SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Program: PGDBA
Subject: Project Finance

Sample Questions:
Section I: Subjective Questions

1. Define a project and state the activities involved in preparing a project.

2. State the sources of information used for deciding the project idea and working out a
business plan/its implementation.

3. What should be the typical competencies of a promoter/entrepreneur of an enterprise?

4. What information as regards competition/competitors is expected to be given in an

application for project loan?

5. What do the lenders see while examining the financial health of an applicant unit?

6. What is meant by 'cost of capital'? Where do we use this concept?

7. What is project evaluation? State the parameters on the basis of which the success of a
project is measured?

8. Public support is an important aspect for successful completion/implementation of an

Infrastructure PPP. Discuss.

Section II: Objective Questions

Multiple Choice Single Response

1. This method is a sophisticated technique used for big projects requiring national
perspectives
1] Trend Projection
2] End-use
3] Leading Indicator
4] Econometrics Model
2. This organisational structure is not risky if the technology is simple and the project
is small
1] Classical Organisation Structure
2] Task Force Oriented Organisation Structure
3] Product Type Organisation Structure
4] Project Management as a Staff Function
3. In this organisational structure, the project manager maintains complete line authority
over the entire project
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

1] Classical Organisation Structure

2] Task Force Oriented Organisation Structure
3] Product Type Organisation Structure
4] Project Management as a Staff Function
4. The advances received against Future Sales Holding Ratio is calculated as
1] Advance Received Future Sales level x 120 / Annual Gross Sales
2] Advance Received Future Sales level x 365 / Annual Gross Sales
3] Advance Received Future Sales level x 90 / Annual Gross Sales
4] Advance Received Future Sales level / Annual Gross Sales
5. In this country, the price for power is generally the 'avoided cost' of the purchasing
utility in connection with such power
1] UK
2] USA
3] India
4] China
6. Under this component of application form for project finance, export possibilities and
the nature of competition to be faced in foreign countries, indicating the prices of the
products in countries where export possibilities exists are mentioned
1] Raw materials
2] Utilities
3] Means of finance
4] Commercial prospects
7. This organisational structure becomes necessary when a project is too large and
complex or geographically spread
1] Matrix Organisation Structure
2] Project Oriented Organisation Structure
3] Product Type Organisation Structure
4] Project Management as a Staff Function
8. The following checks the progress of construction activity and mobilisation of
physical resources through physical inspections of the project as also through the
services of the lender's engineers
1] Financial follow-up
2] Physical follow-up
3] Legal follow-up
4] Technical Follow-up
9. This port has now developed into a major and a modern port facility capable of
handling a variety of cargo
1] Vapi
2] Anabar-Nicobar
3] Porbandar
4] Mundra
10. Details of a new project or modernisation or expansion of an existing unit is
mentioned under this component of the application form for project finance
1] History and Constitution
2] Management, Capital Structure and Borrowing Powers
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

3] The Project
4] Cost of the Project
Multiple Choice Multiple Response

11. These steps are followed under incremental sales method to do sales analysis of the
operating statement
1] Compute the respective changes in the individual cost components of these years
2] Express the increment in the individual elements of cost as a percentage of the
incremental sale.
3] For tracking the interest in cost of consumption over the period
4] The incremental sales relationship with the individual incremental costs
12. The lenders use funds flow analysis to understand the degree of financial discipline
required to be stipulated for the loans to ensure
1] Proper end-use of the funds lent for the project
2] Expansion, investments in subsidiaries, repayment of unsecured loans
3] Proper use of the funds to pay bonus
4] Safeguard the interests of the lender through special covenants on disposal of cash
generation for repayment of dividends
13. These are the important features of financial lease
1] The lessor calculates the lease rental in such a manner that he would be in a position
to recover the entire cost of equipment’s, the interest on the capital outlay and his
finance charges over the lease period
2] The lessee has the exclusive right to use and possess the equipment throughout the
lease term
3] The risks associated with the use of the leased asset primarily rest on the lessee
4] The finance lease can be cancelled anytime if there is dispute among lessee and
lessor
14. According to financing of airport infrastructure, to raise the internal resources the
following steps will be initiated
1] Optimisation of revenue from aeronautical charges, through negotiation with
IATA and keeping government approvals in view
2] A revolutionary thrust towards raising revenue from non-aeronautical commercial
sources
3] Rationalisation and optimisation of various charges like passenger service fee, user
development charges, aerobridge charges etc
4] Raising the revenue by peak and off-peak pricing policies
15. These are the expected role of industry in pollution management
1] To set up short-term and long-term pollution controlling devices
2] To built pollution minimisation as part and parcel of management practices
3] To interact and learn from each other on different practices adopting for improving
environmental performance
4] To commit themselves and set time-bound targets/goals for pollution minimisation
16. According to the cost of production and profitability, this information is required
about raw materials
1] Requirement, price details
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

