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 Finance MCQs
An individual authorized by another person, called the principle, to act on the
latter’s on behalf is known as an/a:
A. Agent
B. Servant
C. Subordinate
D. Assistant

Which of the following ratios are particularly interesting to short-term

creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

If payment of security is paid as $100 at end of year for three years, it is an

example of______________?
A. Fixed payment investment
B. Lump sum amount
C. Fixed interval investment
D. Annuity

Bonds that can be converted into shares of common stock are classified
as_________?
A. Convertible bonds
B. Stock bonds
C. Shared bonds
D. Common bonds

A techniques uses to identify financial statements trends are

included____________?
A. Common size analysis
B. Percent change analysis
C. Returning ratios analysis
D. Both A and B

Coupon rate of bond is also called____________?

A. Nominal rate
B. Premium rate
C. Quoted rate
D. Both a and c

When the stock market is rising it is called__________?

A. Booming
B. Bullish
C. Upward tendency
D. Hawkish

The relationship between Economic Value Added (EVA) and the Net Present
Value (NPV) is considered as _________?
A. valued relationship
B. economic relationship
C. direct relationship
D. inverse relationship

Hewlett-Packard and Microsoft are examples of__________?

A. Limited corporate business
B. Unlimited corporate business
C. Controlled corporate business
D. Corporation

A stock which is hybrid and works as a cross between debt and common stock is
considered as_______________?
A. Hybrid stock
B. Common liabilities
C. Debt liabilities
D. Preferred stock

Process in which managers of company identify projects to add value is

classified as__________?
A. Capital budgeting
B. Cost budgeting
C. Book value budgeting
D. Equity budgeting

A company having a current ratio of 1 will have ________ net working capital.
A. Positive
B. Negative
C. zero
D. None of the given options

If market interest rate falls below coupon rate then bond will be
sold__________?
A. Below its par value
B. Above its par value
C. Equal to return rate
D. Seasoned price

Price per share is $30 and an earnings per share is $3.5 then price for earnings
ratio would be_____________?
A. 8.57 times
B. 8.57%
C. 0.11 times
D. 11%

Partners who are only liable for their own part of investment are considered
as___________________?
A. Venture partners
B. Corporate partners
C. Limited partners
D. General partners

Bond that has been issued in very recent timing is classified as_______?
A. Mature issue
B. Earning issue
C. New issue
D. Recent issue

Mostly in financials, risk of portfolio is smaller than that of asset’s________?

A. Mean
B. Weighted average
C. Mean correlation
D. Negative correlation

Document in a corporation which consists of amount of stock, name and

addresses of directors is classified as_____________?
A. Liability plan
B. Stock planning
C. Corporation paperwork
D. Charter

In estimating value of cash flows, compounded future value is classified as

its__________?
A. Terminal value
B. Existed value
C. Quit value
D. Relative value

Bond which is offered below its face value is classified as______________?

A. Present value bond
B. Original issue discount bond
C. Coupon issued bond
D. Discounted bond

Nominal rate which is quoted to consumers on loans is considered

as__________?
A. Annual percentage rate
B. Annual rate of return
C. Loan rate of return
D. Local rate of return

Sum of discounted cash flows is best defined as____________?

A. Technical equity
B. Defined future value
C. Project net present value
D. Equity net present value

In which type of business, all owners share in gains and losses and all have
unlimited liability for all business debts?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation

Process of selling company stock at large to general public and get lending from
banks is classified as an_________________?
A. Initial public offering
B. External public offering
C. Internal public offering
D. Unprofessional offering

Markets dealing with residential loans, industry real estate loans, agricultural
loans and commercial loans are called___________?
A. Residential markets
B. Mortgage markets
C. Agriculture markets
D. Commercial markets

Dow Jones is stock exchange market of__________?

A. Tokyo
B. London
C. New York
D. None of these

When the market’s required rate of return for a particular bond is much less
than its coupon rate, the bond is selling at:
A. Premium
B. Discount
C. Par
D. Cannot be determined without more information

Balance Sheet is based upon which of the following formula?

A. Assets = Liabilities – Stockholder’s equity
B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity

Net income available to stockholders is $125 and total assets are $1,096 then
return on common equity would be________?
A. 0.11%
B. 11.40%
C. 0.12 times
D. 12%

In weighted average capital, capital structure weights estimation does not rely
on value of__________?
A. Investors equity
B. Market value of equity
C. Book value of equity
D. Stock equity

Relevant information about stock market price if it is given, then this price is
called______________?
A. Market price
B. Intrinsic price
C. Extrinsic price
D. Unstable price

An initial cost is $6000 and the probability index is 5.6 then the present value of
cash flows will be __________?
A. 25000
B. 28000
C. 33600
D. 30000

Projects which are mutually exclusive but different on scale of production or

time of completion then the___________?
A. External return method
B. Net present value of method
C. Net future value method
D. Internal return method

Markets which deal with buying and selling of bonds, mortgages, notes and
stocks are considered as_____________?
A. Financial instruments
B. Financial asset markets
C. Physical asset markets
D. Easy markets

An information uses by investors for expecting future earnings is all recorded

in__________?
A. Five years report
B. Annual report
C. Stock report
D. Exchange report

The bonds that are backed by cash flow from project and are sold to finance
particular project are classified as ____________?
A. finance bonds
B. revenue bonds
C. financing bonds
D. project bonds

Which of the following equation is known as Cash Flow (CF) identity?

A. CF from Assets = CF to Creditors – CF to Stockholder
B. CF from Assets = CF to Stockholders – CF to Creditors
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder

As free bonds issue for welfare by industrial agencies or pollution control

agencies are classified as__________?
A. Agent bonds
B. Development bonds
C. Pollution control bonds
D. Both B and C

The payback period in which an expected cash flows are discounted with the
help of project cost of capital is classified as __________?
A. discounted payback period
B. discounted rate of return
C. discounted cash flows
D. discounted project cost

Coupon payment is calculated with help of interest rate, then this rate considers
as________?
A. Payment interest
B. Par interest
C. Coupon interest
D. Yearly interest rate

An investor who writes stock call options in his own portfolio is classified
as__________?
A. Due option
B. Covered option
C. Undue option
D. Uncovered option

A price for equity is called______________?

A. Interest rate
B. Cost of equity
C. Debt rate
D. Investment return

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?
A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464

In financial markets, period of maturity less than one year of financial

instruments is classified as________________?
A. Short-term
B. Long-term
C. Intermediate term

The process of determining the present value of a payment or a stream of

payments that is to be received in the future is known as:
A. Discounting
B. Compounding
C. Factorization
D. None of the given options

Which of the following is measured by profit margin?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

Projects which are mutually exclusive but different on scale of production or

time of completion then the__________________?
A. External return method
B. Net present value of method
C. Net future value method
D. Internal return method

All assets are perfectly divisible and liquid in___________?

A. Tax free pricing model
B. Cost free pricing model
C. Capital asset pricing model
D. Stock pricing model

Which of the following is not a quality of IRR ?

A. Most widely used
B. Ideal to rank the mutually exclusive investments
C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate

Companies take savings as premium, invest in bonds and make payments to

beneficiaries are classified as_____________?
A. Debit unions
B. Life insurance companies
C. Credit unions
D. Auto purchases

Cost of money is affected by factors which includes______________?

A. Production opportunities
B. Risk
C. All of above
D. Inflation

Set of rules made by corporation founders such as directors election procedure

are classified as_________?
A. Stock laws
B. By laws
C. Liability laws
D. Corporate laws

The profitability index in capital budgeting is used for __________?

A. negative projects
B. relative projects
C. evaluate projects
D. earned projects

High price to earnings ratio shows company’s_________?

A. Low dividends paid
B. High risk prospect
C. High growth prospect
D. High marginal rate

An interest rate which is paid by money borrower and charged by lender is

considered as_____________?
A. Annual rate
B. Periodic rate
C. Perpetuity rate of return
D. Annuity rate of return

An attitude of investor towards dealing with risk determines the____________?

A. Rate of return
B. Rate of exchange
C. Rate of intrinsic stock
D. Rate of extrinsic stock

Correct measure of risk of stock is called_____________?

A. Alpha
B. Beta
C. Variance
D. Market relevance

Reinvestment risk of bonds is higher on__________?

A. Short maturity bonds
B. High maturity bonds
C. High premium bonds
D. High inflated bonds

Payment divided by par value is classified as______________?

A. Divisible payment
B. Coupon payment
C. Par payment
D. Per period payment
An uncovered cost at the start of year is divided by full cash flow during
recovery year then added in prior years to full recovery for calculating
____________?
A. original period
B. investment period
C. payback period
D. forecasted period

Income that is saved and not invested is known as____________?

A. Capital
B. Deposit
C. Hoarding
D. None

Which of the following set of ratios relates the market price of the firm’s
common stock to selected financial statement items?
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

Stocks which has high book for market ratio are considered as_____________?
A. More risky
B. Less risky
C. Pessimistic
D. Optimistic

Type of financial security in which firms do not borrow money rather lease their
assets is classified as____________________?
A. Leases
B. Preferred stocks
C. Common stocks
D. Corporate stocks

Which of the following is measured by retention ratio?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

Bonds issued by government and backed by Pak government are classified

as_________?
A. Issued security
B. Treasury bonds
C. U.S bonds
D. Return security

Which of the following is the process of planning and managing a firm‟s long-
term investments?
A. Capital Structuring
B. Capital Rationing
C. Capital Budgeting
D. Working Capital Management

A point where the profile of net present value crosses the horizontal axis at the
plotted graph indicates the project ___________?
A. costs
B. cash flows
C. internal rate of return
D. external rate of return

The Capital Asset Pricing Model calculate expected:

A. Risk
B. Risk and Return
C. Return
D. None of the above

In cash flow estimation, depreciation shelters company’s income from_______?

