Q1: What is Paper Express’s replacement cost per share
Answer: USD53.57Answer
Q2: What is Paper Express’s Tobin’s q
Answer: 1.68Answer
Q3: What is the equal-payment series for 10 years that is equivalent to a payment series of Rs 15,000 at the end of the first year (t=1) decreasing by Rs300 each year over 10 years? Interest is 9% compounded annually
Answer: A = Rs 13,860.66Answer
Q4: What is the first step in choosing a supply chain
Answer: understanding the customerAnswer
Q5: What is the future value of a regular annuity of Re. 1 earning a rate of 12% interest p.a. for 5 Years
Answer: 5.353Answer
Q6: What is the intrinsic value of Sure’s stock today
Answer: USD20.60Answer
Q7: What is the most appropriate goal of the firm
Answer: Shareholder wealth maximizationAnswer
Q8: What is the most likely reason that a firm (who is highly profitable) might consider acquiring a firm that has had large recent losses and will continue to have losses into the near future
Answer: Tax-loss usageAnswer
Q9: What is the portfolio you will recommend to a young couple with two incomes and two children
Answer: 10% money market; 30% aggressive equity; 25% diversified equity; 35% bond fundsAnswer
Q10: What one is not the decision of financial management
Answer: Asset management decisionAnswer
Q11: What proportion of a mutual funds trustees have to be independent form the sponsor
Answer: 2/3rd of trusteesAnswer
Q12: What stream of cash flows continues indefinitely
Answer: perpetuityAnswer
Q13: What will be the amount accumulated by USD 9,000 in 9 years if it is compounded at a rate of 9% per year
Answer: F = USD 19,547.04Answer
Q14: When a bank is well-capitalized, the bank has___to lose if it fails and is thus___likely to pursue risky activities
Answer: more: moreAnswer
Q15: When the Fed engages in a matched sale-purchase with a bank, it first___securities which the bank agrees to___back to the Fed within a few days
Answer: sells; sellAnswer
Q16: When the Fed wants to decrease bank reserves on a temporary basis, it engages in a___
Answer: reverse repurchase agreement with banksAnswer
Q17: When the Fed wants to reduce reserves in the banking system, it will
Answer: sell government bondsAnswer
Q18: When the Swiss franc appreciates (holding everything else constant), then
Answer: American computers sold in Switzerland become more expensiveAnswer
Q19: When U.S. real interest rates rise, the
Answer: expected return U.S. investments increases, and the dollar depreciatesAnswer
Q20: When we want to come to the present value from future value of a lump sum amount, we use
Answer: present value factor tablesAnswer
Q21: When we want to come to the present value from future value of an Annuity, we use
Answer: present value annuity factor tablesAnswer
Q22: When we want to go to future value of a lump sum amount, we use
Answer: present value annuity factor tablesAnswer
Q23: When we want to go to future value of an Annuity, we use
Answer: present value annuity factor tablesAnswer
Q24: Which are the benchmarks used to evaluate fund performance
Answer: All these—Return on benchmarks like S&P and SensexAnswer
Return on other funds
Return on comparable instruments
Q25: Which exchange rate system involves a strategy of “leaning against the wind?”
