Q81: A technique uses in comparative analysis of financial statement is
- A. graphical analysis
- B. preference analysis
- C. common size analysis
- D. returning analysis
Answer
Answer C. common size analysis
Q82: Price per share is $30 and an earnings per share is $3.5 then price for earnings ratio would be
- A. 8.57 times
- B. 8.57%
- C. 0.11 times
- D. 11%
Answer
Answer A. 8.57 times
Q83: Price per share is $25 and cash flow per share is $6 then price to cash flow ratio would be
- A. 0.24 times
- B. 4.16 times
- C. 4.16%
- D. 24%
Answer
Answer B. 4.16 times
Q84: Low price for earnings ratio is result of
- A. low riskier firms
- B. high riskier firms
- C. low dividends paid
- D. high marginal rate
Answer
Answer A. low riskier firms
Q85: Formula such as net income available for common stockholders divided by total assets is used to calculate
- A. return on total assets
- B. return on total equity
- C. return on debt
- D. return on sales
Answer
Answer A. return on total assets
Q86: Price per share divided by earnings per share is formula for calculating
- A. price earnings ratio
- B. earning price ratio
- C. pricing ratio
- D. earnings ratio
Answer
Answer A. price earnings ratio
Q87: Present value of future cash flows is $2000 and an initial cost is $1100 then profitability index will be
- A. 55%
- B. 1.82
- C. 0.55
- D. 1.82%
Answer
Answer B. 1.82
Q88: Other factors held constant, greater project liquidity is because of
- A. less project return
- B. greater project return
- C. shorter payback period
- D. greater payback period
Answer
Answer C. shorter payback period
Q89: First step in calculation of net present value is to find out
- A. Present value of equity
- B. future value of equity
- C. present value cash flow
- D. future value of cash flow
Answer
Answer C. present value cash flow
Q90: Life that maximizes net present value of an asset is classified as
- A. minimum life
- B. present value life
- C. economic life
- D. transaction life
Answer
Answer C. economic life
Q91: In estimating value of cash flows, compounded future value is classified as its
- A. terminal value
- B. existed value
- C. quit value
- D. relative value
Answer
Answer A. terminal value
Q92: An bond whose price will rise above its face value is classified as
- A. premium face value
- B. premium bond
- C. premium stock
- D. premium warrants
Answer
Answer B. premium bond
Q93: NUK Company has paid annual dividends of $1.40, $1.75, and $2.00 a share over the past three years, respectively. The company now predicts that it will maintain a constant dividend since its business has levelled off and sales are expected to remain relatively constant. Given the lack of future growth, you will only buy this stock if you can earn at least a 12% rate of return. What is the maximum amount you are willing to pay to buy one share today?
- A. $10.00
- B. $13.33
- C. $16.67
- D. $18.88
- E. $20.00
Answer
Answer C. $16.67
Q94: Reinvestment risk of bond’s is usually higher on
- A. income bonds
- B. callable bonds
- C. premium bonds
- D. default free bonds
Answer
Answer B. callable bonds
Q95: An effect of interest rate risk and investment risk on a bond’s yield is classified as
- A. reinvestment premium
- B. investment risk premium
- C. maturity risk premium
- D. defaulter’s premium
Answer
Answer C. maturity risk premium
Q96: Free cash flow is $12000, an operating cash flow is $4000, an investment outlay cash flow is $5000 then salvage cash flow would be
- A. -$21000
- B. $21,000
- C. -$3000
- D. $3,000
Answer
Answer D. $3,000
Q97: Federal government tax revenues if it exceeds government spending then it is classified as
- A. budget surplus
- B. budget deficit
- C. federal reserve
- D. federal budget
Answer
Answer A. budget surplus
Q98: Markets where assets are bought or sold within a few days or at some future dates are classified as
- A. spot markets
- B. future markets
- C. Both A and B
- D. financial instruments
Answer
Answer C. Both A and B
Q99: Which of the following is a tax saving investment?
- A. Fixed deposit
- B. Shares
- C. NSC
- D. PPF
Answer
Answer D. PPF
Q100: Which of the following is not a financial investment?
- A. Purchase of shares
- B. Purchase of bonds
- C. Purchase of car
- D. Purchase of debentures
Answer
Answer C. Purchase of car
Q101: The fundamental analysis approach has been associated with___
- A. Uncertainties
- B. Certainties
- C. Ratios
- D. Balance sheet
Answer
Answer A. Uncertainties
Q102: The object of portfolio is to reduce___by diversification
- A. Return
- B. Risk
- C. Uncertainty
- D. Percentage
Answer
Answer B. Risk
Q103: Which of the following is not a characteristic of a money market instrument?
- A. liquidity
- B. marketability
- C. long maturity
- D. liquidity premium
Answer
Answer C. long maturity
Q104: Assets allocation refers to___
- A. choosing which securities to hold based on their valuation
- B. investing only in “safe” securities
- C. the allocation of assets into broad assets classes
- D. bottom -up analysis
Answer
Answer C. the allocation of assets into broad assets classes
Q105: Commercial banks differ from other businesses in that both their assets and their liabilities are mostly
- A. illiquid
- B. financial
- C. real
- D. owned by the government
Answer
Answer B. financial
Q106: Which of the following is a reason for selecting a mutual fund?
- A. its historic return
- B. high tax efficiency
- C. charging 12b-1 fees instead of load fees
- D. often realizing portfolio gains
Answer
Answer D. often realizing portfolio gains
Q107: ___are not financial assets
- A. bonds
- B. machines
- C. stocks
- D. equities
Answer
Answer B. machines
Q108: Which of the following is not normally one of the reason for a change in a investors circumstances?
- A. change in market conditions
- B. change in legal considerations
- C. change in time horizon
- D. change in tax circumstances
Answer
Answer A. change in market conditions