A. Expansion
B. Salvages
C. Taxation
D. Discounts

The sum of discounted cash flows is best defined as ___________?

A. technical equity
B. defined future value
C. project net present value
D. equity net present value

In capital budgeting, two projects having cost of capital as 12% is classified as

__________?
A. hurdle rate
B. capital rate
C. return rate
D. budgeting rate

A regulatory body which licenses brokers and oversees traders is classified

as__________?
A. International firm of auction system
B. International association of network dealers
C. National firm of equity dealers
D. National association of securities dealers

A tighter probability distribution shows the___________?

A. Higher risk
B. Lower risk
C. Expected risk
D. Peaked risk

Yield of interest rate which is below than coupon rate, this yield is classified
as_________?
A. Yield to maturity
B. Yield to call
C. Yield to earning
D. Yield to investors

The total assets divided by common equity is a formula uses for calculating
_________?
A. equity multiplier
B. graphical multiplier
C. turnover multiplier
D. stock multiplier

Weighted average of probabilities is classified as____________?

A. Average rate of return
B. Expected rate of return
C. Past rate of return
D. Weighted rate of return

The use of Personal borrowing to alter the degree of financial leverage is

called__________?
A. Homemade leverage
B. Financial leverage
C. Operating leverage
D. None of the given option

In calculation of net cash flow, deferred tax payments are classified

as______________?
A. Non-cash revenues
B. Non-cash charges
C. Current liabilities
D. Income expense

In alternative investments, the constant cash flow stream is equal to initial cash
flow stream in the approach which is classified as __________?
A. greater annual annuity method
B. equivalent annual annuity
C. lesser annual annuity method
D. zero annual annuity method

A company having a current ratio of 1 will have __________ net working capital.
A. Positive
B. Negative
C. zero
D. None of the given options

The market price of a firm’s stock represents the focal judgment of all market
participants as to the value of the:
A. Particular market
B. Particular firm
C. Particular creditor
D. Particular debtor

If a company revaluates its fixed assets, the current ratio of the company will:
A. Improve if assets are revalued upward
B. Remain unaffected
C. Improve if assets are revalued downwards
D. Undergo change only if liabilities are remaining constant

Real risk-free interest rate in addition with an inflation premium is equal

to_____________?
A. Required interest rate
B. Quoted risk-free interest rate
C. Liquidity risk-free interest rate
D. Premium risk-free interest rate

Rate of return (in percentages) consists of___________?

A. Capital gain yield interest yield
B. Return yield + stable yield
C. Return yield + unstable yield
D. Par value + market value

A standardized financial statement presenting all items of the statement as a

percentage of total is:
A. a common-size statement
B. an income statemen
C. a cash flow statement
D. a balance sheet

Future value of interest if it is calculated two times a year can be a classified

as__________________?
A. Semiannual discounting
B. Annual discounting
C. Annual compounding
D. Semiannual compounding

Rate of required return by debt holders is used for estimation the__________?

A. Cost of debt
B. Cost of equity
C. Cost of internal capital
D. Cost of reserve assets

An Asset is __________?
A. Sources of funds
B. Use of funds
C. Inflow of funds
D. None of these

Company low earning power and high interest cost cause financial changes
which have_____________?
A. High return on equity
B. High return on assets
C. Low return on assets
D. Low return on equity

Step in initial public offering in which hired agents act on behalf of owners is
classified as______________?
A. Hiring problems
B. Agency problems
C. Corporation internal problems
D. Corporation external problems

A major facet of financial management involves providing the financing

necessary to support:
A. Liabilities
B. Debts
C. Loans
D. Assets

Method of matching orders by posting orders of buying and selling is classified

as______________?
A. Electronic communication network
B. Electronic dealer network
C. Electronic stock network
D. Electronic order network

A technique that is used in comparative analysis of financial statement is

__________?
A. graphical analysis
B. preference analysis
C. common size analysis
D. returning analysis

Markets which bring closer institutions needing funds and with surplus funds
are classified as______________?
A. Financial markets
B. Corporate institutions
C. Hedge firms
D. Retirement planners

Relationship between Economic Value Added (EVA) and Net Present Value
(NPV) is considered as____________?
A. Valued relationship
B. Economic relationship
C. Direct relationship
D. Inverse relationship

Difference between actual return on stock and predicted return is considered

as___________?
A. Probability error
B. Actual error
C. Prediction error
D. Random error

Other factors held constant, greater project liquidity is because of___________?

A. Less project returns
B. Greater project return
C. Shorter payback period
D. Greater payback period
An increase in value of option leads to low present value of exercise cost only if
it has____________?
A. Low volatility
B. Interest rates are high
C. Interest rates are low
D. High volatility

Which of the following strategy belongs to restrictive policy regarding size of

investments in current assets?
A. To maintain a high ratio of current assets to sales
B. To maintain a low ratio of current assets to sales
C. To less short-term debt and more long-term debt
D. To more short-term debt and less long-term debt

Choose from the following a symptom which is not relating to “Over Trading”?
A. Cash shortage
B. Low inventory turnover ratio
C. Low current ratio
D. High inventory turnover ratiO

Period costs include which of the following?

A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead

The present value of future cash flows is $2000 and an initial cost is $1100 then
the profitability index will be ___________?
A. 0.55
B. 1.82
C. 0.55
D. 0.0182
First step in calculation of net present value is to find out_________?
A. Present value of equity
B. Future value of equity
C. Present value cash flow
D. Future value of cash flow

A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000.
What is the retention ratio for the firm?
A. 12%
B. 25%
C. 40%
D. 60%

Intangible assets such as copyrights, trademarks and patents are applicable

for____________?
A. Depreciation
B. Amortization
C. Stock amortization
D. Perishable assets

Companies that help to set benchmarks are classified as__________?

A. competitive companies
B. Benchmark companies
C. Analytical companies
D. Return companies

If market interest rate rises above coupon rate, then bond will be
sold_____________?
A. Equal to return rate
B. Seasoned price
C. Below its par value
D. Above its par value
An inflation free rate of return and inflation premium is two components
of_________?
A. Quoted rate
B. Unquoted rate
C. Steeper rate
D. Portfolio rate

In cash flow estimation and risk analysis, real rate will be equal to nominal rate
if there is__________?
A. No inflation
B. High inflation
C. No transactions
D. No acceleration

Procedure of finding present values in time value of money is classified

as____________?
A. Compounding
B. Discounting
C. Money value
D. Stock value

In capital budgeting, a negative net present value results in _________?

A. zero economic value added
B. percent economic value added
C. negative economic value added
D. positive economic value added

Cash flows that should be considered for decision in hand are classified
as____________?
A. Relevant cash flows
B. Irrelevant cash flows
C. Marginal cash flows
D. Transaction cash flows

Process of comparing company results with other leading firms is considered

as____________?
A. Comparison
B. Analysis
C. Bench marking
D. Return analysis

An equity multiplier is multiplied to return on assets to calculate_________?

A. Return on assets
B. Return on multiplier
C. Return on turnover
D. Return on stock

Total assets divided common equity is a formula uses for

calculating___________?
A. Equity multiplier
B. Graphical multiplier
C. Turnover multiplier
D. Stock multiplier

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?
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

Non cash revenues and non cash charges if it subtracted from net income is
equal to___________?
A. Free cash flow
B. Retained cash flow
C. Net cash flow
D. Financing cash flow

If a firm uses cash to purchase inventory, its quick ratio will?

A. Increase
B. Decrease
C. Remain unaffected
D. Become zero

Bonds issued by local and state governments with default risk

are____________?
A. Municipal bonds
B. Corporation bonds
C. Default bonds
D. Zero bonds

The modified rate of return and modified internal rate of return with exceed
cost of capital if the net present value is ____________?
A. positive
B. negative
C. zero
D. one

The price per share is $30 and earnings per share is $3.5 then price for earnings
ratio would be ___________?
A. 8.57 times
B. 0.0857
C. 0.11 times
D. 0.11

Bonds issue by corporations which are more riskier than preferred stocks are
classified as_____________?
A. Leases
B. Preferred stocks
C. Common stocks
D. Corporate stocks

Mr. Y and Mr. Z are planning to share their capital to run a business. They are
going to employ which of the following type of business?
A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options

Loans by finance companies, banks and credit unions is classified

as___________?
A. Consumer credit loans
B. Dollar bonds
C. Eurodollar market deposits
D. Euro bonds

Stakeholders include:
A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them

Product costs include which of the following?

A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses

During planning period, a marginal cost for raising a new debt is classified
as__________?
A. Debt cost
B. Relevant cost
C. Borrowing cost
D. Embedded cost

In internal rate of returns, the discount rate which forces the net present values
to become zero is classified as ___________?
A. positive rate of return
B. negative rate of return
C. external rate of return
D. internal rate of return

Proceeds of company shares of sold stock is recorded in___________?