Answer: floating exchange ratesAnswer
Q26: Which group of ratios measures how effectively the firm is using its assets
Answer: Activity ratiosAnswer
Q27: Which Interest rates are important to financial institutions since an interest rate increase
Answer: All These—Increases the cost of acquiring fundsAnswer
Raises the income from assets
Q28: Which is the best measure of capital budgeting
Answer: Payback periodAnswer
Q29: Which is the most expensive source of funds
Answer: New Equity SharesAnswer
Q30: Which of the following approaches advocates that the cost of equity capital and debit capital remains the degree of leverages varies
Answer: Net operating income approachAnswer
Q31: Which of the following are found on the asset side of the Federal Reserve’s balance sheet
Answer: All these—Treasury securitiesAnswer
Discount loans
Q32: Which of the following are found on the liability side of the Federal Reserve’s balance sheet
Answer: Deferred availability cash itemsAnswer
Q33: Which of the following are not among the daily activities of financial management
Answer: sale of shares and corporate bondsAnswer
Q34: Which of the following bank assets is the most liquid
Answer: U.S. government securitiesAnswer
Q35: Which of the following cannot be distributors of a mutual fund
Answer: Employees of AMCAnswer
Q36: Which of the following cannot invest in mutual funds
Answer: Foreign investorsAnswer
Q37: Which of the following cost of capital require tax adjustment
Answer: Cost of DebenturesAnswer
Q38: Which of the following directly increases the money supply
Answer: None of these—the public withdraws cash from banksAnswer
the public deposits cash into banks
banks sell securities to dealers
Q39: Which of the following do not provide a guarantee on capital
Answer: Units of mutual fundsAnswer
Q40: Which of the following factors does not influence the composition of Working Capital requirements
Answer: amount of fixed assetsAnswer
Q41: Which of the following factors influence the capital structure of a business entity
Answer: Expected incomeAnswer
Q42: Which of the following is a basic principle of finance as it relates to the management of working capital
Answer: Profitability moves together with riskAnswer
Q43: Which of the following is a capital market instrument
Answer: DebentureAnswer
Q44: Which of the following is a derivatives instrument
Answer: Forward ContractAnswer
Q45: Which of the following is a fundamental commercial bank accounting identity
Answer: assets minus liabilities equals capitalAnswer
Q46: Which of the following is a legitimate reason for international investment
Answer: There are possible benefits from international diversificationAnswer
Q47: Which of the following is a money market instrument
Answer: T-billAnswer
Q48: Which of the following is a source of commercial bank funds
Answer: All these—depositsAnswer
capital
non-deposit borrowing
Q49: Which of the following is a source of fund
Answer: Increase in liabilitiesAnswer
Q50: Which of the following is a technique for monitoring the status of receivables
Answer: ageing scheduleAnswer
Q51: Which of the following is an example of a commercial bank
Answer: CitibankAnswer
Q52: Which of the following is an example of a development bank
Answer: EXIM BankAnswer
Q53: Which of the following is an exchange traded derivative instrument
Answer: FutureAnswer
Q54: Which of the following is an ideal allocation for a wealth preserving affluent investor
Answer: 30% equity; 70% debtAnswer
Q55: Which of the following is an Over the counter (OTC ) Derivative instrument
Answer: SwapAnswer
Q56: Which of the following is not a cash outflow for the firm
Answer: DepreciationAnswer
Q57: Which of the following is not a factor considered as a part of asset liability management by the banks
Answer: Employee TurnoverAnswer
Q58: Which of the following is not a factor effecting capital structure
Answer: Profitability ratiosAnswer
Q59: Which of the following is not a feature of an optimal capital structure
Answer: SafetyAnswer
Q60: Which of the following is not a function of finance Manager
Answer: distributing the capital among different suppliers of productsAnswer
Q61: Which of the following is not a money market security
Answer: National saving certificateAnswer
Q62: Which of the following is not a service provided by factoring companies
Answer: Bond issuance facilitiesAnswer
Q63: Which of the following is not a SRO
Answer: AMFIAnswer
Q64: Which of the following is not a type of financial lease arrangement
Answer: Indirect leasingAnswer
Q65: Which of the following is not a type of indirect fund-adjustment method
Answer: balance sheet hedgeAnswer
Q66: Which of the following is not a usual type of lease arrangement
Answer: Goods on ApprovalAnswer
Q67: Which of the following is not an advantage of Hire Purchase
Answer: Hire purchase agreements can be cancelled at short notice with no penaltyAnswer
Q68: Which of the following is not considered to be a goal of monetary policy
Answer: Fair wagesAnswer
Q69: Which of the following is not regulated by SEBI
Answer: Foreign direct investmentAnswer
Q70: Which of the following is not the reason for Time Preference of money
Answer: The value of money will remain the same every timeAnswer
Q71: Which of the following is not the responsibility of financial management
Answer: preparation of the firm’s accounting statementsAnswer
Q72: Which of the following is not true for a “Lease or Buy” decision for the lessee
Answer: Helps in project locationAnswer
Q73: Which of the following is recommended by Bogle for older investors in accumulation stage
Answer: 70% equity and 30% debtAnswer
Q74: Which of the following is the true about bank statement
Answer: Total Bank Assets = Total Bank Liabilities + Bank CapitalAnswer
Q75: All These—A bond is an instrument of debt issued by a business or Government unit
Par value is the value stated on the face of the bond.
