Total Questions: 63

Total Marks: 100

Assignment Information :

The examination will consist of only Objective type (multiple choice) questions
requiring candidates to Mouse-click their correct choice of alternatives against the
related question number. The questions would carry 1 to 5 marks each depending on
the difficulty level of the question as indicated in the table below:

Difficulty Level of Questions:

1 Mark - Direct, Memory based

2 Marks - Memory & Conceptual
3 Marks - Conceptual & Analytical
4 Marks - Analytical based on understanding of concepts
5 Marks - Application based on understanding of concepts
  The question paper will be for 100 marks and considering marks
allotted to each question, the total number of questions would be around
63.
  There will not be negative marking for wrong answers.
  In case candidate does not want to attempt the question he I she
should not mouse-click any option.
  The students are allowed to save the responses and come back
later to resume, complete and "Save and Submit" the assignment.
However, if the Due Date has expired, then the assignment will not be
accessible and will be marked as zero. In such cases, the student can re-
attempt the assignment allocated after enrolling in the subsequent
Semester.
  Once submitted, that answer sheet cannot be retreieved for any
editing. The student has to initiate a new attempt (if allowed), if he has
submitted the assignment by mistake.
  The students are normally allowed 3 chances to attempt and
submit the assignment. The number of attempts availed is displayed under
the "Test Information".
  The Highest Grade of the 3 attempts shall be considered for
grading.
  The assignments are auto evaluated, and hence no chance of re-
evaluation/re-totalling is allowed to the student.
-------

Multiple Attempts This Test allows

3 attempts.
This is attempt
number 1.
Force Completion This Test can
be saved and
resumed later.
 Question Completion Status:
QUESTION 1
1. The NI approach, the ke is assumed to be same and constant.
  True

 False

1 points   
QUESTION 2
1. The concepts of present value and future value are:
directly related to each
other
not related to each other
proportionately related to
each other
inversely related to each
other
1 points   
QUESTION 3
1. Treasury bonds are subject to interest rate risk but are free of default
risk.

 True

 False

1 points   
QUESTION 4
1. In Traditional Approach, which one is correct?
ke rises constantly
kd decreases
constantly
k0 decreases
constantly
None of the above

1 points   
QUESTION 5
1. If credit terms of 2/10, net 40 are offered, the approximate cost of not
taking the discount and paying at the end of the credit period would be 30%
(Assume a 365-day year.)

 True

 False

Note- (2 ÷98%) × (365 ÷30 ) =24.83 %

 1 points   
QUESTION 6
1. Firms raise the funding they need through debt, equity and profits.

 True

 False

1 points   
QUESTION 7
1. Receivables management involves a tradeoff between costs and
benefits of receivable.

 True

 False

1 points   
QUESTION 8
1. The principal reason for the existence of leasing is that:
intermediate-term loans are difficult to obtain
this is a type of financing unaffected by changes in tax law
companies, financial institutions, and individuals derive different benefits
from owning assets
leasing is a renewable source of intermediate-term funds

1 points   
QUESTION 9
1. McDonalds' weighted-average cost of capital is lower than that of Wal-
Mart.

 True

 False

1 points   
QUESTION 10
1. Net benefit of leasing is the NPV of lease option from the point of view
of lessor.

 True

 False

1 points   
QUESTION 11
1. Financing short-term needs with long-term debt is consistent with a
conservative approach to financing working capital.

 True

 False

1 points   
QUESTION 12
1. Current Liabilities are those obligations which are generally to be
discharged in:
1
month
1 year
1
week
1 day

1 points   
QUESTION 13
1. The decision function of financial management can be broken down
into the__________decisions
financing and investment
investment, financing, and asset management
financing and dividend
capital budgeting, cash management, and
credit management
1 points   
QUESTION 14
1. Risk-aversion of an investor can be measured by portfolio return.

 True

 False

1 points   
QUESTION 15
1. The focal point of financial management in a firm is the creation of
value for shareholders.