A. Preferred stock account
B. Common stock account
C. Due stock account
D. Preceded stock account

A project which have one series of cash inflows and results in one or more cash
outflows is classified as __________
A. abnormal costs
B. normal cash flows
C. abnormal cash flow
D. normal costs

An interest rate which is paid by firm as soon as it issues debt is classified as pre-
tax__________?
A. Term structure
B. Market premium
C. Risk premium
D. Cost of debt
An analysis of decision making of investors and managers is classified
as_________?
A. Riskier finance
B. Behavioral finance
C. Premium finance
D. Buying finance

_______________refers to the extent to which fixed-income securities (debt

and preferred stock) are used in a firm’s capital structure?
A. Financial risk
B. Portfolio risk
C. Operating risk
D. Market risk

Average Accounting Return is a measure of accounting profit relative to:

A. Book value
B. Intrinsic value
C. Cost
D. Market value

Net income is $2250 and non cash charges are $1150 then net cash flow would
be _________?
A. $1,100
B. $3,400
C. $2,200
D. $3,500

External factors such as expiration of basic patents and industry competition

effect____________?
A. Patents premium
B. Competition premium
C. Company’s beta
D. Expiry premium

In balance sheet, sum of retained earnings and common stock are considered
as_____________?
A. Preferred equity
B. Due equity
C. Common perpetuity
D. Common equity

Betas tend to move towards 1.0 with passage of time are classified
as__________?
A. Standard betas
B. Varied betas
C. Historical betas
D. Adjusted betas

In weighted average cost of capital, rising in interest rate leads

to_________________?
A. Increase in cost of debt
B. Increase capital structure
C. Decrease in cost of debt
D. Decrease capital structure

Rise in stock market is called_______?

A. bullish
B. bearish
C. hawkish
D. none of this

Markets for products such as wheat, rice, cotton, real estate and autos dealing
is classified as___________?
A. Physical asset markets
B. Intangible assets
C. Competitive markets
D. Easy markets

Redemption option which protects investors against rise in interest rate is

considered as________?
A. Redeemable at deferred
B. Redeemable at par
C. Redeemable at refund
D. Redeemable at finding

Treasury bonds are exposed to additional risks that are included________?

A. Reinvestment risk
B. Interest rate risk
C. Investment risk
D. Both A and B

Risk free rate is subtracted from expected market return is considered

as___________?
A. Country risk
B. Diversifiable risk
C. Equity risk premium
D. Market risk premium

Price per ratio is divided by cash flow per share ratio which is used for
calculating___________?
A. Dividend to stock ratio
B. Sales to growth ratio
C. Cash flow to price ratio
D. Price to cash flow ratio

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

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)

Method of inventory recording gives lower cost of goods sold in income

statement is classified as______________?
A. Last in first out
B. Last out receivable
C. First out receivable
D. First in first out

Number of shares outstanding if it is divided by net income for using to

calculate___________?
A. Earning per share
B. Dividends per share
C. Book value of share
D. Market value of shares

Standard deviation is 18% and expected return is 15.5% then coefficient of

variation would be__________?
A. 0.86%
B. 1.16%
C. 2.50%
D.−2.5%

Rule of 72 as a short cut method is explained by the formula:

A. 72 divided by the annual interest rate
B. Annual interest rate dividend by 72
C. 72 divided by (annual interest rate multiplied by discount factor)
D. None of these

Chance of occurrence of any event is classified as_____________?

A. Probability
B. Risk
C. Chance
D. Event happening

Price per share is $30 and an earnings per share is $3.5 then price for earnings
ratio would be___________?
A. 8.57 times
B. 8.57%
C. 0.11 times
D. 11%

Which of the following refers to the difference between the sale price and cost
of inventory?
A. Net loss
B. Net worth
C. Markup
D. Markdown

An increase in marginal cost of capital and the capital rationing are two arising
complications of __________?
A. maximum capital budget
B. greater capital budget
C. optimal capital budget
D. minimum capital budget

Project which is started by firm for increasing sales is classified

as______________?
A. New expansion project
B. Old expanded project
C. Firm borrowing project
D. Product line selection
Having some overall goal in mind, financial management is concerned with:
A. Acquisition of assets
B. Financing of assets
C. Management of assets
D. All of them

According to capital asset pricing model assumptions, quantities of all assets

are______________?
A. Given and fixed
B. Not given and fixed
C. Not given and variable
D. Given and variable

Payback period in which an expected cash flows are discounted with help of
project cost of capital is classified as___________________?
A. Discounted payback period
B. Discounted rate of return
C. Discounted cash flows
D. Discounted project cost

Type of financial securities that matures in less than a year are classified
as_______________?
A. Money market securities
B. Capital market securities
C. Saving intermediaries
D. Discounted intermediaries

The projects which are mutually exclusive but different on scale of production
or time of completion than the _________?
A. external return method
B. net present value of method
C. net future value method
D. internal return method

Reinvestment risk of bond’s is usually higher on______?

A. Income bonds
B. Callable bonds
C. Premium bonds
D. Default free bonds

Bonds issued to individuals by corporations are classified as__________?

A. Municipal bonds
B. Corporate bonds
C. U.S treasury bonds
D. Mortgages

A portion of profits, which a company retains itself for further expansion, is

known as:
A. Dividends
B. Retained Earnings
C. Capital Gain
D. None of the given options

Agency theory suggests that managers(the agents), particularly those of large ,

publically-owned firms, may have different objectives from those of the:
A. Workers
B. Subordinates
C. Shareholders
D. Employees

A type of project whose cash flows would not depend on each other is classified
as ____________?
A. project net gain
B. independent projects
C. dependent projects
D. net value projects

Cost which has occurred already and not affected by decisions is classified
as______________?
A. Sunk cost
B. Occurred cost
C. Weighted cost
D. Mean cost

Ratios which relate firm’s stock to its book value per share, cash flow and
earnings are classified as_________?
A. Return ratios
B. Market value ratios
C. Marginal ratios
D. Equity ratios

The formula such as, net income available for common stockholders divided by
total assets is used to calculate __________?
A. return on total assets
B. return on total equity
C. return on debt
D. return on sales

The profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7
times then return on assets will be __________?
A. 0.2673
B. 26.73 times
C. 0.094
D. 0.4 times

An inflation rate includes in bond’s interest rates is one which is inflation

rate________?
A. At bond issuance
B. Expected in future
C. Expected at time of maturity
D. Expected at deferred call

The set of projects or set of investments to maximize the firm value is classified
as __________?
A. optimal capital budget
B. minimum capital budget
C. maximum capital budget
D. greater capital budget

Right held with corporations to call issued bonds for redemption is considered
as___________?
A. Artificial provision
B. Call provision
C. Redeem provision
D. Original provision

Rate on debt that increases as soon market rises is classified as________?

A. Rising bet rate
B. Floating rate debt
C. Market rate debt
D. Stable debt rate

Risk affects any firm with factors such as war, recessions, inflation and high
interest rates is classified as____________?
A. Diversifiable risk
B. Market risk
C. Stock risk
D. Portfolio risk

In calculation of internal rate of return, an assumption states that received cash

flow from the project must __________?
A. be reinvested
B. not be reinvested
C. be earned
D. not be earned

In retention growth model, payout ratio is subtracted from one to

calculate___________?
A. Present value ratio
B. Future value ratio
C. Retention ratio
D. Growth ratio

A model which makes an assumption about the future growth of dividends is

known as:
A. Dividend Price Model
B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options

If two independent projects having hurdle rate then both projects should
___________?
A. be accepted
B. not be accepted
C. have capital acceptance
D. have return rate acceptance

The present value of future cash flows is divided by an initial cost of the project
to calculate __________?
A. negative index
B. exchange index
C. project index
D. profitability index

Return on assets = 5.5%, Total assets $3,000 and common equity $1,050 then
return on equity would be_________?
A. $22,275
B. 15.71%
C. 1.93%
D. 1.925 times

A formula such as net income available to common stockholders divided by

common equity is used to calculate __________?
A. return on earnings power
B. return on investment
C. return on common equity
D. return on interest

Which of the following statement is CORRECT regarding compound interest?

A. It is the most basic form of calculating interest.
B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.

The techniques which are used to identify financial statements trends include
__________?
A. common size analysis
B. percent change analysis
C. returning ratios analysis
D. Both A and B

Business Finance addresses which of the following?

A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options

An increasing in interest rate leads to decline in value of__________?

A. Junk bonds
B. Outstanding bonds
C. Standing bonds
D. Premium bonds

In mutually exclusive projects, project which is selected for comparison with

others must have____________?
A. Higher net present value
B. Lower net present value
C. Zero net present value
D. All of above

Weighted average cost of debt, preferred stock and common equity is classified
as_____________?
A. Cost of salvage
B. Cost of interest
C. Cost of taxation
D. Cost of capital

An uncovered cost at start of year is $200, full cash flow during recovery year is
$400 and prior years to full recovery is 3 then payback would be__________?
A. 5 years
B. 3.5 years
C. 4 years
D. 4.5 years

Profitability index in capital budgeting is used for_________?

A. Negative projects
B. Relative projects
C. Evaluate projects
D. Earned projects

If stock market price is higher than strike price so call option____________?

A. Price will be lower
B. Rate will be higher
C. Price will be higher
D. Rate will be lower

In financial markets, period of maturity within one to five years of financial

instruments is classified as_________________?
A. Short-term
B. Long-term
C. Intermediate term
D. Capital term

In capital asset pricing model, characteristic line is classified as____________?

A. Regression line
B. Probability line
C. Scattered points
D. Weighted line

The price per share is $25 and the cash flow per share is $6 then the price to
cash flow ratio would be ___________?
A. 0.24 times
B. 4.16 times
C. 0.0416
D. 0.24

Markets which deals with high liquid and short-term debt securities are
classified as_____________?
A. Capital markets
B. Money markets
C. Liquid markets
D. Short-term markets

A discount rate which is equal to the present value of TV to the project cost
present value is classified as _________?
A. negative internal rate of return
B. modified internal rate of return
C. existed internal rate of return
D. relative rate of return

An average inflation rate which is expected over life of security is classified

as__________?
A. Inflation premium
B. Off season premium
C. Nominal premium
D. Required premium

Cash outflows are costs of project and are represented by___________?

