liquidity ratioAnswer
Q83: Stock exchange can act as regulators of
Answer: Closed end funds listed on the exchangeAnswer
Q84: Suppose that purchasing power parity holds, and that the current exchange rate between the dollar and the yen is 110 yen/USD. If inflation in the U.S. runs at 4 percent and inflation in Japan runs at 2 percent, next year we would expect the exchange rate to be roughly
Answer: 108 yen/USDAnswer
Q85: Suppose that the Japanese yen is selling at a forward discount in the forward-exchange market. This implies that most likely
Answer: Interest rates are higher in Japan than in the United StatesAnswer
Q86: Suppose that the market price of Company X is USD45 per share and that of Company Y is USD30. If X offers three-fourths a share of common stock for each share of Y, the ratio of exchange of market prices would be
Answer: 1.125Answer
Q87: Tandon committee suggested inventory and receivable norms for
Answer: 25 major and minor industriesAnswer
Q88: Term Insurance is
Answer: A pure life insurance risk planAnswer
Q89: The accounting statement of cash flows reports a firm’s cash flows segregated into what categorical order
Answer: Operating, investing, and financingAnswer
Q90: The amount of current assets required to meet a firm’s long-term minimum needs is referred to as___working capital
Answer: permanentAnswer
Q91: The bond markets are important because
Answer: They are the markets where interest rates are determinedAnswer
Q92: The capital structure ratio measure the
Answer: Financial RiskAnswer
Q93: The Combined Leverage gives the relationship between
Answer: Sales Revenue and EPS of the firmAnswer
Q94: The cost of Debt is always calculated
Answer: After taxAnswer
Q95: The cost of equity takes into account the
Answer: all the aboveAnswer
Q96: The cost of Retained Earnings is same as
Answer: Cost of EquityAnswer
Q97: The costliest of long term sources of finance is
Answer: Equity share capitalAnswer
Q98: The credit term offered by a supplier is 3/10 net 60.The annualized interest cost of not availing the cash discount is
Answer: 0.23%Answer
Q99: The demand for the monetary base is composed of demand by
Answer: banks and the publicAnswer
Q100: The difference between a capital market and money market is that
Answer: All These—Capital markets can be classified into primary and secondary markets unlike money marketAnswer
Capital market provides the resources needed by medium and large scale industries for investment purposes while money market provides resources for working capital needs
