Practice Test

Q1) Corporate finance deals with Show Answer

Q2) Capital required for day to day expenses is Show Answer

Q3) Finanlising dividend payout is Show Answer

Q4) Capital budgeting decisions are Show Answer

Q5) Capital structure is Show Answer

Q6) Risk of incurring capital loss is Show Answer

Q7) Issue of shares to existing shareholders is Show Answer

Q8) Long-team decisions are called as Show Answer

Q9) Capital budgeting decisions involve huge amount of risk due to Show Answer

Q10) Payback period is Show Answer

Q11) For capital budgeting decisions Show Answer

Q12) ARR method Show Answer

Q13) N.P.V. method is Show Answer

Q14) P.I. is the proportion between Show Answer

Q15) In accept-reject decisions Show Answer

Q16) In determination of cash outflow Show Answer

Q17) The method which uses accrual accounting Show Answer

Q18) The method which does not consider investments profitability is Show Answer

Q19) The following affects PV of an investment Show Answer

Q20) The IRR is the same as Show Answer

Q21) The most reliable method for financing capital budget decisions Show Answer

Q22) Optimum Capital structure implies a ratio debt and equity at when _______ would be least and market value of the firm would ne highest. Show Answer

Q23) One of the following is not an assumption of capital structure theories: Show Answer

Q24) The factor which is not relevant for determination of debt equity mix. Show Answer

Q25) Ability of a firm with high gearing to meet fixed interest payment out of current earnings. Show Answer

Q26) Capital Structure decision should always aim at having debt component in order to Show Answer

Q27) The non-produce projects should be financed by Show Answer

Q28) Capital structure with equity shares only Show Answer

Q29) Optimum capital structure Show Answer

Q30) Capital structure with equity Show Answer

Q31) Capital structure with equity & preference Show Answer

Q32) Financial markets provide protection against Show Answer

Q33) Capital market is the place where Show Answer

Q34) Secondary market is a market for Show Answer

Q35) In private placement, the issue is made to Show Answer

Q36) Funds can be raised through international market by Show Answer

Q37) Venture capital oriented in Show Answer

Q38) Stock Exchanges Show Answer

Q39) Capital market Show Answer

Q40) Stock exchange is Show Answer

Q41) Companies can access capital markets through Show Answer

Q42) Capital market includes the following participants Show Answer

Q43) The scheme of issue in which selling price of new issue is decided by demand is Show Answer

Q44) In Buyback of shares a company can buyback its shares out of Show Answer

Q45) Fundamental Analysis involves Show Answer

Q46) Demat trading is Show Answer

Q47) In India first Depository was set up in Show Answer

Q48) Demat trading is Show Answer

Q49) Rolling settlement was formulated in Show Answer

Q50) These derivates are at standardized Show Answer

Q51) Future contracts are available in respect of Show Answer

Q52) _______ is concerned with raising financial resources and their effective utilisation towards achieving organisational goals. Show Answer

Q53) The most fundamental objective of financial management is _______ Show Answer

Q54) _______ refers to the composition of the different securities that comprises the capital of the business. Show Answer

Q55) The routine finance function are also called as _______ function. Show Answer

Q56) Capital budgeting is a _______ investment decision that helps to create value to stakeholders. Show Answer

Q57) Capital structure refers to composition of the firms ______ funds comprising of equity, preference and long term loans. Show Answer

Q58) _______ is a form of equity financings design especially for funding high risk and high reward projects Show Answer

Q59) The _______ facilitates accessing of mostly long-term funds by corporate firms and other through the issue of securities. Show Answer

Q60) The _______ facilitates trading in securities on the stock exchanges. Show Answer

Q61) _______ market deals with the security suggest bond issued by the central government, state governments, and all India financial institutions. Show Answer

Q62) _______ is a method of raising further funds from existing shareholders. Show Answer

Q63) When the current market price of the stock is less than the true value then it is known as _______ Show Answer

Q64) When the current market price of the stock is more than the true value then it is known as _______ Show Answer

Q65) _______ of the company represents the financial position and liquidity of the company on a given date. Show Answer

Q66) The common tools used for _______ analysis are charts trend lines moving averages etc. Show Answer

Q67) _______ is an important source of equity for startup companies. Show Answer

Q68) _______ refers to conversion of physical share certificate into electronic certificates. Show Answer

Q69) _______ are highly standardized and legally enforceable. Show Answer

Q70) _______ deals with trading in commodities like wheat, sugar, metals etc. Show Answer

Q71) _________deals in foreign exchange, financial instruments like stock market instruments, treasury bills, bonds etc. Show Answer

Q72) _______ is a contract, which gives the buyer the right, but not the obligation to buy or sell specified quantity of underlying assets, auto specific price on or before a specified date. Show Answer

Q73) _______ provides the right to buy a specified underlying as said at a specified price on or before the specified date. Show Answer

Q74) A _______ gives an investor the right to sell the underlying asset at the strike price before the expiry date. Show Answer