A. Negative numbers
B. Positive numbers
C. Hurdle number
D. Relative number

Number of years forecasted to recover an original investment is classified

as________?
A. Payback period
B. Forecasted period
C. Original period
D. Investment period

Type of bonds that pays no coupon payment but provides little appreciation are
classified as______________?
A. Depreciated bond
B. Interest bond
C. Zero coupon bond
D. Appreciation bond

According to capital asset pricing model assumptions, investors will borrow

unlimited amount of capital at any given___________?
A. Identical and fixed returns
B. Risk free rate of interest
C. Fixed rate of interest
D. Risk free expected return

In situation of bankruptcy, stock which is recorded above common stock and

below debt account is_____________?
A. Debt liabilities
B. Preferred stock
C. Hybrid stock
D. Common liabilities

An uncovered cost at start of year is $200, full cash flow during recovery year is
$400 and prior years to full recovery is 3 then payback would be ________?
A. 5 years
B. 3.5 years
C. 4 years
D. 4.5 years

Quick Ratio is also known as_______________?

A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio

Financial securities that can be converted into cash at closing to their book value
price are classified as_______________?
A. Inventories
B. Short-term investments
C. Cash equivalents
D. Long-term investments

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 ___________?
A. Dividing the square root of the number of items in the sample by the mean
B. Dividing standard deviation by number of items in the sample
C. Dividing the standard deviation by the square root of the number of items in the sample
D. We cannot calculate standard error on account of inadequacy of information

Payment if it is divided with interest rate will be formula of__________?

A. Future value of perpetuity
B. Present value of perpetuity
C. Due perpetuity
D. Deferred perpetuity

Financial security which is tax exempted and issues by state governments to

individuals is classified as___________?
A. U.S treasury bonds
B. Mortgages
C. Municipal bonds
D. Corporate bonds

Term structure premium, an inflation of bond and bond default premium are
included in_________________?
A. Risk factors
B. Premium factors
C. Bond buying factors
D. Multi model

The number of years forecasted to recover an original investment is classified as

___________?
A. payback period
B. forecasted period
C. original period
D. investment period

Which one of the following terms refers to the risk arises for bond owners from
fluctuating interest rates?
A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk

Other factors held constant, but the lesser project liquidity is because of
__________?
A. shorter payback period
B. greater payback period
C. less project return
D. greater project return

In large expansion programs, increased riskiness and flotation cost associated

with project can cause_______________?
A. Rise in marginal cost of capital
B. Fall in marginal cost of capital
C. Rise in transaction cost of capital
D. Rise in transaction cost of capital

The price per ratio is divided by cash flow per share ratio, is used for calculating
__________?
A. dividend to stock ratio
B. sales to growth ratio
C. cash flow to price ratio
D. price to cash flow ratio

Stockholders that do not get benefits even if company’s earnings grow are
classified as_____________?
A. Preferred stockholders
B. Common stockholders
C. Hybrid stockholders
D. Debt holders

Earning per share is computed as:

A. ____________Earning After Tax_____________
No of common shares outstanding

The process of comparing company results with the other leading firms is
considered as ___________?
A. comparison
B. analysis
C. benchmarking
D. return analysis

Which of the following ratios is NOT from the set of Asset Management Ratios?
A. Inventory Turnover Ratio
B. Receivable Turnover
C. Capital Intensity Ratio
D. Return on Assets

In financial planning, most high option price will lead to__________?

A. Longer option period
B. Smaller option period
C. Lesser price
D. Higher price

Prices of bonds will be decreased if an interest rates_________?

A. Rises
B. Declines
C. Equals
D. None of above

A loan that is repaid on monthly, quarterly and annual basis in equal payments
is classified as____________?
A. Amortized loan
B. Depreciated loan
C. Appreciated loan
D. Repaid payments

Current option price is added to present value of portfolio for

calculating_________?
A. Future value of portfolio
B. Current value of stock
C. Future value of stock
D. Present value of portfolio

In the mutually exclusive projects, the project which is selected for comparison
with others must have _________?
A. higher net present value
B. lower net present value
C. zero net present value
D. all of the above

The principal amount of a bond at issue is called____________?

A. Par value
B. Coupon value
C. Present value of an annuity
D. Present value of a lump sum

Purchase cost of assets over its useful life is classified as_________?

A. Appreciation
B. Depreciation
C. Appreciated assets
D. Appreciated liabilities

If the profit margin is equal to 4.5% and the total assets turnover is 1.8% then
the return on assets DuPont equation would be _________?
A. 0.025
B. 0.081
C. 0.004
D. 4 times

Price per share divided by earnings per share is formula for

calculating_________?
A. Price earnings ratio
B. Earning price ratio
C. Pricing ratio
D. Earning ratio

An equation in which total assets are multiplied to profit margin is classified

as_____________?
A. Du DuPont equation
B. Turnover equation
C. Preference equation
D. Common equation

The life that maximizes net present value of an asset is classified as _________?
A. minimum life
B. present value life
C. economic life
D. transaction life

Transfer through institutions such as mutual funds or banks are classified

as________________?
A. Non-financial intermediary
B. Financial intermediary
C. Savers intermediary
D. Discounted intermediary

Between the two identical bonds having different maturity periods, the price of
the ______ bond will change less than that of ______ bond.
A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options

A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000.
What would be the total worth of the firm’s assets?
A. Rs. 300,000
B. Rs. 500,000
C. Rs. 800,000
D. Rs. 1100,000

Set of projects or set of investments usually maximize firm value is classified

as_________?
A. Optimal capital budget
B. Minimum capital budget
C. Maximum capital budget
D. Greater capital budget

Which of the following ratios are intended to address the firm’s financial
leverage?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios

Rate of return which is asked by investors is classified

as_____________________?
A. Average cost of capital
B. Mean cost of capital
C. Weighted cost of capital
D. Weighted average cost of capital

Long-term equity anticipation security is usually classified as__________?

A. Short-term options
B. Long-term options
C. Short money options
D. Yearly call

The return on assets is equal 6.7% and equity multiplier is equal to 2.5% then
the return on equity will be
A. 0.1675
B. 0.0268
C. 0.00373
D. 0.092

Double declining balance method and sum of years digits are included
in__________?
A. Yearly method
B. Single methods
C. Double methods
D. Accelerated methods

In calculation of time, value of money, ”N ”represents___________?

A. Number of payment periods
B. Number of investment
C. Number of installments
D. Number of premium received

An uncovered cost at the start of the year is $300, full cash flow during recovery
year is $650 and prior years to full recovery is 4 then payback would be
_________?
A. 3.46 years
B. 2.46 years
C. 5.46 years
D. 4.46 years

Financial security with low degree risk and investment held by businesses is
classified as________________?
A. Treasury bills
B. Commercial paper
C. Negotiable certificate of deposit
D. Money market mutual funds

The return on assets = 5.5%, Total assets $3,000 and common equity is $1,050
then the return on equity would be _________?
A. 22275
B. 0.1571
C. 0.01925
D. 1.925 times

An annual interest payment divided by current price of bond is considered

as_____________?
A. Current yield
B. Maturity yield
C. Return yield
D. Earning yield

In capital budgeting, positive net present value results in_________________?

A. Negative economic value added
B. Positive economic value added
C. Zero economic value added
D. Percent economic value added

In weighted average cost of capital, capital components are funds that usually
offer by____________?
A. Stock market
B. Investors
C. Capitalist
D. Exchange index

If two independent projects having hurdle rate, then both projects

should________?
A. Be accepted
B. Not be accepted
C. Have capital acceptance
D. Have return rate acceptance

Movement of price or rise or fall of prices of options is classified as_________?

A. Option lattice
B. Pricing movement
C. Price change
D. Binomial lattice

Cost of capital is equal to required return rate on equity in case if investors are
only__________?
A. Valuation manager
B. Common stockholders
C. Asset seller
D. Equity dealer

An unsystematic risk which can be eliminated but market risk is

the__________?
A. Aggregate risk
B. Remaining risk
C. Effective risk
D. Ineffective risk

Values recorded as determined in marketplace are considered

as_______________?
A. Market values
B. Book values
C. Appreciated values
D. Depreciated values

Stock issued by company have lower rate of return because of___________?

A. High market to book ratio
B. Low book to market ratio
C. Low market to book ratio
D. High book to market ratio

Corporations that buy financial instruments with money accepted from savers
are classified as_________________?
A. Debit funds
B. Credit funds
C. Mutual funds
D. Insurance funds

In an individual stock, relevant risk is classified as___________?

A. Alpha coefficient
B. Beta coefficient
C. Stand-alone coefficient
D. Relevant coefficient

To whom does the Treasurer most likely report?

A. Chief Financial Officer
B. Vice President of Operations
C. Chief Executive Officer
D. Board of Directors

Condition in which company’s imports are more than its exports is classified
as____________?
A. Foreign trade
B. Foreign trade deficits
C. Foreign trade surplus
D. Trade surplus

In capital budgeting, the number of non-normal cash flows having internal rate
of returns are _________?
A. one
B. multiple
C. accepted
D. non-accepted

Value generally promises to pay at maturity date and a firm borrows is

considered as bond’s__________?
A. Bond value
B. Per value
C. State value
D. Par value

Collection of net income, amortization and depreciation is divided by common

shares outstanding to calculate______________?
A. Cash flow of financing activities
B. Cash flow per share
C. Cash flow of investment
D. Cash flow of operations

Which of the following is known as the group of assets such as stocks and bonds
held by an investor ?
A. Stock Bundle
B. Portfolio
C. Capital Structure
D.. None of the given options

Bonds with deferred call have protection which is classified as__________?

