MB2001

MB2001MBA (FINANCE)-IV (OLD)

FINANCIAL STATEMENT ANALYSISQUESTION BANK

Q1. True or False:

1. Equity to fixed interest bearing securities is acid test ratio.

2. Debt equity ratio is a solvency ratio.

3. Ratio analysis is a technique of planning & control.

4. A firms ability to meet the interest charges and repayment dues on

5. Long term obligations are referred to as its solvency.

6. Rate of return on capital employed is a turnover ratio.

7. Law gearing is preferable to high gearing.

8. Capital gearing is the ratio of debt to equity.

9. Acid test divides liquidity.

10. For stock turnover ratio, arrange stock is to be calculated.

11. A decreased stock tumor ratio usually indicates expanding business

Answers for Q1:(1) F

(2) T

(3) F

(4) T

(5) F

(6) T

(7) F

(8) T

(9) T

(10) F

Q2. The C.R of a Co. is 2:1. Which of the following suggestions would

Improve the ratio, which would reduce it and which would not change it ?

1. To pay a current liability

2. To sell a motor car for cash at a slight

3. To borrow money on an interest nearing possessor note.

4. To purchase stock for cash

5. To give an interest bearing promissory note to a

Creditor to whom money was owed on current A/C.

Answer 2:1) Improve the ratio

2) Do

3) Reduce the ratio

4) No change in the ratio

5) No change in the ratio

Q3. Assuming the C.R is 2, state in each of the following cases

Whether. The ratio will improve or decline or will have he change.

1. Payment of a current liability.

2. Purchase of fixed assets.

3. Cash collected from customers.

4. Bills receivable dishonored.

5. Issue of new shares.

Answer3:1) Improve

2) Decline

3) No change

4) No change

5) e) Improve

Q4. Multiple choices:

1. Ratio of net sales to net W.C is a:-

A) W.C. turnover ratio

B) Profitability ratio

C) Liquidity ratio

D) Cant say

Ans. (a)

2. Observing changes in the financial variable across the years in:-

A) Vertical analysis.

B) Horizontal analysis.

C) Inter firm comparison.

D) None Ans. (b)

3. Ratio of net profit before interest & fax to sales in a:-

A) Operating profit ratio

B) Capital gearing

C) Solvency ratio

D) Cant say Ans. (a)

4. The statistical yardstick that provides a measure of the relationship

Between two accounting figures in:-

A) A operating current ratio

B) The accounting ratio

C) Input output ratio

D) None Ans. (b)

5. Debt equity ratio is a :-

A) Liquidity ratio

B) Solvency ratio

C) Profitability ratio

D) None Ans. (b)

6. The turnover ratio helps management in:-

A) Managing a resources

B) Managing a debit

C) Evaluating performance

Ans. (c)

7. Long term solvency in indicated by

A) Current ratio

B) Debt / easily ratio

C) Net profit ratio Ans. (b)

8. The three most useful general purpose financial statements for management are:-

a) P & L A/C, B/S & statement of retained earning.

b) P & L A/C, B/S & statement of changes in financial position.

c) P & L A/C, fund flow statement, stat of R.E

d) Stat. of R.E, B/S & fund flow statement

Ans. (b)

9. In case of a Ltd. Co. the term financial statement includes:-

a) P & L A/C & B/S

b) P & L A/C P & L appropriation A/C & B/S.

c) B/S

d) None

Ans.(b)

10. The term current assets does not include:-

a) Payments in advance

b) Bills receivable

c) Long-term deferred charges.

e) None

Ans.(c)

11. The following is a recorded fact:-

a) Mkt. Value of investment

b) Debtors

c) Replacement cost of M/C

d) None

Ans.(b)

12. The term fixed assets include:-

a) Stock in trade

b) Furniture

c) Payments in advance.

d) None

Ans.(b)

Q5. Which accounting ratio will be useful in indicating the following

symptoms

1. Low capacity utilization.

2. Following demand for the product in the Mkt.

3. Inutility to pay interest.

4. Borrowing for short term & investing in long term assets.

5. Large inventory accumulation in anticipation of price rise in future.

6. Inefficient collection of debtors.

7. Inability to pay dues to F.IS.

8. Return on shareholders funds being which higher than the overall

Return on investment.

9. Liquidity Crisis.

10. Increase in average credit period to maintain sales in view of

Falling demand.

