Economic exposure does not deal with
A. change in real exchange rates
B. future cash flow of the firm
C. expected exchange rate changes
D. None of the above
Select an option to see the answer and solution.
"Capital budgeting is long-term planning for making and financing proposed capital outlays." This definition is given by
A. Milton H. Spencer
B. R. M. Lynch
C. Charles T. Horngreen
D. Joel Dean
Select an option to see the answer and solution.
Match the items of
List-I with
List-II and indicate the correct answer:
List-I
List-II
a. Net Income Approach
1. Working Capital Management
b. Profitability Index
2. Over Capitalization
c. Concentration Planning
3. Capital Structure Banking
d. Lower Rate of Decision
4. Capital Budgeting Return
A. a-3, b-4, c-1, d-2
B. a-3, b-4, c-2, d-1
C. a-4, b-2, c-3, d-1
D. a-2, b-3, c-1, d-4
Select an option to see the answer and solution.
The full details for the issue of ADRs by a company must be furnished within 30 days from the date of its closure to
A. Securities and Exchange Commission (SEC)
B. Reserve Bank of India (RBI)
C. Securities and Exchange Board of India (SEBI)
D. Company Law Board (CLB)
Select an option to see the answer and solution.
The Lintner Model shows that the current dividend depends
A. Partly on current earnings and partly on the previous year's dividend
B. Partly on the market rate of return and partly on the expected rate of return
C. Partly on current earnings and partly on the expected rate of return
D. Partly on the previous year's dividend and partly on the market rate of return
Select an option to see the answer and solution.
Financial derivatives include
A. Stocks
B. Forward contracts
C. Futures
D. Both B and C
Select an option to see the answer and solution.
In finance, working capital means the same thing as
A. total assets
B. fixed assets
C. current assets
D. None of these
Select an option to see the answer and solution.
Which of the following statement(s) is/are incorrect?
A. According to MM theory, the value of a firm is affected by the debt equity mix
B. According to MM theory, 'the total value of the firm is static'
C. Both A and B
D. None of the above
Select an option to see the answer and solution.
Match the correct combination for Assertion and Reason as argued by Shapiro and Titman:
Assertion (A): Management decisions to insure or hedge asset appear at best neutral mutation.
Reason (R): The price of systematic risk is identical for all the participants in the financial market.
A. (A) is correct, but (R) is incorrect
B. (A) is incorrect, but (R) is correct
C. Both (A) and (R) is incorrect
D. Both (A) and (R) is correct
Select an option to see the answer and solution.
Combined leverage is calculated as A.
A. Operating Leverage + Financial Leverage
B. Operating Leverage - Financial Leverage
C. Operating Leverage × Financial Leverage
D. Operating Leverage ÷ Financial Leverage
Select an option to see the answer and solution.
The following situation may occur when there is an increase in the number of shares outstanding by reducing the par value of the stock.
A. Stock split
B. Stock dividend
C. Extra dividend
D. Regular dividend
Select an option to see the answer and solution.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was enacted in which year?
Select an option to see the answer and solution.
Which of the following statement(s) is/are correct?
A. The cost of retained earnings is always less than the cost of external equity
B. The cost of external equity is always less than the cost of retained earnings
C. The cost of retained earnings is power than the cost of external equity in presence of floatation costs
D. None of the above
Select an option to see the answer and solution.
Arrange the following terms of working capital cycle involves in correct sequence.
1. Acquisition of raw material
2. Finished goods
3. Receivables
4. Cash
5. Work-in-progress
A. 4, 3, 1, 5, 2
B. 1, 2, 3, 4, 5
C. 1, 5, 2, 3, 4
D. 4, 1, 2, 3, 5
Select an option to see the answer and solution.
Which of the following statements is true?
A. The cost of work-in-progress includes raw materials, wages and factory overheads
B. Cost of finished goods is estimated at profit amount
C. Delay in payment of certain expenses provides long-term financing of working capital
D. None of the above
Select an option to see the answer and solution.
Which of the following can be defined as the term of a finance lease?
A. It is cancellable
B. The legal title to the asset is with the lessee
C. The asset is capitalized in the balance sheet of the lessee
D. The lessor is responsible for service and maintenance of the asset
Select an option to see the answer and solution.
What is the beta for averagerisk security? What is the beta for a treasury bill?
A. 1; 0
B. 0; 1
C. Greater than 1; 1
D. 1; greater than 1
Select an option to see the answer and solution.
What does 'Yield to Maturity' in the context of bonds indicate?
A. The fixed cost of the organization
B. The effectiverate of interest
C. The facevalue of the bond
D. It reflects the rating by the credit rating agency
Select an option to see the answer and solution.
Our firm has a philosophy that is analogous to hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs?
A. Trade credit
B. Currency notes
C. Accounts payable
D. Common stock equity
Select an option to see the answer and solution.
A firm with high operating leverage has
A. Low fixed cost in its production process
B. High variable cost in its production process
C. High fixed cost in its production process
D. Low variable cost in its production process
Select an option to see the answer and solution.