 True

 False

1 points   
 QUESTION 16
1. The controller's responsibilities are primarily _________in nature, while
the treasurer's responsibilities are primarily related to _______.
operational; financial
management
financial management;
accounting
accounting; financial
management
financial management;
operations
1 points   
QUESTION 17
1. The primary issuers of capital market securities are local governments
and corporations.

 True

 False

1 points   
QUESTION 18
1. Bond Valuation is sensitive to both the interest rate and the required
rate of return of the investor.

 True

 False

1 points   
QUESTION 19
1. The weighted-average cost of capital is the return the company needs
to earn after tax in order to satisfy all its security holders.

 True

 False

1 points   
QUESTION 20
1. To financial analysts, working capital means the same thing as current
assets.

 True

 False
 Note- Financial analysts, working capital means the same thing as current
assets minus current Liabilities. Financial analyst is one of the most coveted roles in the financial services
industry.
1 points   
QUESTION 21
1. Receiving a required inventory item at the exact time needed is
ABC
JIT
FOB
PER
T
Note- An inventory strategy companies employ to increase efficiency and decrease waste by receiving
goods only as they are needed in the production process, thereby reducing inventory costs
1 points   
QUESTION 22
1. Limited Liability Partnership is NOT considered a hybrid organization?

 True

 False

1 points   
QUESTION 23
1. Equity financing includes both securing trade credit and issuing new
ownership shares.

 True

 False

1 points   
QUESTION 24
1. A firm becomes bankrupt when the value of its debt equals the value
of its assets.

 True

 False

1 points   
QUESTION 25
1. Market Value of debt instruments depends upon the market value of
collateral.

 True
  False

1 points   
QUESTION 26
1. You wish to borrow $2,000 to be repaid in 12 monthly installments of
$189.12. The annual interest rate would be 18%.

 True

 False (24%)

1 points   
QUESTION 27
1. With reference to Creditors, the cash discount date is missed, when the
payment be made?
As early as
possible
On the Schedule
day
On receipt of
Notice
Never

1 points   
QUESTION 28
1. Which of the following would be consistent with a hedging (maturity
matching) approach to financing working capital?
Financing short-term needs with short-term
funds.
Financing short-term needs with long-term
debt.
Financing seasonal needs with long-term
funds.
Financing some long-term needs with short-
term funds.
1 points   
QUESTION 29
1. Efficient Frontier consists of a large number or 23 portfolios.

 True

 False

1 points   
QUESTION 30
1. Opportunity Cost concept is at the heart of economic profits approach.

 True

 False

1 points   
QUESTION 31
1. Gross Working Capital is equal to:
Total assets
Total liabilities
Total current
assets
Total current
liabilities
1 points   
QUESTION 32
1. The ultimate conclusions of NI approach and the NOI approach are
same.

 True

 False

1 points   
QUESTION 33
1. If interest is compounded annually, the effective annual rate and the
annual percentage rate will be the same.

 True

 False

1 points   
QUESTION 34
1. EPS depends upon the composition of capital structure.

 True

 False

1 points   
QUESTION 35
1. Which of the following is not applicable to IRR?
Considers all Cash Flows
Based on Time Value of
 Money
Common for all projects
Stated in % Return

1 points   
QUESTION 36
1. All of the following conditions must occur for a market to be considered
efficient except:
Information is costless and widely available to market participants at
approximately the same time.
Information is generated in a specific fashion such that announcements
are basically dependent on each other.
There are a large number of rational, profit-maximizing investors who
actively participate in the market.
Investors react quickly and fully to the new information, causing stock
prices to adjust accordingly.
1 points   
QUESTION 37
1. Marketable securities are primarily:
Equity shares
Preference shares
Fixed deposits with
companies
Short-term debt
investments
1 points   
QUESTION 38
1. The __________ is not a market anomaly.
size effect
January effect
Day-of-the-week
effect
accounting changes
effect
1 points   
QUESTION 39
1. Risk-Return trade-off implies:
Minimization of
risk
Maximization of
 risk
Ignorance of risk
Optimization of
risk
1 points   
QUESTION 40
1. The paradox of efficient markets is that investors attempting to
uncover and use information about security prices help make the market more
efficient.