Answer 5:1. Fixed assets turnover ratio

2. Finished good turnover

3. Interest Coverage ratio

4. Current ratio & fixed assets ratio

5. Inventory turnover ratio

6. Debtors turnover ratio

7. Debt coverage ratio

8. Debt equity ratio

9. Current ratio & quick ratio

10. Debtors turnover ratio & Av. Collection period

Q6. Fill in the blanks:-

1. The two statements which are generally included in the definition of financial of

Statements are

Ans.P & L A/C balance sheet

2. Income statement ( P & L A/C ) .the revenues and costs incurred in the

Process of earning revenues.

Ans. Matches.3. Balance sheet is a statement of of a business at a specific movement of time.

Ans. Financial position

4. Assets & liabilities in a balance sheet (B/S) may be arranged either according to

.. order or . Order

Ans. Liquidity & permanency.

5. Financial statements disclose only facts.

Ans. Monetary.

6. P & L A/C is also called as the

Ans.Income statement.

7. Rearrangement of figures is necessary for&

Ans. Analysis & interpretation.

Q7. Numericals:

Q.1 From the following details of a business concern as certain the G.P ratio :-

2000

2001

Sale :Rs.1,20,000

Rs.1,60,000

G.P :Rs.40,000

Rs.60,000

A) 33.3%, 37.5%B) 32.3%, 35.6%C) 45.8%, 39.0% D) 42.3%, 33.4%

ANS: A

Q.2 Calculate the G.P ratio, from the following data :-

Cash sale being 25% of total sales,

Purchases Rs.6,90,000 credit sales Rs.6,00,000

Excess of closing stock over opening stock Rs.50,000

A) 25%

B) 20% C) 30%

D) 35%

ANS: B

Q.3 Following information in available find GP ratio:

Cash sale :Rs.25,000

Purchase :

Cash

:Rs.15,000

Credit

:Rs.60,000

Caniage inward:Rs.2,000

Salaries

:Rs.25,000

Decrease in stock:Rs.10,000

Return outward:Rs.2,000

Wages

:Rs.5,000

Ratio of cash sales credit sales => 1:3

A) 15% B) 40%

C) 10%

D) 56%

ANS:C

Q.4 A Co. earns a gross profit as 20% on cash its credit sales are twice its cash sales are

twice its cash sales if the credit sales are Rs.4,00,000 calculate the G.P. ratio of the

Co.

A) 15.67%

B) 16.67%

C) 18.75%

D) 12.33%

ANS: B

Q.5 From the following data, calculate Net Profit Ratio :-

Sales

=> Rs.5,00,000

Net profit=> Rs.84,000

A) 16.80% B) 12.80%

C) 17.80%

D) 13.63%

ANS: A

Q.6 From the following data, calculate net profit ratios :-

Gross sales Rs.10,00,000

Sales Tax 5% on gross price

Income Tax 40%

PBT Rs.2,00,000

A) 21.05%

B) 22.90%

C) 19.33%

D) 12.64%

ANS: A

Q.7 G.P. ratio of a cashes 25% its cash sale were Rs.2,00,000 and its credit sales were

90% of the total sales. If the indirect even of the Co. were Rs.20,000 calculate its net

profit ratio

A) 26%

B) 24%

C) 22%

D) 26%

ANS:B

Q.8 From the following details of a business calculate operating profit ratio :-

2001

2002

Sales

:Rs.60,00080,000

Interest on debentures:1,000

2,000

Net profit

:3,800

6,000

A) 6%, 7%

B) 8%, 40%

C) 8%, 10%

D) 10%, 9%

ANS:C

Q.9 Calculate the operating profit ratio from the following data :-

Rs.

Sale

3,00,000

G.P.

1,20,000

Famn. Expenses

35,000

Selling & distribution expenses

25,000

Income on investments

15,000

Loss by fire

9,000

A) 30%

B) 29%

C) 15%

D) 20%

ANS:D

Q.10 From the following details, calculate he operating ratio :-

Rs.

Cost of good sold

:6,00,000

Operating expenses

:40,000

Sales

:8,20,000

Sales Returns

:20,000

A) 20%

B) 70%

C) 80%

D) 75%

ANS:C

Q.11 The following in the trading & P & L A/C of a firm for the year ending 31.3.2002:-

Dr.

ParticularRs.ParticularRs.