Q75) Finance is required _____ of a business unit. Show Answer

Q76) _____ is one of the functions of financial management. Show Answer

Q77) Modern business is _____ intensive. Show Answer

Q78) Management of cash flow is one function of _____ management. Show Answer

Q79) Well balanced capital structure ensures _____ utilisation of funds collected. Show Answer

Q80) _____ determines the capital structure. Show Answer

Q81) Capital market and _____ are two constituents of Indian Financial System. Show Answer

Q82) Options trading is simple and _____. Show Answer

Q83) Depository system leads to _____. Show Answer

Q84) Futures contracts give protection against _____. Show Answer

Q85) A depository holds securities of investors in _____. Show Answer

Q86) Demat account needs to be opened with _____. Show Answer

Q87) Debenture is _____ product. Show Answer

Q88) Option included call option and _____. Show Answer

Q89) Financial management deals with raising, utilizing and _____ the funds of a business enterprise. Show Answer

Q90) Capital market deals with _____. Show Answer

Q91) Capital market facilitates _____ growth. Show Answer

Q92) Venture capital is provided in the form of _____. Show Answer

Q93) In the case of demat shares, dividend is paid _____. Show Answer

Q94) Options are important _____ derivatives. Show Answer

Q95) Dematerialization is _____ in India. Show Answer

Q96) Secondary market deals with _____ securities. Show Answer

Q97) Capital budgeting decisions are long term investment decisions. Show Answer

Q98) Capital budgeting decisions need not be taken carefully. Show Answer

Q99) Long term decisions involve heavy risk. Show Answer

Q100) Long term decisions can be easily reversed. Show Answer

Q101) Cost of investment is a part of cash outlay. Show Answer

Q102) Depreciation should be added back to N.P. after tax to get cash inflow. Show Answer

Q103) The amount of scrap value should be added to the cash inflow of last year. Show Answer

Q104) Working capital requirement should be added to the cash outlay and it should be added to the cash inflow. Show Answer

Q105) Capital budgeting decisions are very easy to take. Show Answer

Q106) Payback period is the period required to recover the initial investment outlay. Show Answer

Q107) The project with longer payback period should be selected. Show Answer

Q108) The project with higher accounts rate of return should be selected. Show Answer

Q109) Payback period method does not consider time value of money. Show Answer

Q110) NPV method considers time value. Show Answer

Q111) The project with higher NPV should be selected. Show Answer

Q112) Profitability index is the proportion between present value of cash inflow and PV of cash outflow. Show Answer

Q113) IRR is the best method of evaluating capital budgeting projects. Show Answer

Q114) NPV is the best method of evaluation of capital budgeting projects. Show Answer

Q115) The cost of capital of a new projects is 18%. Two competing projects X and Y having IRR of 17% and 16% respectively project X has higher IRR. Hence it should be accepted. Show Answer

Q116) Depreciation is a non cash cost. Show Answer

Q117) Capital structure is the composition of securities issued to raise finance. Show Answer

Q118) Capital structure is organisation structure of a company. Show Answer

Q119) An ideal capital structure can be formulated by combining debt and equity judiciously. Show Answer

Q120) An ideal capital structure is one which maximizes market value per share. Show Answer

Q121) Capital structure is make up of capitalization. Show Answer

Q122) Capital structure includes short to creditors, and equity shareholder’s fund. Show Answer

Q123) Capital structure influences risk and return of the shareholders. Show Answer

Q124) Securities premium is included in own capital. Show Answer

Q125) The capital structure need not be flexible. Show Answer

Q126) Capital structure should not impair solvency of the company. Show Answer

Q127) Cost of financing is high when finance is raised through issue of equity shares. Show Answer

Q128) Change in capital structure does not affect value of the firm. Show Answer

Q129) The basic assumption of net income approach in capital structure planning is that are these taxes. Show Answer

Q130) A capital structure is optimum if market value of equity shares does not change in spite of change in the degree of leverage. Show Answer

Q131) Traditional approach assumes that optimum capital structure exist. Show Answer

Q132) Liquidity is ability to convert into cash. Show Answer

Q133) Financial market provides protection against health and income risk. Show Answer

Q134) Capital market is the place where long term securities are dealt with. Show Answer

Q135) In secondary market, securities are issued for the first time Show Answer

Q136) Under private placement, issue of securities is made to a small group of investors. Show Answer

Q137) Capital market is a barometer of economic performance of a country. Show Answer

Q138) Primary markets deals with securities already issued. Show Answer

Q139) Stock exchange is an organized market where securities are traded. Show Answer

Q140) Stock exchanges are sensitive to economic and political events. Show Answer

Q141) Book Building is the system of raising funds. Show Answer

Q142) SEBI formulated Rolling settlement in Jan 2000. Show Answer

Q143) Buyback is purchasing own shares by the company. Show Answer

Q144) Securities analysis is evaluation of movement of prices of securities. Show Answer

Q145) Studying facts of the company is technical analysis. Show Answer

Q146) Studying the direction of movement of securities is fundamental analysis. Show Answer