A. Provision protection
B. Provision protection
C. Deferred protection
D. Call protection

Maximizing Shareholder wealth:

A. Relieves the firms responsibility towards society
B. Does not relieve the firm’s responsibility towards society
C. Partially relives the firm’s responsibility towards society
D. None of Them

Price for debt is called_________?

A. Debt rate
B. Investment return
C. Discount rate
D. Interest rate

Real interest rate and real cash flows do not include_____________?

A. Equity effects
B. Debt effects
C. Inflation effects
D. Opportunity effects

Relationship between risk and required return is classified as___________?

A. Security market line
B. Required return line
C. Market risk line
D. Riskier return line

An efficient set of portfolios represented through graph is classified as

an__________?
A. Attained frontier
B. Efficient frontier
C. Inefficient frontier
D. Unattainable frontier

Price of stock that companies observe in financial markets is

called____________?
A. Market price
B. Intrinsic price
C. Extrinsic price
D. Fundamental price

All partners have limited liability in_________________?

A. Unlimited liability partnership
B. Limited liability partnership
C. Controlled partnership
D. Uncontrolled partnership

Which of the following ratios are particularly interesting to shortterm creditors?

A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
If market value is greater than book value, then investors for future stock are
considered as___________________?
A. Experienced
B. Inexperienced
C. Pessimistic
D. Optimistic

Which of the following relationships holds TRUE if a bond sells at a discount?

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

Profit margin multiply assets turnover multiply equity multiplier is used to

calculate____________?
A. Return on turnover
B. Return on stock
C. Return on assets
D. Return on equity

Cash flows occurring with more than one change in sign of cash flow are
classified as________?
A. Non-normal cash flow
B. Normal cash flow
C. Normal costs
D. Non-normal costs

According to Black Scholes model, stocks with call option pays the__________?
A. Dividends
B. No dividends
C. Current price
D. Past price
In estimating value of cash flows, the compounded future value is classified as
its _________?
A. terminal value
B. existed value
C. quit value
D. relative value

Type of options that permit bond holder to buy stocks at stated price are
classified as______?
A. Provision
B. Guarantee
C. Warrants
D. Convertibles

In capital budgeting, the term of bond which has great sensitivity to interest
rates is __________?
A. long-term bonds
B. short-term bonds
C. internal term bonds
D. external term bonds

Formula such as net income available for common stockholders divided by total
assets is used to calculate__________________________?
A. Return on total assets
B. Return on total equity
C. Return on debt
D. Return on sales

The project whose cash flows are sufficient to repay the capital invested for rate
of return then the net present value will be ____________?
A. negative
B. zero
C. positive
D. independent

Firm’s promise to pay and is backed or guaranteed by bank is classified

as____________?
A. Customer’s acceptance
B. Banker’s acceptance
C. Federal acceptance
D. Treasury acceptance

Risk of fall in income due to fall in interest rates in future is classified

as__________?
A. Income risk
B. Investment risk
C. Reinvestment risk
D. Mature risk

The conflict of interest between stockholders and management is known as:

A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost

A technique uses in comparative analysis of financial statement is_________?

A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis

Falling interest rate leads change to bondholder income which is__________?

A. Reduction in income
B. Increment in income
C. Matured income
D. Frequent income

When real rate is high, all the interest rates tend to be ___________?
A. Higher
B. Lower
C. Constant
D. None of the given options

In capital budgeting, number of non-normal cash flows have internal rate of

returns are____________?
A. One
B. Multiple
C. Accepted
D. Non-accepted

In capital budgeting, an internal rate of return of the project is classified as its

__________?
A. external rate of return
B. internal rate of return
C. positive rate of return
D. negative rate of return

Greater value of option, larger span of time value is usually results

in__________?
A. Shorter call option
B. Longer call option
C. Longer put option
D. Shorter put option

Price earning ratio and price by cash flow ratio are classified as___________?
A. Marginal ratios
B. Equity ratios
C. Return ratios
D. Market value ratios

Accounts payable, accruals and notes payable are listed on balance sheet
as________?
A. Accrued liabilities
B. Current liabilities
C. Accumulated liabilities
D. Non-current liabilities

Relevant cash flow which company expects when its will implement project is
classified as_____________?
A. Irrelevant cash flow
B. Relevant cash flow
C. Incremental cash flow
D. Decrease cash flow

Which of the following is a series of constant cash flows that occur at the end of
each period for some fixed number of periods?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

Rate of return that an investment provides its investor is classified

as__________?
A. Investment return rate
B. Internal rate of return
C. International rate of return
D. Intrinsic rate of return

Type of bond in which payments are made on basis of inflation index is classified
as_____________?
A. Borrowed bond
B. Purchasing power bond
C. Surplus bond
D. Deficit bond

Method uses for an estimation of cost of equity is classified as___________?

A. Market cash flow
B. Future cash flow method
C. Discounted cash flow method
D. Present cash flow method

Tendency of measuring correlation of two variables is classified as_________?

A. Tendency coefficient
B. Variable coefficient
C. Correlation coefficient
D. Double coefficient

The net present value, profitability index, payback and discounted payback are
the methods to __________?
A. evaluate cash flow
B. evaluate projects
C. evaluate budgeting
D. evaluate equity

The treasury notes that provide returns tied to inflation rate are classified as
A. clean price bonds
B. discount index bonds
C. premium index bonds
D. inflation index bonds

A project whose cash flows are more than the capital invested for rate of return
then the net present value will be _________?
A. positive
B. independent
C. negative
D. zero

The most important item that can be extracted from financial statements is the
actual ________ of the firm.
A. Net Working Capital
B. Cash Flow
C. Net Present Value
D. None of the given options

Future beta is needed to calculate in most situations is classified

as____________?
A. Historical betas
B. Adjusted betas
C. Standard betas
D. Varied betas

In which form of Business, owners have limited liability?

A. sole proprietorship
B. partnership
C. joint stock company
D. none of the above

Which of the following is the cheapest source of financing available to a firm?

A. Bank loan
B. Commercial papers
C. Trade credit
D. None of the given options.

In calculation of net cash flow, depreciation and amortization are treated

as________?
A. Current liabilities
B. Income expenses
C. Non-cash revenues
D. Non-cash charges

The word “Bank” is derived from which of the following?

A. Bancus
B. Banque
C. Bench
D. All of the above

Corporate governance encompasses the relationship among a company’s:

A. Shareholders and board of director
B. Board of directors and senior management
C. Shareholders and senior management
D. Shareholders, board of directors and senior management

Financial corporations which serve individual savers and commercial mortgage

borrowers are classified as____________?
A. Savings associations
B. Loans associations
C. Preferred and common associations
D. Savings and loans associations

Collection of money from investors and spending money in other investment

activities is classified as__________________?
A. Future funds
B. Hedge funds
C. Retirement funds
D. Pension funds

Financial policy is evaluated by which of the following?

A. Profit Margin
B. Total Assets Turnover
C. Debt-equity ratio
D. None of the given options

In capital budgeting, an internal rate of return of project is classified as

its__________?
A. External rate of return
B. Internal rate of return
C. Positive rate of return
D. Negative rate of return

Capital budgeting decisions are analyzed with help of weighted average and for
this purpose____________?
A. Component cost is used
B. Common stock value is used
C. Cost of capital is used
D. Asset valuation is used

Which of the following set of ratios is used to assess a business’s ability to

generate earnings as compared to its expenses and other relevant costs
incurred during a specific period of time?
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

Which of the following costs are reported on the income statement as the cost
of goods sold?
A. Product cost
B. Period cost
C. Both product cost and period cost
D. Neither product cost nor period cost
Which of the following measure reveals how much profit a company generates
with the money shareholders have invested?
A. Profit Margin
B. Return on Assets
C. Return on Equity
D. Debt-Equity Ratio

In large expansion programs, the increased riskiness and the floatation cost
associated with project can cause ___________?
A. rise in marginal cost of capital
B. fall in marginal cost of capital
C. rise in transaction cost of capital
D. rise in transaction cost of capital

The formula to calculate the present value of a single cash flow is given by:
A. CF1 / (1+r)n
B. C2 / (1+r)
C. C0 + C (1+r)n
D. None of these

Modified rate of return and modified internal rate of return with exceed cost of
capital if net present value is____________?
A. Positive
B. Negative
C. Zero
D. One

In financial markets, period of maturity more than five years of financial

instruments is classified as___________________?
A. Intermediate term
B. Capital term
C. Short-term
D. Long-term

Two alternative expected returns are compared with help of__________?

