Strategic Finance

6. The FEA Tools encompass a vast array of information & policy into :-

Many evaluations

One evaluation

One procedure

Many procedures

7. optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.

True

False
LIST OF ATTEMPTED QUESTIONS AND ANSWERS (strategic finance-6)

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Match The Following
Question Correct Answer Your Answer

AS 4 Contingencies & events occurring after Contingencies & events occurring after
the balance sheet date the balance sheet date
AS 13 Accounting for investments Accounting for investments

AS 23 Accounting for investments in associates in Accounting for investments in associates

consolidated financial statements in consolidated financial statements
AS 21 Consolidated financial statements Consolidated financial statements

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

True/False
Question Planning helps an acquiring firm to identify the units it should drop & it should add.

Correct Answer True

Select The Blank

Question Non value added activities helps ________.

Correct Answer To analyse the activities more carefully

Your Answer To take a better decision

True/False
Question Usually only a single method is used for valuation of shares.

Correct False

Select The Blank

Question In the reproduction value method of valuation, the value of assets is taken to be on
the basis of ________
Correct Answer Replacement cost

Multiple Choice Multiple Answer

Question The major conditions to be fulfilled for buyback of shares as per the legal provisions
include :-
Correct Answer Articles of association should authorize buyback of shares , The shares which are
sought to be bought back should be fully paid up , After the buy back the ratio of debt
to total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer

Question The Public announcement of share buy back has to be made at least :-

Correct Answer 7 Days prior to the commencement of buy back

Select The Blank

Question Combination of 2 or more companies into existing company is called ________.

Correct Answer Absorption

Select The Blank

Question ________ is not a example of segment liability.

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Correct Answer Goodwill

Your Answer Accrued liabilities

17. According to Merton Miller & Franco Modigliani, the only important determinant of a company's market
value is :-

Decision regarding firm's payout of dividend

Retention of dividend for internal financing

Its investment policy

Investment opportunities available

24. Fixed price tender offers are accompanied by an abnormal announcement period return of :-

2-3%

6-8%

8 - 10 %

10 - 15 %

30. Opportunity costs and real costs decrease the market value of a firm.

True

False

43.
HLL is % of subsidiary of Unilever PLC.

.75,0.5,0.25,0.516

47. The statute governing an enterprise may provide the basis for
computation of the depreciation.
TRUE / FALSE

1. Line of credit 1. The cash flow ability of the borrower to pay the loan is
usually of paramount importance
2. Revolving credit agreements 2. Does not constitute any legal commitments on the part of
the bank
3. Transaction loan 3. The clean up period is more than 6 months

4. Unsecured loans 4. While the commitment is in force the bank must extend
credit whenever the borrower wishes to borrow
5. Form of debt not backed by the pledge of specific assets
6. Borrower does not have to pay a commitment fees
51. A single organisation model serves to keep all individual initiatives to be targeted into a co-
ordinated plan.

True

False
LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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Strategic Finance

Match The Following

Question Correct Answer Your Answer

AS 21 Consolidated financial statements Consolidated financial statements

AS 4 Contingencies & events occurring Contingencies & events occurring

after the balance sheet date after the balance sheet date
AS 13 Accounting for investments Accounting for investments

AS 23 Accounting for investments in Accounting for investments in associates

associates in consolidated financial in consolidated financial statements
statements

Select The Blank

Question There is a ________ relationship between the number of employees & the use of
operating supplies.
Correct Answer Natural

Your Answer Natural

Multiple Choice Multiple Answer

Question The main characteristics of CAPM are :-

Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives ,
Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer

Question A firm using a conservative policy for determining the requirements of current assets :-

Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates
sales

Multiple Choice Single Answer

Question As per Pecking order theory, which is the costliest means of funding :-

Correct Answer Equity Shares

Multiple Choice Single Answer

Question Free Reserves is a component of :-

Correct Answer Equity

Select The Blank

Question ________ are those operating assets that are employed by a segment in its operating
activities.
Correct Answer Segment assets

Multiple Choice Multiple Answer

Question The overhead expenses include :-

Correct Answer Utilities , Maintenance , Security

Multiple Choice Multiple Answer

Question Examples of accrued expenses are :-

Correct Answer Wages , Income tax , Property tax

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