Stock (1.4.89)

Purchases

Wages

Gross profit

Admn: expenses

Selling & Det. expenses

Loss on sale of plant

Net profit

35,000

2,25,000

6,000

1,84,000Sale

Stock (at end)

Gross profit4,00,000

50,000

4,50,0004,50,000

10,000

14,000

10,000

1,50,0001,84,000

1,84,0001,84,000

Calculate operating ratio.

A) 60%

B) 55% C) 70%

D) 57%

ANS: A

Q.12. Following in the B/S of X Ltd. As on 31 December 2002.

Liabilities Rs.Assets Rs.

Share capital

Reserves

10% loan

Current liabilities

Profit for the year

20,00,000

5,00,000

10,00,000

15,00,000

5,00,000

F.A. net

Current assets

Underwriting

Commission 29,00,000

25,00,000

1,00,000

55,00,00055,00,000

Find out the return on investment

A) 13.3%

B) 15.4%

C) 14.2%

D) 14.23%

ANS:B

Q.13 From the following data, calculate the return on capital employed . Net F.A.

Rs.1,00,000 C.A. Rs.50,000 C.L. Rs.25,000, G.P. Rs.32,500, interest on Long Term

debt Rs.7,500 Tax Rs.8,750 office & admn. Expenses Rs.2,500, selling &

distribution expenses Rs.5000. There were no long term investments.

A) 15% B) 30%

C) 10%

D) 20%

ANS:D

Q.14 From the following details, calculate ..:-

Equity

:4,00,000

Preference

:1,00,000

General Reserve

:1,89,000

10% debentures

:4,00,000

Current Liabilities

:1,00,000

Discount on shares

:5,000

Net profit (after debenture

interest but before income tax):80,000

A) 9.23%

B) 16.3%

C) 11.1%

D) 7.53%

ANS: C

Q.15

10% pref. Share capital (fully paid)

:Rs.1,00,000

16,000 equity shares of Rs.10 each

(fully paid)

:Rs.1,60,000

Reserve & surplus

:Rs.6,40,000

Net profit after tax

:Rs.2,37,500

Calculate return on equity (ROE).

A) 28.44%

B) 23.65%

C) 34.23%

D) 32.64%

ANS:A

Q.16 From the following details, calculate ROE :-

Equity capital

:Rs.5,00,000

General

:Rs.1,89,000

10% debenture

:Rs.4,00,000

Current liabilities

:Rs.1,00,000

Preliminary expenses

:Rs.5,000

Net profit (after Income Tax) :Rs.60,000

A) 4.34%

B) 8.8%

C) 10%

D) 7.3%

ANS:B

Q.17 Determine which Co. is more profitable :-

A Ltd.

B Ltd.

Net profit ratio

:5%

8%

Turnover ratio

:6 times

3 times

A) Com. A

B) Com. B

C) Both

D) None

ANS:A

Q.18. The following details have been given to you for Messers Reckless Ltd. For two

years. You are require to find out the fixed assets turnover ratio & comment on it.

1987

1988

F.A. at written down value:Rs.1,50,000

Rs.3,00,000

Sales less returns

:Rs.6,00,000

Rs.8,00,000

A) 2, 6.32

B) 3, 4.35

C) 4, 2.67

D) 3, 2.76

ANS:C

Q.19. Calculate the debtors turnover ratio from following figures :-

Total sales for the year 1988

:Rs.1,00,000

Cash sales for the year 1988

:Rs.20,000

Debtors as on 1.1.1988

:Rs.10,000

Debtors as on 31.12.1988

:Rs.15,000

Bills receivable as on 1.1.1988:Rs.7,500

Bills receivable as on 31.12.1988:Rs.12,500

A) 2.34

B) 3.56

C) 4.43

D) 6.33

ANS:B

Q20. Credit sales for the year

:Rs.12,000

Debtors

:Rs.1,00,000

Bills receivable

:Rs.1,000

Calculate the debtors turnover ratio & debt collection period.

A) 7 times, 3months B) 8 times, 4months C) 6 times, 2 months

D) 9 times, 3 months

ANS: C

Fund Flow Analysis

Q1. Fill in the blanks :

1. Fund flow refers to changes in .. capital.

2. Building sold on credit is .. of funds.

3. Goods purchased on credit .. in flow of fund.

4. Commission outstanding is of funds.

5. Any gain on sale of non current assets should be .. from

the net profit for determining funds from operators.