A. Coefficient of variation
B. Coefficient of deviation
C. Coefficient of standard
D. Coefficient of return

Capital gain expected by stockholders and dividends are included

in____________?
A. Debt rate
B. Investment return
C. Interest rate
D. Cost of equity

An option that gives investors right to sell a stock at predefined price is classified
as____________?
A. Put option
B. Call option
C. Money back options
D. Out of money options

In capital market line, risk of efficient portfolio is measured by

its____________?
A. Standard deviation
B. Variance
C. Aggregate risk
D. Ineffective risk

Bonds which are riskier than corporate bonds and are issued by major
corporations are classified as___________?
A. Common stocks
B. Corporate stocks
C. Leases
D. Preferred stocks

Interest rates, tax rates and market risk premium are factors which
an/a_____________?
A. Industry cannot control
B. Industry cannot control
C. Firm must control
D. Firm cannot control

A type of beta which incorporates about company such as changes in capital

structure is classified as___________?
A. Industry Beta
B. Market Beta
C. Subtracted Beta
D. Fundamental Beta

The profit margin multiply assets turnover multiply equity multiplier is used to
calculate __________?
A. return on turnover
B. return on stock
C. return on assets
D. return on equity

Rate of return which is required to satisfy stockholders and debt holders is

classified as__________?
A. Weighted average cost of interest
B. Weighted average cost of capital
C. Weighted average salvage value
D. Mean cost of capital
An internal rate of return in capital budgeting can be modified to make it the
representative of __________?
A. relative outflow
B. relative inflow
C. relative cost
D. relative profitability

In cash flow estimation, depreciation is considered as________________?

A. Cash charge
B. Non cash charge
C. Cash flow discounts
D. Net salvage discount

Full Form of BCCI ?

A. Bank of Commerce and Cooperation International
B. Bank of Central Cooperation International
C. Bank of Credit and Commerce International
D. None of These

An annuity with an extended life is classified as_____________?

A. Extended life
B. Perpetuity
C. Deferred perpetuity
D. Due perpetuity

The cash flow which starts negative then positive then again positive cash flow
is classified as ___________?
A. normal costs
B. non-normal costs
C. non-normal cash flow
D. normal cash flow

Which of the following statement is TRUE regarding debt?

A. Debt is an ownership interest in the firm.
B. Unpaid debt can result in bankruptcy or financial failure.
C. Debt provides the voting rights to the bondholders.
D. Corporation’s payment of interest on debt is fully taxable.

Money lends to corporations by banks is classified as___________?

A. Eurodollar market deposits
B. Commercial loans
C. Consumer credit loans
D. Consumer credit loans

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?
A. 8.42 years
B. 10.51 years
C. 15.75 years
D. 18.78 years

Standard deviation of tighter probability distribution is____________?

A. Long-termed
B. Short-termed
C. Riskier
D. Smaller

Positive minimum risk portfolio of any security shows that market security
sold____________?
A. Equal to original price
B. Equal to sum of stocks
C. Less than original price
D. Greater than original price

The graph which is plotted for projected net present value and capital rates is
called ___________?
A. net loss profile
B. net gain profile
C. net future value profile
D. net present value profile

Stated value of bonds or face value is considered as_____________?

A. State value
B. Par value
C. Bond value
D. Per value

Price of an outstanding bond increases when market rate___________?

A. Never changes
B. Increases
C. Decreases
D. Earned

Market in which bonds are traded over-the-counter than in an organized

exchange is classified as__________?
A. Organized markets
B. Trade markets
C. Counter markets
D. Bond markets

Standard Corporation sold fully depreciated equipment for Rs.5,000. This

transaction will be reported on the cash flow statement as a(n):
A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options

In independent projects evaluation, the results of internal rate of return and net
present value lead to __________?
A. cash flow decision
B. cost decision
C. same decisions
D. different decisions

Real rate expected cash flows and nominal rate expected cash flows must
be______________?
A. Accelerated
B. Equal
C. Different
D. Inflated

The system by which companies are managed and controlled is known as:
A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System

A risk associated with project and way considered by well diversified

stockholder is classified as______________?
A. Expected risk
B. Beta risk
C. Industry risk
D. Returning risk

A technique uses in comparative analysis of financial statement

is____________?
A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis
A markets which deals with long-term corporate stocks are classified as
A. Liquid markets
B. Short-term markets
C. Capital markets
D. Money markets

rate which is divided by compounding periods to calculate periodic rate must

be___________________?
A. Annuity return
B. Deferred annuity return
C. Nominal rate
D. Semiannual discount rate

If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be
the worth of your amount after 4 years if interest is compounded annually?
A. Rs. 5,400
B. Rs. 5,900
C. Rs. 6,600
D. Rs. 6,802

Funds which are used as interest-bearing checking accounts are classified

as____________?
A. Money market funds
B. Capital market funds
C. Money mutual funds
D. Insurance money funds

Bonds issued by corporations and exposed to default risk are classified

as_________?
A. Corporation bonds
B. Default bonds
C. Risk bonds
D. Zero risk bonds

Required rate of return in calculating bond’s cash flow is also classified

as_______?
A. Going rate of return
B. Yield
C. Earning rate
D. Both A and B

Financial security kept by non-financial corporations is____________________?

A. Deposit cheque
B. Distribution cost
C. Short term treasury bills
D. Short term capital cost

If book value is greater than market value comparison with investors for future
stock are considered as_______________?
A. Pessimistic
B. Optimistic
C. Experienced
D. Inexperienced

The process in which the managers of the company identify projects to add
value is classified as __________?
A. capital budgeting
B. cost budgeting
C. book value budgeting
D. equity budgeting

The price per share divided by earnings per share is the formula for calculating
___________?
A. price earnings ratio
B. earnings price ratio
C. pricing ratio
D. earnings ratio

Return on assets = 6.7% and equity multiplier = 2.5% then return on equity will
be ______________?
A. 16.75%
B. 2.68%
C. 0.37%
D. 9.20%

Standard deviation is 18% and coefficient of variation is 1.5% an expected rate

of return will be_____________?
A. 27%
B. 12%
C. 19.50%
D. none of above

In independent projects evaluation, results of internal rate of return and net

present value lead to_____________?
A. Cash flow decision
B. Cost decision
C. Same decisions
D. Different decisions

Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified
as______________?
A. Financial instruments
B. Capital assets
C. Primary assets
D. Competitive instruments
Price of an outstanding bond decreases when market rate is_______________?
A. Increased
B. Decreased
C. Earned
D. Never changed

An outstanding bond are also classified as__________?

A. Standing bonds
B. Outdated bonds
C. Dated bonds
D. Seasoned bonds

Federal Reserve policy and federal surplus or deficit of budget affect

the____________?
A. Cost of production
B. Cost of money
C. Opportunity cost
D. Inflation risk

Legal entity separation from its legal owners and managers with help of state
laws is classified as____________?
A. Controlled corporate business
B. Corporation
C. Limited corporate business
D. Unlimited corporate business

Life that maximizes net present value of an asset is classified as__________?

A. Minimum life
B. Present value life
C. Economic life
D. Transaction life

The low price for earnings ratio is the result of ____________?

A. low riskier firms
B. high riskier firms
C. low dividends paid
D. high marginal rate

Which of the following statement is considered as the accountant’s snapshot of

firm’s accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement

Beta which is estimated as regression slope coefficient is classified

as___________?
A. Historical beta
B. Market beta
C. Coefficient beta
D. Riskier beta

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?
A. 6 years
B. 12 years
C. 24 years
D. 48 years

During the accounting period, sales revenue is Rs. 25,000 and accounts
receivable increases by Rs. 8,000. What will be the amount of cash received
from customers for the period?
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000

Which of the following item provides the important function of shielding part of
income from taxes?
A. Inventory
B. Supplies
C. Machinery
D. Depreciation

Federal government tax revenues if it exceeds government spending then it is

classified as___________?
A. Budget surplus
B. Budget deficit
C. Federal reserve
D. Federal budget

Markets dealing loans of autos, education, vacations and appliances are

considered as__________?
A. Consumer credit loans
B. Commercial markets
C. Residential markets
D. Mortgage markets

Stocks which has lower book for market ratio are considered as__________?
A. Optimistic
B. More risky
C. Less risky
D. Pessimistic

Cash flows that could be generated from an owned asset by company but not
use in project are classified as_________________?
A. Occurred cost
B. Mean cost
C. Opportunity costs
D. Weighted cost

Securities with less predictable prices and have longer maturity time is
considered as_______________?
A. Cash equivalents
B. Long-term investments
C. Inventories
D. Short-term investments

Type of bonds that are issued by foreign governments or foreign corporations

are classified as__________?
A. Zero risk bonds
B. Zero bonds
C. Foreign bonds
D. Government bonds

Which of the following form of business organization is least regulated?

A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation

Which of the following statement about bond ratings is TRUE?

A. Bond ratings are typically paid for by a company’s bondholders.
B. Bond ratings are based solely on information acquired from sources other than the bond
issuer.
C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
D. None of the given options

Cash flow which starts negative than positive then again positive cash flow is
classified as__________?
A. Normal costs
B. Non-normal costs
C. Non-normal cash flow
D. Normal cash flow

The situation in which one project is accepted while rejecting an other project in
comparison is classified as __________?
A. present value consent
B. mutually exclusive
C. mutual project
D. mutual consent

The situation in which the firm limits the expenditures on capital is classified as
__________?
A. optimal rationing
B. capital rationing
C. marginal rationing
D. transaction rationing

Forecast by analysts, retention growth model and historical growth rates are
methods used for an______________?
A. Estimate future growth
B. Estimate option future value
C. Estimate option present value
D. Estimate growth ratio

Profitability index (PI) rule is to take an investment, if the index

exceeds___________?
A. -1
B. 0
C. 1
D. 2
The first step in calculation of net present value is to find out ________?
A. present value of equity
B. future value of equity
C. present value cash flow
D. future value of cash flow

According to market risk premium, an amount of risk premium depends upon

investor______________?
A. Risk taking
B. Risk aversion
C. Market aversion
D. Portfolio aversion

An equity multiplier is multiplied to return on assets to calculate __________?

