finance Mcqs
51. Life that maximizes net present value of an asset is classified as__________?
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A. Economic life

B. Minimum life

C. Present value life

D. Transaction life

52. Set of rules consisting of behavior towards its directors, creditors, shareholders, competitors and community is considered as____________?
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A. Hiring governance

B. Corporate governance

C. Agency governance

D. External governance

53. An inflation rate includes in bonds interest rates is one which is inflation rate________?
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A. Expected at deferred call

B. Expected in future

C. Expected at time of maturity

D. At bond issuance

54. Method uses for an estimation of cost of equity is classified as___________?
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A. Future cash flow method

B. Discounted cash flow method

C. Market cash flow

D. Present cash flow method

55. A project whose cash flows are more than capital invested for rate of return then net present value will be___________?
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A. Zero

B. Positive

C. Independent

D. Negative

56. If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
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A. Rs. 1,000

B. Rs. 1,464

C. Rs. 1,244

D. Rs. 1,331

57. Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?
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A. Fluctuations Risk

B. Interest Rate Risk

C. Inflation Risk

D. Real-Time Risk

58. Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?
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A. Negative

B. Zero

C. Independent

D. Positive

59. Cash outflows are costs of project and are represented by___________?
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A. Hurdle number

B. Relative number

C. Positive numbers

D. Negative numbers
60. Which of the following set of ratios relates the market price of the firms common stock to selected financial statement items?
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A. Liquidity Ratios

B. Market Value Ratios

C. Profitability Ratios

D. Leverage Ratios

61. Which of the following relationships holds TRUE if a bond sells at a discount?
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A. Bond Price > Par Value and YTM > coupon rate

B. Bond Price < Par Value and YTM > coupon rate

C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM < coupon rate

62. In capital budgeting, a negative net present value result in______________?
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A. Positive economic value added

B. Percent economic value added

C. Zero economic value added

D. Negative economic value added
63. Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is____________?
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A. Negative

B. Positive

C. Zero

D. One

64. Yield of interest rate which is below than coupon rate, this yield is classified as_________?
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A. Yield to earning

B. Yield to investors

C. Yield to call

D. Yield to maturity

65. Rate of required return by debt holders is used for estimation the__________?
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A. Cost of debt

B. Cost of internal capital

C. Cost of equity

D. Cost of reserve assets

66. A bond whose price will rise above its face value is classified as________?
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A. Premium bond

B. Premium warrants

C. Premium stock

D. Premium face value

67. How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual payment and a 5% interest rate?
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A. 6 years

B. 24 years

C. 12 years

D. 48 years

68. A model which makes an assumption about the future growth of dividends is known as:
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A. All of the given options

B. Dividend Policy Model

C. Dividend Price Model

D. Dividend Growth Model
69. Bonds that have high liquidity premium are usually have_________?
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A. Less frequently traded

B. Frequently traded

C. Inflated trading

D. Default free trading

70. Which of the following statement is CORRECT regarding compound interest?
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A. It earns profit not only on principal but also on interest.

B. It does not take into account the accumulated interest for calculation.

C. It is the most basic form of calculating interest.

D. It is calculated by multiplying principal by rate multiplied by time.

71. Capital gain expected by stockholders and dividends are included in____________?
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A. Interest rate

B. Cost of equity

C. Debt rate

D. Investment return

72. Which of the following ratios is NOT from the set of Asset Management Ratios?
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A. Receivable Turnover

B. Inventory Turnover Ratio

C. Return on Assets

D. Capital Intensity Ratio
73. Type of financial security in which firms do not borrow money rather lease their assets is classified as____________________?
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A. Corporate stocks

B. Leases

C. Preferred stocks

D. Common stocks

74. When real rate is high, all the interest rates tend to be ___________?
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A. None of the given options

B. Constant

C. Lower

D. Higher
75. Relevant cash flow which company expects when its will implement project is classified as_____________?
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A. Incremental cash flow