6. Difference between C.A. & C.L is known as .

7. Depreciation is sometimes treated as funds.

Answer 1:1. Working 2. A source 3.Does not result 4.An application 5.Deducted

6. Working capital 7. A source

Q2. True or False:

2. Purchase of stock in trade is an application of funds

3. A decrease in C.L. increases W.C.

4. Fund flow refers to change in long term funds.

5. The FFS shows changes in the individual items comprising W.C.

6. Fund flow analysis shows the position of business as on the closing

date of business period.

7. W.C. is the different between F.A & C.A.

8. Cash or credit sales at a profit increase the W.C.

9. Purchase of fixed assets is a use of funds.

10. Amortization of preliminary expenses in a use of funds.

11. Payment of dividends is a use of funds

12. For FFS provision for taxation will be treated as an item of interest

Source.

Answer2:(1) T

(2) T

(3) F

(4) F

(5) F

(6) F

(7) F

(8) T

(9) F

(10) T

(11) T

Q3. Multiple Choices:1. Increase in an asset due to purchase is

a) Source of funds

b) User of funds

c) None

2. Net profit earned plus non W.C. expenses is equal to

a) Funk provided by operations.

b) Use of funds

c) Sinking fund

3. Tax paid is _________

a) Application of funds

b) Source of funds

c) No flow of funds

4. Stock at the end results in the

a) Application of fund

b) Source of fund

c) No flow fund

5. An increase in the share premium A/C is

a) An application of fund

b) A source of fund

c) No flow of fund

6. Sale of investments indicate

a) Source of fund

b) Application of fund

c) Change in C.A.

Answer 3:(1) B

(2) A

(3) A

(4) B

(5) B

(6) A

Cash Flow Analysis

1) True or False:

a. Cash flow statement reveals the effects of

transactions involving movement of cash.

b. The term fund means current assets in case of a cash flow

c. A cash flow statement can very well be equated with an Income

statement.

d. A co. should keep large balances of cash in hand so that it can

meet all contingencies.

e. Increase in provision for doubtful of cash in hand so that it can

meet all contingencies.

f. FFS & CFS are one & the same

Answer (1)

(1) T

(2) F

(3) F

(4) F

(5) T

(6) F

2) Multiple Choices:1. Cash from operations is equal to

b) Net profit plus increase in outstanding expenses

c) Net profit plus increase in debtors.

d) Net profit plus increase in stock

2. Increase in the amount of debtors results in

a) Decrease in cash

b) Increase in cash

c) No change in cash

3. Increase in the amount of bills payable results in

a) Increase in cash

b) Decrease in cash

c) No change in cash

Answer (2)

(1) A

(2) A

(3) A

3) State the effect of each of the following the transaction considered individually an

fund (W.C. concept) of funds (cash concept) :-

4. Purchase of good for cash.

5. Purchase of building against a large term loan payable.

6. Bonus paid in the form of fully paid shares.

Answer (3)

When fund denotes W.C., none of the items will affect W.C.

When fund denote cash item:-

a) Will result in decrease of cash

b) & c) will have no effect on cash.

Marginal costing & BEP analysis

Q.1 True or False

State whether the following statements are true or false:-

a) An increase in volume of production will result in a reduction in unit V.C.

(Vanable Cost)

b) Marginal cost includes prime cost plus fixed overhead

c) Contribution the deference between the selling.price & V.C.

d) The deference between the budgeted output & the actual output is known as margin

of safety.

e) Margin of safety is and extremely valuable give to the strength of business.

f) All V.C. are included in marginal cost.

g) Regardless of output, fixed cost remain contoss while margined cost per unit tends

to vary.

h) When fixed cost is deducted from total cost we get marginal cost.

i) By reducing the fixed expenses the E/V ratio of a particular product can be improved.

j) Margin of safety can be improved by lowering the volume of sales

k) At BEP margin of safety is nil.

l) BEP is not affected by changes in fixed costs.

m) M.O.S. is the deference between the actual sales and the sales at BEP.