A. return on assets
B. return on multiplier
C. return on turnover
D. return on stock

Nominal interest rates and nominal cash flows are usually reflected
the____________?
A. Inflation effects
B. Opportunity effects
C. Equity effects
D. Debt effects

In a statement of cash flows, a company investing in short-term financial

investments and in fixed assets results in______________?
A. Increased cash
B. Decreased cash
C. Increased liabilities
D. Increased equity
Financial security issued by banks operating outside U.S is classified
as___________________?
A. Dollar bonds
B. Euro deposits
C. Eurodollar market deposits
D. Euro bonds

In capital budgeting, a technique which is based upon discounted cash flow is

classified as ___________?
A. net present value method
B. net future value method
C. net capital budgeting method
D. net equity budgeting method

Profit maximization is the maximizing a firm’s Earning:

A. Before Tax
B. After Tax
C. Both A and B
D. None of Them

Portfolio which consists of perfectly positive correlated assets having no effect

of___________?
A. Negativity
B. Positivity
C. Correlation
D. Diversification

Which of the following terms refers to the use of debt financing?

A. Operating Leverage
B. Financial Leverage
C. Manufacturing Leverage
D. None of the given options
An internal rate of return in capital budgeting can be modified to make it
representative of_________?
A. Relative outflow
B. Relative inflow
C. Relative cost
D. Relative profitability

Net present value, profitability index, payback and discounted payback are
methods to______________?
A. Evaluate cash flow
B. Evaluate projects
C. Evaluate budgeting
D. Evaluate equity

The cash flows occurring with more than one change in sign of cash flow are
classified as __________?
A. non-normal cash flow
B. normal cash flow
C. normal costs
D. non-normal costs

The net income available to stockholders is $125 and total assets are $1,096
then return on common equity would be ___________?
A. 0.00114
B. 0.114
C. 0.12 times
D. 0.12

Payment of security if it is made at end of each period such as beginning of year

is classified as______________?
A. Annuity due
B. Payment fixed series
C. Ordinary annuity
D. Deferred annuity

A formula of after-tax component cost of debt is___________?

A. Interest rate-tax savings
B. Marginal tax-required return
C. Interest rate + tax savings
D. Borrowing cost + embedded cost

In capital asset pricing model, stock with high standard deviation tend to
have________?
A. Low variation
B. Low beta
C. High beta
D. High variation

If net present value is positive, then profitability index will be__________?

A. Greater than two
B. Equal to
C. Less than one
D. Greater than one

Bonds that have high liquidity premium are usually have_________?

A. Inflated trading
B. Default free trading
C. Less frequently traded
D. Frequently traded

According to capital asset pricing model assumptions, variances, expected

returns and co-variance of all assets are__________?
A. Identical
B. Not identical
C. Fixed
D. Variable

Mutual fund allows investors to sale out their share during any normal trading
hours is classified as____________?
A. Exchange traded fund
B. Management expense
C. Money trade fund
D. Capital trade fund

If the net present value is positive then the profitability index will be
___________?
A. greater than two
B. equal to
C. less than one
D. greater than one

The cash inflows are the revenues of project and are represented by
___________?
A. hurdle number
B. relative number
C. negative numbers
D. positive numbers

Situation in which firm limits expenditures on capital is classified as________?

A. Optimal rationing
B. Capital rationing
C. Marginal rationing
D. Transaction rationing

A project whose cash flows are more than capital invested for rate of return
then net present value will be___________?
A. Positive
B. Independent
C. Negative
D. Zero

In which type of market, new securities are traded?

A. Primary market
B. Secondary market
C. Tertiary market
D. None of the given options

Bonds issued by small companies tend to have_____________?

A. High liquidity premium
B. High inflation premium
C. High default premium
D. High yield premium

In time value of money, nominal rate is_______________?

A. Not shown on timeline
B. Shown on timeline
C. Multiplied on timeline
D. Divided on timeline

In capital budgeting, the positive net present value results in _________?

A. negative economic value added
B. positive economic value added
C. zero economic value added
D. percent economic value added

A type of project whose cash flows would not depend on each other is classified
as______________?
A. Project net gain
B. Independent projects
C. Dependent projects
D. Net value projects

Type of financial securities that mature in less than a year are classified
as___________?
A. Saving intermediaries
B. Discounted intermediaries
C. Money market securities
D. Capital market securities

Stock which has higher correlation with market tend to have__________?

A. High beta, less risky
B. Low beta, more risky
C. High beta, more risky
D. Low beta, less risky

In which of the following type of annuity, cash flows occur at the beginning of
each period?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options

The price earnings ratio and price by cash flow ratio are classified as
__________?
A. marginal ratios
B. equity ratios
C. return ratios
D. market value ratios

Standard Company had net sales of Rs. 750,000 over the past year. During that
time, average receivables were Rs. 150,000. Assuming a 365-day year, what was
the average collection period?
A. 5 days
B. 36 days
C. 48 days
D. 73 days
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A theory which states that assets are traded at price equal to its intrinsic value is
classified as___________________?
A. Efficient money hypothesis
B. Efficient market hypothesis
C. Inefficient market hypothesis
D. Inefficient money hypothesis

Coupon rate of convertible bond is_________?

A. Higher
B. Lower
C. Variable
D. Stable

Annual cash dividends divided by annual earnings; or alternatively, dividends

per share divided by earning per share is termed as:
A. Earning per share ratio
B. Proposed dividend ratio
C. Dividend payout ratio
D. Expected dividend ratio

An interest rate which is used in calculation of cash flows of bonds is

called______________?
A. Required rate of redemption
B. Required rate of earning
C. Required rate of return
D. Required option
Set of rules consisting of behavior towards its directors, creditors, shareholders,
competitors and community is considered as____________?
A. Agency governance
B. Hiring governance
C. Corporate governance
D. External governance

The high price to earnings ratio shows companies ____________?

A. low dividends paid
B. high risk prospect
C. high growth prospect
D. high marginal rate

Financial markets include___________?

A. Primary markets
B. Capital markets
C. Physical asset markets
D. All of above

The net income available to stockholders is $150 and total assets are $2,100
then return on total assets would be ________?
A. 0.0007
B. 0.0714
C. 0.05 times
D. 7.15 times

Beta reflects stock risk for investors which is usually_________?

A. Individual
B. Collective
C. Weighted
D. Linear

Project whose cash flows are sufficient to repay capital invested for rate of
return then net present value will be_________?
A. Negative
B. Zero
C. Positive
D. Independent

In case of international business which of the given factor(s) must be

considered?
A. Role of foreign exchange
B. Balance of payments
C. Attitude of Governments
D. All of the given options

Which of the following ratios are particularly interesting to short term creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios

Tendency of moving together of two variables is classified as_____________?

A. Correlation
B. Move tendency
C. Variables tendency
D. Double tendency

Type of financial security in which loans are secured by borrowers’ property is

classified as__________?
A. Municipal bonds
B. Corporate bonds
C. U.S treasury bonds
D. Mortgages

Stock issued by company have higher rate of return because

of______________?
A. Low market to book ratio
B. High book to market ratio
C. High market to book ratio
D. Low book to market ratio

Long period of bond maturity leads to_________?

A. More price changes
B. Stable prices
C. Standing prices
D. Mature prices

Which of the following refers to the cash flows that result from the firm‟s day-
to-day activities of producing and selling?
A. Operating Cash Flows
B. Investing Cash Flows
C. Financing Cash Flows
D. All of the given options

Stocks in market portfolio are graphically represented with_____________?

A. Dashed line
B. Straight line
C. Market line
D. Risk line

A company who issues bonds or stocks in result raised funds which

finally____________?
A. Increases liabilities
B. Increases equity
C. Increases cash
D. Decreases cash

In capital budgeting, term of bond which has great sensitivity to interest rates
is______________?
A. Long-term bonds
B. Short-term bonds
C. Internal term bonds
D. External term bonds

A point where profile of net present value crosses horizontal axis at plotted
graph indicates project____________________?
A. Costs
B. Cash flows
C. Internal rate of return
D. External rate of return

In internal rate of returns, discount rate which forces net present values to
become zero is classified as__________?
A. Positive rate of return
B. Negative rate of return
C. External rate of return
D. Internal rate of return

If default probability is zero and bond is not called, then yield to maturity
is_____________?
A. Mature expected return rate
B. Lower than expected return rate
C. Higher than expected return rate
D. Equal to expected return rate

Cost of common stock is 16% and bond yield is 9% then bond risk premium
would be_________?
A. 7%
B. 8%
C. 1.78%
D. 25%

All the constituencies with a stake in the fortunes of the company are termed
as:
A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates

Type of bond which pays interest payment only when it earns is classified
as__________?
A. Income bond
B. Interest bond
C. Payment bond
D. Earning bond

Which of the following is the overall return the firm must earn on its existing
assets to maintain the value of the stock?
A. IRR (Internal Rate of Return)
B. MIRR (Modified Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)

Land, buildings, and factory fixed equipment are classified as____________?

