finance Mcqs
201. Average Accounting Return is a measure of accounting profit relative to:
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A. Cost

B. Intrinsic value

C. Market value

D. Book value
205. Current option price is added to present value of portfolio for calculating_________?
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A. Future value of portfolio

B. Future value of stock

C. Present value of portfolio

D. Current value of stock
206. If two independent projects having hurdle rate, then both projects should________?
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A. Have capital acceptance

B. Not be accepted

C. Have return rate acceptance

D. Be accepted
207. Which of the following costs are reported on the income statement as the cost of goods sold?
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A. Product cost

B. Period cost

C. Both product cost and period cost

D. Neither product cost nor period cost

208. A portion of profits, which a company retains itself for further expansion, is known as:
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A. Dividends

B. Retained Earnings

C. None of the given options

D. Capital Gain

209. An equity multiplier is multiplied to return on assets to calculate_________?
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A. Return on multiplier

B. Return on turnover

C. Return on stock

D. Return on assets
210. Situation in which firm limits expenditures on capital is classified as________?
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A. Optimal rationing

B. Capital rationing

C. Transaction rationing

D. Marginal rationing

211. Coupon rate of bond is also called____________?
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A. Nominal rate

B. Premium rate

C. Quoted rate

D. Both a and c
212. If we were studying a sample of 100 students and their examination performance and if the standard deviation of the list of results was say 14, then we could calculated the standard error by ___________?
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A. Dividing standard deviation by number of items in the sample

B. Dividing the standard deviation by the square root of the number of items in the sample

C. We cannot calculate standard error on account of inadequacy of information

D. Dividing the square root of the number of items in the sample by the mean

214. Maximizing Shareholder wealth:
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A. None of Them

B. Relieves the firms responsibility towards society

C. Does not relieve the firms responsibility towards society

D. Partially relives the firms responsibility towards society

216. Process in which managers of company identify projects to add value is classified as__________?
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A. Capital budgeting

B. Book value budgeting

C. Cost budgeting

D. Equity budgeting

218. Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified as______________?
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A. Primary assets

B. Financial instruments

C. Capital assets

D. Competitive instruments

219. Weighted average cost of debt, preferred stock and common equity is classified as_____________?
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A. Cost of salvage

B. Cost of interest

C. Cost of capital

D. Cost of taxation

221. Bonds issued by small companies tend to have_____________?
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A. High liquidity premium

B. High inflation premium

C. High default premium

D. High yield premium

222. Quick Ratio is also known as_________?
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A. None of the given options

B. Current Ratio

C. Acid-test Ratio

D. Cash Ratio

224. The difference between current assets and current liabilities is known as____________?
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A. Current Ratio

B. Working Capital

C. Short-term Ratio

D. Surplus Asset

226. An Asset is __________?
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A. None of these

B. Use of funds

C. Sources of funds

D. Inflow of funds

227. Total assets divided common equity is a formula uses for calculating___________?
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A. Stock multiplier

B. Equity multiplier

C. Turnover multiplier

D. Graphical multiplier

228. The use of Personal borrowing to alter the degree of financial leverage is called__________?
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A. Homemade leverage

B. None of the given option

C. Operating leverage

D. Financial leverage

231. Projects which are mutually exclusive but different on scale of production or time of completion then the__________________?
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A. Net future value method

B. External return method

C. Net present value of method

D. Internal return method

233. Which of the following ratios are particularly interesting to shortterm creditors?
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A. Liquidity Ratios

B. Profitability Ratios

C. Market Value Ratios

D. Long-term Solvency Ratios

234. Price per ratio is divided by cash flow per share ratio which is used for calculating___________?
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A. Price to cash flow ratio

B. Dividend to stock ratio

C. Sales to growth ratio

D. Cash flow to price ratio

235. Double declining balance method and sum of years digits are included in__________?
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A. Double methods

B. Yearly method

C. Single methods

D. Accelerated methods
236. Who of the following make a broader use of accounting information?
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A. Accountants

B. Auditors

C. Financial Analysts

D. Marketers

237. An effect of interest rate risk and investment risk on a bonds yield is classified as_________?
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A. Maturity risk premium

B. Defaulters premium

C. Reinvestment premium

D. Investment risk premium

239. The DuPont Identity tells us that Return on Equity is affected by:
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A. The DuPont Identity tells us that Return on Equity is affected by:

B. asset use efficiency (as measured by total assets turnover)

C. financial Leverage (as measured by equity multiplier)

D. all of the given options (a, b and c)
240. Which of the following is the cheapest source of financing available to a firm?
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A. Bank loan

B. Trade credit

C. Commercial papers

D. None of the given options.

242. Stated value of bonds or face value is considered as_____________?
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A. Bond value

B. Par value

C. Per value

D. State value

243. Rate on debt that increases as soon market rises is classified as________?
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A. Stable debt rate

B. Market rate debt

C. Floating rate debt

D. Rising bet rate

245. Price earning ratio and price by cash flow ratio are classified as___________?
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A. Market value ratios

B. Marginal ratios

C. Equity ratios

D. Return ratios

246. Payback period in which an expected cash flows are discounted with help of project cost of capital is classified as___________________?
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A. Discounted cash flows

B. Discounted project cost

C. Discounted payback period

D. Discounted rate of return

247. Falling interest rate leads change to bondholder income which is__________?
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A. Increment in income

B. Matured income

C. Reduction in income

D. Frequent income

248. The formula to calculate the present value of a single cash flow is given by:
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A. None of these

B. CF1 / (1+r)n

C. C0 + C (1+r)n

D. C2 / (1+r)