B. Decrease cash flow

C. Relevant cash flow

D. Irrelevant cash flow

76. You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?
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A. Rs. 1,000 because it has the higher future value

B. Rs. 1,000 because you receive it sooner

C. Rs. 1,050 because it is more money

D. Either because both options are of equal value
77. Which of the following is the process of planning and managing a firm?s long-term investments?
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A. Capital Structuring

B. Capital Rationing

C. Capital Budgeting

D. Working Capital Management

78. Bond that has been issued in very recent timing is classified as_______?
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A. Mature issue

B. Recent issue

C. Earning issue

D. New issue
79. A company having a current ratio of 1 will have ________ net working capital.
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A. Negative

B. zero

C. Positive

D. None of the given options

80. In which type of business, all owners share in gains and losses and all have unlimited liability for all business debts?
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A. Sole-proprietorship

B. Limited Partnerhsip

C. Corporation

D. General Partnership
81. Profitability index in capital budgeting is used for_________?
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A. Negative projects

B. Earned projects

C. Evaluate projects

D. Relative projects

82. Real risk-free interest rate in addition with an inflation premium is equal to_____________?
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A. Required interest rate

B. Quoted risk-free interest rate

C. Premium risk-free interest rate

D. Liquidity risk-free interest rate

83. Ability to trade at net price very quickly is classified as___________?
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A. Liquidity

B. Original trading

C. Fixed price trading

D. Offline trading

84. Which of the given area is NOT addressed by Business Finance?
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A. Managing day today expenses

B. Financing

C. Investing

D. None of the given options
85. Type of bond which pays interest payment only when it earns is classified as__________?
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A. Income bond

B. Payment bond

C. Earning bond

D. Interest bond

86. Net investment in operating capital is subtracted from net operating profit after taxes to calculate___________?
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A. Relevant inflows

B. Relevant outflows

C. Free cash flow

D. Cash outlay

87. Business Finance addresses which of the following?
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A. Capital budgeting

B. All of the given options

C. Working capital management

D. Capital structure

88. An average inflation rate which is expected over life of security is classified as__________?
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A. Required premium

B. Inflation premium

C. Off season premium

D. Nominal premium

89. If stock market price is higher than strike price so call option____________?
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A. Rate will be lower

B. Price will be lower

C. Price will be higher

D. Rate will be higher

90. Companies that help to set benchmarks are classified as__________?
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A. Analytical companies

B. competitive companies

C. Return companies

D. Benchmark companies
91. An outstanding bond are also classified as__________?
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A. Standing bonds

B. Dated bonds

C. Seasoned bonds

D. Outdated bonds

92. A type of project whose cash flows would not depend on each other is classified as______________?
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A. Net value projects

B. Dependent projects

C. Independent projects

D. Project net gain

93. Period costs include which of the following?
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A. Selling expense

B. Raw material

C. Direct labor

D. Manufacturing overhead

94. A techniques uses to identify financial statements trends are included____________?
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A. Common size analysis

B. Percent change analysis

C. Returning ratios analysis

D. Both A and B
95. Risk of fall in income due to fall in interest rates in future is classified as__________?
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A. Investment risk

B. Income risk

C. Reinvestment risk

D. Mature risk

96. In which type of market, new securities are traded?
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A. Tertiary market

B. None of the given options

C. Secondary market

D. Primary market
97. Return on assets = 5.5%, Total assets $3,000 and common equity $1,050 then return on equity would be_________?
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A. 1.93%

B. 1.925 times

C. $22,275

D. 15.71%
98. Profit margin multiply assets turnover multiply equity multiplier is used to calculate____________?
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A. Return on stock

B. Return on equity

C. Return on assets

D. Return on turnover

99. Process of comparing company results with other leading firms is considered as____________?
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A. Bench marking

B. Return analysis

C. Comparison

D. Analysis

100. You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent compounded annually, how long will you have to wait to buy the television?
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A. 10.51 years

B. 18.78 years

C. 8.42 years

D. 15.75 years