Q147) Shares are traditionally held in physical form. Show Answer

Q148) In Demat System Shares are held in Dematerialised form. Show Answer

Q149) SEBI was established in 1990. Show Answer

Q150) Exchange traded is a derivative. Show Answer

Q151) Future contracts are available in respect of equity shares only. Show Answer

Q152) An option can be call option or put option. Show Answer

Q153) Financial management is concerned with only investments of funds. Show Answer

Q154) A business form requires long term funds to meet working capital needs. Show Answer

Q155) Financial management deals with the planning and control of forms financial resources. Show Answer

Q156) The fundamental objective of financial management is wealth maximization. Show Answer

Q157) Retained earnings can be utilised to only to meet contingencies. Show Answer

Q158) Finance manager carried out only routine functions. Show Answer

Q159) There should be proper composition of various security is to avoid an imbalance in capital structure. Show Answer

Q160) Allocation of surplus is the routine function of financial management. Show Answer

Q161) In order to make decisions on funds requirement, a firm should consider both the fixed capital and working capital requirement. Show Answer

Q162) When a budget is prepared with respect to capital expenditure it is called capital budgeting. Show Answer

Q163) Capital budgeting decisions is a long-term strategic investment decision which provides the basic structure and foundation to an organisation. Show Answer

Q164) Capital budgeting is not relevant to plan the capital structure of the company. Show Answer

Q165) There is no need to follow up after the project is implemented. Show Answer

Q166) Size of the company is not an important factor for determining the capital structure. Show Answer

Q167) Size of the company is not an important factor for determining the capital structure. Show Answer

Q168) Venture Capital helps in financing hi-technology and R& D projects Show Answer

Q169) Venture capital is not a risk capital. Show Answer

Q170) Short term finance enables the form to execute the expansion and diversification plans. Show Answer

Q171) Money market provides short term funds. Show Answer

Q172) Corporate securities market and primary security markets are synonymous. Show Answer

Q173) Secondary market deals with new issue of capital. Show Answer

Q174) The capital market provides funds for the project in backward areas. Show Answer

Q175) The true value of company's stock is called intrinsic value. Show Answer

Q176) While undertaking fundamental analysis the firm should consider only quantitative factor. Show Answer

Q177) Technical analysis assumes that changed in the share price can be determined by analysing market activities. Show Answer

Q178) Technical analysis involves analysis of economy industry and company Show Answer

Q179) Fundamental analyst are called chartist. Show Answer

Q180) Raising fund by the way of venture capital requires fewer formalities as compared to obtaining funds by the way of public issue of share capital. Show Answer

Q181) Transfer of shares become easier and quicker under demat mode. Show Answer

Q182) In futures contract delivery of asset is not required. Show Answer

Q183) There are normally 4 types of options Show Answer

Q184) There is no difference between American option and European option. Show Answer

Q185) Finance is treated as the life blood of business. Show Answer

Q186) Excess cash is remunerative. Show Answer

Q187) Finance is required throughout the life span of a company. Show Answer

Q188) Finance is sine quo non for business management. Show Answer

Q189) Capital structure of a company is decided in the capital plan. Show Answer

Q190) Capital structure should be simple and economical. Show Answer

Q191) Capital market deals with short term finance. Show Answer

Q192) Money market is one player of capital market. Show Answer

Q193) Technical analysis is market oriented. Show Answer

Q194) Fundamental analysis involves only economic analysis. Show Answer

Q195) Venture capital is not risky. Show Answer

Q196) Venture capital companies provide funds to safe and secured ventures. Show Answer

Q197) The outlook in fundamental and technical analysis is identical. Show Answer

Q198) Price of share is underlying asset of derivatives. Show Answer

Q199) Demat indicates electronic conversion of shares. Show Answer

Q200) Shares are sources of long term capital. Show Answer

Q201) Demat means electronic conversion of shares. Show Answer

Q202) Demat shares are easy, quick and safe for handling. Show Answer

Q203) Well balanced capital structure ensures full utilisation of funds collected. Show Answer

Q204) Money market deals with long term funds and capital market deals with short term funds. Show Answer

Q205) Technical analysis is beneficial to investors. Show Answer

Q206) Venture capital is offered to enterprises engaged in trading and financial services. Show Answer

Q207) Demat account is completely different from regular S.B. Account. Show Answer

Q208) Finance is called “the science of business”. Show Answer

Q209) Every company has to design its own capital structure. Show Answer

Q210) Option contracts combine the features of “futures” and “Forward” contacts. Show Answer

Q211) Futures contracts are not legally enforceable. Show Answer

Q212) Capital structure suggests the ration between owned capital and borrowed capital. Show Answer

Q213) Finance means money resources. Show Answer

Q214) Corporate finance deals with financial aspects of business. Show Answer

Q215) Corporate finance is static in nature. Show Answer

Q216) Finance is required for working capital need. Show Answer

Q217) Finance manager has to do tax planning. Show Answer

Q218) Investment decisions are concerned with raising of finance. Show Answer

Q219) Dividend decisions deal with appropriation of profits. Show Answer

Q220) Capital structure is organizational structure. Show Answer

Q221) Maintaining liquidity is the objective of finance management. Show Answer