Which of the following is the systematic risk?
A. Market risk
B. Purchasing power risk
C. Interest rate risk
D. All of these
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Match the items of
List-I with the items of
List-II , and find out the correct matching.
List-I
List-II
a. EBIT Contribution
1. Financial leverage
b. ( Earning before tax ) EBT EBIT
2. Super-leverage EBIT
c. EBIT Contribution
3. Operating leverage
A. a-1, b-3, c-2
B. a-1, b-2, c-3
C. a-3, b-2, c-1
D. a-2, b-1, c-3
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Investment in machines require
A. short-term finance
B. long-term finance
C. Both A and B
D. None of these
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Statement-I: In the payback period method, the risk of the project is adjusted by lessening the target payback period.
Statement-II: Sensitivity analysis helps in the calculation of the net present value of the proposal.
A. Statement-I is correct, but statement-II isincorrect
B. Statement-I is incorrect, but statement-II is correct
C. Statement-I and statement-II are correct
D. Statement-I and statement-II are incorrect
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Which combination of the following two statements (A) and (R) is correct?
Assertion (A): The IRR of a project is the discount rate which reducesits NPV to zero.
Reason (R): A project is worth accepting if the IRR exceeds the cost of capital.
A. (A) is right, but (R) is wrong
B. Both (A) and (R) are correct
C. (A) is wrong, but (R) is correct
D. Both (A) and (R) are wrong
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Match the following:
List-I
List-II
a. Matching approach
1. Dividend Policy
b. Structural ratios
2. Inventory Management
c. Ordering quantity
3. Financing Working Capital
d. Bonus shares
4. Capital Structure
A. a-1, b-2, c-3, d-4
B. a-3, b-4, c-1, d-2
C. a-3, b-4, c-2, d-1
D. a-2, b-1, c-3, d-4
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The single European currency, the euro, was adopted by 11 member nations on 1st January, . . . . . . . .
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For a layman, factoring and forfaiting perform the same basic function. Factoring mostly deals with
A. Short-term receivables
B. Long-term receivables
C. Medium-term receivables
D. All of the above
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Combined leverage can be used to measure the relationship between
A. PAT and EPS
B. Sales and EBIT
C. EBIT and EPS
D. Sales and EPS
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Assertion (A): Acompany should pay a minimum dividend to its shareholders.
Reason (R): Dividends are heavily taxed than capital gains.
A. Both (A) and (R) are correct
B. Both (A) and (R) are incorrect
C. (A) is incorrect, but (R) is correct
D. (A) is correct, but (R) is incorrect
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The segments of international financial market include
1. Foreign Exchange Market
2. International Arbitrage Market
3. International Money Market
4. International Bond Market
Select the correct answer by using the options given below
A. Both 1 and 4
B. 1, 3 and 4
C. 2, 3 and 4
D. All of the above
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The instrument chosen for enhancement of international liquidity is
A. Society for Worldwide Inter-bank Financial Telecommunications (SWIFT)
B. Special Drawing Rights (SDRs)
C. Multilateral Netting
D. Netting of Payments
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Which of the following are rules to use when choosing between forward contracts and currency options?
A. When the quantity of a foreign-currency cash outflow is known, buy the currency forward
B. When the quantity of a foreign currency cash outflow is unknown, buy the currency forward
C. When the quantity of a foreign currency cash flow is partially known and partially uncertain, use a forward contract to hedge the known and unknown portions
D. when the quantity of a foreign currency cash inflow is known, buy the currency forward
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The overall capitalization rate and the cost of debt remain constant for all degrees of financial leverage. It is advocated by
A. Traditional Approach
B. Net Income Approach
C. Net Operating Income Approach
D. M-M Approach
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In which of the following ways should the discount rate be adjusted to increase a given future value?
A. Upward
B. Downward
C. First upward and then downward
D. We should use PVIF to get the answer
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Net present value is equal to
A. Total present value of cash inflow - Total present value of cash outflows
B. Total present value of cash outflow - Total present value of cash inflows
C. Total present value of cash outflows + Inflows
D. None of the above
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For contingency exposure of foreign exchange, the best derivative that can be used to hedge is
A. forwards
B. options
C. futures
D. swaps
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The cost of issuing new stock is called
A. the cost of equity
B. marginal cost of capital
C. floatation cost
D. None of these
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The date of settlement for a foreign exchange transaction is referred to as
A. Value date
B. Clearing date
C. Maturity date
D. Transaction date
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Securitisation is a process in which assets are sold to a bankruptcy remote . . . . . . . . in return for an immediate cash payment.
A. special purpose vehicle
B. asset reconstruction corporation
C. bank or NBFC
D. mortgage company
Select an option to see the answer and solution.