 True

 False

1 points   
QUESTION 41
1. The present value of a dollar to be received in the future is more than
a dollar.

 True

 False

Note- Money has a time value because it can be invested to make more money. Thus, a dollar received
in the future has lesser value than a dollar received today. Conversely, a dollar received today is more
valuable than a dollar received in the future because it can be invested to make more money.
2 points   
QUESTION 42
1. Stock beta measures stock volatility.

 True

 False

Note- Beta is a statistical measure of the volatility of a stock versus the overall market.

2 points   
QUESTION 43
1. While evaluating lease as a source of long- term finance, the lessee
should give more emphasis on AS-19.

 True

 False

2 points   
QUESTION 44
1. A company's employees are potentially the most effective instrument
of good corporate governance.

 True

 False

2 points   
QUESTION 45
1. Decision-tree approach is used in:
Proposals with
longer life
Sequential decisions
Independent Cash
flows
Accept-Reject
Proposal
2 points   
QUESTION 46
1. Financial health of the organization can be ascertained by EVA.

 True

 False

2 points   
QUESTION 47
1. A certificate of deposit is usually considered to be very liquid.

 True

 False

2 points   
QUESTION 48
1. Concentration banking is a method of controlling cash outflows.

 True

 False

2 points   
QUESTION 49
1. When an investment pays only simple interest, this means the future
value of the investment will be low.

 True
  False

2 points   
QUESTION 50
1. In India, all types of short-term financing from banks must be secured.

 True

 False

2 points   
QUESTION 51
1. Shareholder wealth in a firm is represented by the number of people
employed in the firm

 True

 False

2 points   
QUESTION 52
1. Financial leverage depends upon the operating leverage.

 True

 False

2 points   
QUESTION 53
1. The future value of an annuity is more than each annuity payment.

 True

 False

2 points   
QUESTION 54
1. One of the objective of Tandon Committee m suggest inventory norms
for different industries.

 True

 False

2 points   
QUESTION 55
1. If you borrow $150,000 for a house at 8% simple annual interest rate
for 15 years, what is your monthly payment?
 $1,4
33
$1,5
33
$1,6
33
$1,7
33
4 points   
QUESTION 56
1. What would you estimate to be the required rate of return for equity
investors if a stock sells for $40 and will pay a $4.40 dividend that is expected
to grow at a constant rate of 5%?
0.07
6
0.12
0.12
6
0.16

4 points   
QUESTION 57
1. If a firm is given trade credit terms of 2/10, net 30, then the cost of the
firm failing to take the discount is:
0.02
0.3
0.36
72
0.1

4 points   
QUESTION 58
1. If a bank offers a firm a simple interest loan of $1000 for 120 days at a
cost of $60 interest, what is the effective rate of interest on the loan?
0.18
0.06
0.2
none of the
above
4 points   
QUESTION 59
1. You are considering borrowing $10,000 for 3 years at an annual
interest rate of 6%. The loan agreement calls for 3 equal payments, to be paid
at the end of each of the next 3 years. (Payments include both principal and
interest.) The annual payment that will fully pay off (amortize) the loan is
closest to
$2,6
74
$2,8
90
$3,7
41
$4,0
20
4 points   
QUESTION 60
1. Treasury bonds are subject to _________ risk but are free of _________
risk.
default; interest-rate
default;
underwriting
interest-rate; default
interest-rate;
underwriting
3 points   
QUESTION 61
1. Which of the following is true?
Retained earnings are cost free
External equity is cheaper than Internal
equity
Retained earnings are cheaper than
External equity
Retained earnings are costlier than
External equity
3 points   
QUESTION 62
1. When establishing their optimal capital structure, firms should strive
to:
minimize the weighted average cost
of capital
minimize the amount of debt
financing used
 maximize the marginal cost of
capital
none of the above

3 points   
QUESTION 63
1. Cash flows occurring in different periods should not be compared
unless:
interest rates are expected to be stable.
the flows occur no more than one year
from each other
high rates of interest can be earned on the
flows.
the flows have been discounted to a
common date.