A. Tangible asset
B. Non-tangible assets
C. Financial asset
D. Financial liability

Professionals such as doctors, accountants and lawyers often make corporations

are classified as____________?
A. General professionals
B. Professional corporation
C. Professional association
D. Both B and C

An income available for shareholders after deducting expenses and taxes from
revenues is classified as______________?
A. Net income
B. Net earnings
C. Net expenses
D. Net revenues

Standard deviation is divided by expected rate of return is used to

calculate_________?
A. Coefficient of variation
B. Coefficient of deviation
C. Coefficient of standard
D. Coefficient of return

The project whose cash flows are less than the capital invested for required rate
of return then the net present value will be ___________?
A. negative
B. zero
C. positive
D. independent

A modified internal rate of return is considered as present value of costs and is

equal to ________?
A. p.v of hurdle rate
B. fv of hurdle rate
C. p.v of terminal value
D. fv of terminal value
Cash inflows are revenues of project and are represented by__________?
A. Hurdle number
B. Relative number
C. Negative numbers
D. Positive numbers

Net investment in operating capital is subtracted from net operating profit after
taxes to calculate___________?
A. Relevant inflows
B. Free cash flow
C. Relevant outflows
D. Cash outlay

In capital asset pricing model, assumptions must be followed

including________?
A. No taxes
B. No transaction costs
C. Fixed quantities of assets
D. All of above

The cash outflows are the costs of project and are represented by _________?
A. negative numbers
B. positive numbers
C. hurdle number
D. relative number

The ratios which relate firm’s stock to its book value per share, cash flow and
earnings are classified as _________?
A. return ratios
B. market value ratios
C. marginal ratios
D. equity ratios
An annual estimated cost of assets uses up every year is included__________?
A. Depreciation and amortization
B. Net sales
C. Net profit
D. Net income

The difference between current assets and current liabilities is known

as____________?
A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio

Variability for expected returns for projects is classified as___________?

A. Expected risk
B. Stand-alone risk
C. Variable risk
D. Returning risk

In time value of money, periodic rate is_________?

A. Not shown on timeline
B. Shown on timeline
C. Multiplied on timeline
D. Divided on timeline

The companies that help to set benchmarks are classified as ___________?

A. competitive companies
B. benchmark companies
C. analytical companies
D. return companies

If coupon rate is less than going rate of interest, then bond will be
sold________?
A. Seasoned par value
B. More than its par value
C. Seasoned par value
D. At par value

The Board of Directors sets company-wide policy and advices the CEO and other
senior executies, who manage the company’s:
A. Managerial activities
B. Year-to-Year activities
C. Day-to-Day activities
D. Financial activities

Risk which is caused by events such as strikes, unsuccessful marketing programs

and other lawsuits is classified as____________?
A. Stock risk
B. Portfolio risk
C. Diversifiable risk
D. Market risk

Corporations such as Citigroup, American Express and Fidelity are classified

as__________________?
A. Financial services corporations
B. Common service corporations
C. Preferred service corporations
D. Commercial service corporations

Type of relationship exists between an expected return and risk of portfolio is

classified as___________?
A. Non-linear
B. Linear
C. Fixed and aggregate
D. Non-fixed and non-aggregate
An effect of interest rate risk and investment risk on a bond’s yield is classified
as_________?
A. Reinvestment premium
B. Investment risk premium
C. Maturity risk premium
D. Defaulter’s premium

An uncovered cost at start of year is divided by full cash flow during recovery
year then added in prior years to full recovery for calculating__________?
A. Original period
B. Investment period
C. Payback period
D. Forecasted period

Who of the following make a broader use of accounting information?

A. Accountants
B. Financial Analysts
C. Auditors
D. Marketers

Sum of market risk and diversifiable risk are classified as total risk which is
equivalent to_______________?
A. Sharpe’s alpha
B. Standard alpha’s
C. Alpha’s variance
D. Variance

According to Black Scholes model, selling and buying of stock have_______?

A. Discount rate
B. Transaction costs
C. No transaction costs
D. No discounts
Process of calculating future value of money from present value is classified
as____________?
A. Compounding
B. Discounting
C. Money value
D. Stock value

Coefficient of variation is used to identify an effect of__________?

A. Risk
B. Return
C. Deviation
D. Both A and B

A market interest rate for specific type of bond is classified as

bond’s_____________?
A. Required rate of return
B. Required option
C. Required rate of redemption
D. Required rate of earning

A portfolio consists of all stocks in a market is classified as____________?

A. Market portfolio
B. Return portfolio
C. Correlated portfolio
D. Diversified portfolio

When price of bond is calculated below its par value, it is classified

as___________?
A. classified bond
B. Discount bond
C. Compound bond
D. Consideration earning
Type of risk in which beta is equal to one is classified as____________?
A. Multiple risk stock
B. Varied risk stock
C. Total risk stock
D. Average risk stock

A series of constant cash flows that occur at the end of each period for some
fixed number of periods is ____________ .
A. an ordinary annuity
B. annuity due
C. multiple cash flows
D. perpetuity

Cash flow from assets involves which of the following component(s)?

A. Operating cash flow
B. Capital spending
C. Change in net working capital
D. All of the given options

Ability to trade at net price very quickly is classified as___________?

A. Original trading
B. Liquidity
C. Offline trading
D. Fixed price trading

Chance of happening any unfavorable event in near future is classified

as___________?
A. Chance
B. Event happening
C. Probability
D. Risk

If coupon rate is equal to going rate of interest, then bond will be

sold________?
A. At par value
B. Below its par value
C. More than its par value
D. Seasoned par value

A high portfolio return is subtracted from low portfolio return to

calculate_________?
A. HML portfolio
B. R portfolio
C. Subtracted portfolio

Beta coefficient is used to measure market risk which is an index of__________?

A. Coefficient risk volatility
B. Market risk volatility
C. Stock market volatility
D. Portfolio market portfolio

Present value of future cash flows is divided by an initial cost of project to

calculate_______?
A. Negative index
B. Exchange index
C. Project index
D. Profitability index

An equation in which total assets are multiplied to profit margin is classified as

_________?
A. du DuPont equation
B. turnover equation
C. preference equation
D. common equation
A bond whose price will rise above its face value is classified as________?
A. Premium face value
B. Premium bond
C. Premium stock
D. Premium warrants

The present value of future cash flows is $4150 and an initial cost is $1300 then
the profitability index will be ____________?
A. 0.0319
B. 3.19
C. 0.31 times
D. 5450

Coefficient of beta is used to measure stock volatility_____________?

A. Coefficient of market
B. Relative to market
C. Ir-relative to market
D. Same with market

Total amount of depreciation charged on long term assets is classified

as______________?
A. Accumulated depreciation
B. Depleted depreciation
C. Accumulated appreciation
D. Accumulated appreciation schedule

In capital budgeting, a negative net present value result in______________?

A. Zero economic value added
B. Percent economic value added
C. Negative economic value added
D. Positive economic value added

Finance is vital for which of the following business activity (activities)?

A. Marketing Research
B. Product Pricing
C. Design of marketing and distribution channels
D. All of the given options

The investment decision is the most important of the firm’s three major
decisions, when it comes to:
A. Value creation
B. Value addition
C. Value proposition
D. Value deletion

_________ refers to the most valuable alternative that is given up if a particular

investment is undertaken?
A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options

The initial cost is $5000 and the probability index is 3.2 then the present value
of cash flows is _________?
A. 8200
B. 16000
C. 0.0064
D. 1562.5

Net income available to stockholders is $150 and total assets are $2,100 then
return on total assets would be_________?
A. 0.07%
B. 7.14%
C. 0.05 times
D. 7.15 times
___________ is concerned with the acquisition, financing, and management of
assets with some overall goal in mind.
A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility

If coupon rate is more than going rate of interest, then bond will be
sold________?
A. More than its par value
B. Seasoned par value
C. At par value
D. Below its par value

High price to earning ratio shows company’s_____________?

A. Low dividends paid
B. High risk prospect
C. High growth prospect
D. High marginal rate

The Yield to Maturity of a bond is the same as_____________?

A. The present value of the bond
B. The bonds internal rate of return
C. The future value of the bond
D. None of these

An investor who buys shares and writes a call option on stock is classified
as__________?
A. Put investor
B. Call investor
C. Hedger
D. Volatile hedge
Other factors held constant, the greater project liquidity is because of
___________?
A. less project return
B. greater project return
C. shorter payback period
D. greater payback period

The effect of purchasing power or inflation on present value is important

because _________?
A. It increases the real value of cash flows received in the future
B. It reduces the real value of cash flows received in the future
C. It has no effect on real value of cash flow received in the future
D. None of these

Which of the given area is NOT addressed by Business Finance?

A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options

Maturity date decides at time of issuance of bond and legally permissible is

classified as____________?
A. Original maturity
B. Permanent maturity
C. Artificial maturity
D. Valued maturity

Low price for earnings ratio is result of________________?

A. Low riskier firms
B. High riskier firms
C. Low dividends paid
D. High marginal rate
Quick Ratio is also known as_________?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options

Coupon payment of bond which is fixed at time of issuance____________?

A. Remains same
B. Becomes stable
C. Becomes change
D. Becomes low

Market where market makers keep record of stock of financial instruments is

classified as_________________?
A. Stock market
B. Dealer market
C. Outcry auction system
D. Face to face communication

In cash flow analysis, the two projects are compared by using common life, is
classified as _________?
A. transaction approach
B. replacement chain approach
C. common life approach
D. Both B and C

A company’s low earnings power and high interest cost cause financial changes,
which have ___________?
A. high return on equity
B. high return on assets
C. low return on assets
D. low return on equity
If current price increases from lower to higher then an____________?
A. Option value equal to one
B. Option value will increase
C. Option value will decrease
D. Option value equal to zero

Which of the following is a special case of annuity, where the stream of cash
flows continues forever?
A. Ordinary Annuity
B. Special Annuity
C. Annuity Due
D. Perpetuity