A bond carries a specific interest rate which is called coupon rate
Answer: Correct – TrueAnswer
Q76: Most future contracts represent a conservative approach by firms to hedge foreign trade
Answer: Correct – TrueAnswer
Q77: Retained Earnings are cheaper than External Equity
Answer: Correct – TrueAnswer
Q78: Which of the following is true about the Federal Reserve System
Answer: There are 12 regional Federal Reserve BanksAnswer
Q79: Which of the following is true for assured return schemes
Answer: All these—Name and net worth of guarantor to be givenAnswer
Performance of past assured return schemes to be given
Whether assurance in earlier scheme was met to be stated
Q80: Which of the following is true for closed end funds
Answer: The corpus of the fund is constantAnswer
Q81: Which of the following is true for mutual funds in India
Answer: Entry load is not allowedAnswer
Q82: Which of the following is true for Net Income Approach
Answer: Higher Debt is betterAnswer
Q83: Which of the following is untrue of an automatic reinvestment plan
Answer: The benefit of automatic reinvestment is often lost on account of the heavy load charge on the reinvestmentAnswer
Q84: Which of the following models on dividend policy stresses on investors preference for the current dividend
Answer: MM modelAnswer
Q85: Which of the following must be satisfied to support a classification as a finance lease? 1. Ownership is transferred by the end of the lease term
2. The lease contains a bargain purchase option
3. The lease term is for the major part of an asset’s useful life
4. The present value of the minimum lease payments are substantially more or equal to the asset’s fair value
Answer: All of the four criteriaAnswer
Q86: Which of the following refers to mezzanine financing
Answer: Hybrid of Debt and EquityAnswer
Q87: Which of the following represents the transition phase
Answer: Investor’s financial goals are approachingAnswer
Q88: Which of the following statements about listing on a stock exchange is most correct
Answer: Listing reduces the reporting requirements for firms, because listed firms file reports with the exchange rather than with the SECAnswer
Q89: Which of the following statements concerning the rights of common shareholders is correct, or most accurate
Answer: Voting by common shareholders can be done either in person at the shareholders’ annual meeting or by proxyAnswer
Q90: Which of the following statements is correct regarding profit maximization as the primary goal of the firm
Answer: Profit maximization is concerned more with maximizing net income than the stock priceAnswer
Q91: Which of the following statements is most correct as it relates to the recording of a capital lease
Answer: A capital lease is listed as an asset on the lessee’s balance sheet and must be amortized over the lease periodAnswer
Q92: Which of the following statements is correct as it relates to the recording of a capital lease
Answer: The present value of the minimum lease payments over the lease periodAnswer
Q93: Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm
Answer: EPS maximization is concerned with maximizing net incomeAnswer
Q94: A flexible exchange rate automatically cushions the economy’s output and employment by allowing an immediate change in the relative price of domestic and foreign goods
Answer: Correct – TrueAnswer
Q95: Which of the following will NOT require financial planning
Answer: An old person wanting to transfer all his wealth to his grandchildrenAnswer
Q96: Which one of the following is an advantage of international investing
Answer: you can invest in companies that are, on average, more profitable than similar U.S. firmsAnswer
Q97: Which one of the following is not a feature or characteristics of hire purchase
Answer: Regular interest and capital payments (e.g. monthly) are made by the user to the hire purchase companyAnswer
Q98: Which one of the following most accurately describes an operating lease
Answer: A lease agreement in which a firm sells equipment firm sells equipment to a finance house, which then permits the firm to continue to use it in return for regular rental paymentsAnswer
Q99: While calculating average cost of capital
Answer: Cost of issues are consideredAnswer
Q100: While calculating weighted average cost of capital
Answer: Retained earnings are excludedAnswer