2] Forecasting
3] Location and particulars of mining
4] Principal terms of mining lease
17. According to the cost of production, these are included in the financial expenses
1] Interest payable on debentures
2] Interest and other charges payable on working capital
3] Term loan, Deferred payments
4] Depreciation
18. These steps are involved in simulation analysis
1] Model the project how the net present value is related to the parameters and the
exogenous variables
2] Specify the values of the parameters and the probability distributions of the
exogenous variables
3] Select a value, at random, from the probability distributions of each of the
exogenous variables
4] Estimate the values of each of the variables in investment analysis for each
scenario
Fill in the Blanks

19. ___________ role is to establish a facilitative rather than defensive communication

climate.
1] Lender
2] Finance Manager
3] Leadership
4] Entrepreneurship
20. ___________ achievements tend to depend on his own efforts rather than rely on
achievement through the efforts of subordinates.
1] Pace Setter's
2] Coach's
3] Affiliator's
4] Democrat's
21. ___________ is the completion time having the highest probability.
1] Optimistic time
2] Pessimistic time
3] Most Likely time
4] Expected time
22. ___________ is the longest time that an activity might require.
1] Optimistic time
2] Pessimistic time
3] Most Likely time
4] Expected time
23. According to Prof. Edward Altman, above the level of 3.0 the company is unlikely to
___________.
1] Survive
2] Fail
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

3] Risk
4] Uncertainty
24. A ___________ statistically expresses a running process, a quantitative phenomenon.
1] Cash budget
2] Fund flow
3] Ratio
4] Leverage
25. Selected Financial and Other Ratios of the Private Corporate Sector is a publication
issued periodically by the ___________.
1] Credit Information Bureau
2] Credit Rating Organisation
3] Dun and Bradstreet
4] Reserve Bank of India
26. The ___________ process is entirely governed by the uniform custom and practices
issued by the International Chamber of Commerce.
1] Letter of Credit
2] Bonds
3] Repo
4] American Depository Receipts
27. ___________ management is seen as a remedial measure and not an integral part of
the management function.
1] Risk
2] Threat
3] Failure
4] Forecasting
28. A ___________ return on assets ratio would reflect an efficient use of capital and
assets and the management's skill in employing the funds invested in the company.
1] Low
2] High
3] Constant
4] Worse
State True or False

29. Under the component of nature of industry and products, the promoters have to give
industry, product, licensed capacity, installed capacity, actual production and
proposed capacity.
30. Before issuing commercial paper, it is necessary for a company to appoint a
scheduled commercial bank to act as an Issuing and Paying Agent for the issue.
31. The cost baselines are used to measure the cost performance of the project.

32. According to Power Purchase Agreements, Lenders will be concerned about the risk
unless the utility also assumes all of the owner's obligations to the lenders and others
under the loan agreement and the other project documents.
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

33. Reduction in the length of the operating cycle can be achieved only by better
management of one or more of the individual phases of the operating cycle period.
34. Bank financing working capital gap ratio is a liquidity ratio.

35. The benefit of PERT is that it gives information about the activity starts and end
dates.
36. According to the syndication credit, the borrower mandates a banker as lead manager
of his choice to arrange a loan for him indicating the terms of the loan and the
mandated bank's rights and responsibilities.
37. Calculation of these ratios is useful to the project management in managing costs and
profitability and as also to the lenders in determining working capital requirements
and loan quantity.
38. According to the covenants conditions, the company shall keep the Bank advised of
any circumstances adversely affecting the financial position of their
subsidiaries/group companies in which it has invested.

Match the Following

39. 1] Valuation Ratio 1] Capital market perceptions of risk and

return
2] Price-Earning Ratio 2] Market price per share / Earnings per
share
3] Payout Ratio 3] Dividend per share/ Earning per share
4] Yield 4] Dividend + Price Change / Initial Price
5] Operating change / Earning per share

6] Capital / Earning per share

40. 1] Factoring 1] International Institute for the

Unification of Private Law
2] Forfeiting 2] Introduced in India by EXIM Bank in
1994
3] Commercial Paper 3] Blue-chip companies are major
players
4] Covenants 4] A definite provision in a loan contract
5] Corporative Banks are the major
players
6] Introduced in India by SEBI in 1995
41. 1] Variance Analysis 1] Compares the actual project results to
the planned results
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBA
Subject: Project Finance

2] Trend Analysis 2] Examining the project results over a

3] Earned Value Analysis
4] Budgeted Cost Work Schedule
42. 1] Custom Airports
2] Model Airports
3] Civil Enclaves in Defence Airport
4] International Airports
period a time to find out if the cost
performance is improving or not
3] It is a technique that measures the
project performance by integrating the
scope, cost and schedule measures of the
project
4] It is the improved cost estimate
planned for a project activity for a given
period
5] It is the total costs incurred while
implementing an activity in a given
period
6] Called as Earned value
1] Bangalore, Hyderabad, Ahmedabad
2] Minimum runway length of 7500 feet
3] There are 28 civil enclaves
4] Guwahati, Amritsar
5] There are 32 civil enclaves
6] Bhuwaneshwar, Rajkot