Ans.1 True or False

a) T

b) F

c) T

d) F

e) T f) T

g) F

h) T

i) F

j) F

k) T

l) F

m) T

Q.2 Fill in the blanks

a) In cost acconting marginal cost does near include.

b) In absorption costing cost in added to investment.

c) Sales . Variable cost = F.C + ..

d) Contribution minus .. cost in profit.

e) At I.E.P .. is equal to F.C.

f) A higher P/W ratio indicates ..profitability.

g) In marginal costing, fixed costs are charged to .

h) The BEP is . When selling price increases.

i) In marginal costing, stock is valued at.

j) When volume of production is nil, the loss will be equal

k) In marginal cost, V.E are charged to .& F.C are charged to.

l) At B.E.P. total cast is equal to..

Ans.2 Fill in the blanks

a) Fixed cost b) Fixed costc) Profit

d)Fixed cost

e)Contributionf) Greater

g)Costing P & V A/C

h)Decreasedi) Variable costj)Variable cost

k)Products, costing P & L A/C

l) Sale value

Q.3 Objective TypeA) Break even sales is calculated as following:1. Marginal cost

x Sale

Standard cost

2. F.C

x Sale

Contribution

3. F.C

x Sale

Total cost

B) A large marginal safety indicates

1. Overcapitalization

2. Soundness of a business

3. over production

(C) Angle of incidence is

1. The angle between the sales line & the Y-axis.

2. The angle between the sales line & the X - axis.

3. The angle between the sales line & the total cost line.

Ans.3 Objective type :-

a) (ii)

b) (ii)

c) (iii)

Numerical a) The selling price per unit is Rs.20, V.C Rs.12 per unit and fixed cost Rs.16,000 the

break even production unit:-

(i) 800

(ii) 2,000

(iii) 3,000

Ans: ii

b) Sales Rs. 20,000,V.C. Rs.12,000 & F.C Rs.4,000, the bread-even sales

(i) 12,000

(ii) 10,000

(iii) 1,500

Ans: ii

c) Sales Rs. 20,000,V.C. Rs.12,000 & F.C Rs.4,000, P/V ratio is.

(i) 80%

(ii) 40%

(iii) 30%

Ans: ii

d) Sales Rs. 20,000,V.C. Rs.12,000 net profit Rs.3,000 fixed cost is.

(i) 6,000

(ii) 5,000

(iii)4,000

Ans: ii

e) Actual sales Rs.20,000, break-even sales Rs.12,000, margin of safety sales

(i) 8,000

(ii) 12,000

(iii) 10,000

Ans: i

f) P/V ratio is 0.6, marginal cost of production Rs.20. the selling price is:-

(i) Rs.40

(ii) Rs.60

(iii) Rs.50

Ans: iii

g) F.C. Rs.5,000 sales Rs,40,000 & P.V ratio 30 the amount of profit is :-

(i) Rs.7,000

(ii) Rs.9,000

(iii) Rs.12,000

Ans: i

(h) The P/V ratio of a product is 0.4 & selling price is Rs.40 per unit. The marginal cost

is the product would be:-

(i) Rs.8

(ii) Rs.24

(iii) Rs.20

Ans: ii

(j) The P/V ratio of a product is 0.4 & selling profit is Rs.4000 per unit. The margin of

safety is:-

(i) Rs.10,000

(ii) Rs.12,000

(iii) Rs.6,000

Ans: i

Q.4 Which reference to the break-even chart given blow, answer the following:-

Y

S

R

ET

M

B

N F

O E1 P X

a) What is measured along OX ?

b) What is measured along OY ?

c) What is point E ?

d) What is BF line ?

e) What is CS line ?

f) What is BT line ?

g) What does PR measure ?

h) What does PM measure ?

i) What does PN measure ?

j) What is the MO.S at P in units ?

k) What is the contribution at P ?

l) What does M N measure ?

Answers:

A) Output b) cost and revenue c) BEP d) fixed cost line e) sales

f) total cost g) sales h) total cost i) fixed cost j) E1P or OPOE1 k) MR+PN l) Variable cost

Q.5 From the following profit-volume graph, name the numbered components A to E .

d

a Profit b

oc

eLoss

Answer:

a) Break Even Point b) Profit C) Sales d) Profit e) Fixed cost

Q. 6 By noting P/V will increase or decrease or will not change, as the case may be,

state how the following independent situations will affect the P/V ratio:-

1. An increase in the physical sales volume,

2. An increase in the fixed cost,

3. A decrease in the V.C per unit,

4. A decrease in the contibution margin,

5. An increase in the selling price per unit,

6. A decrease in the fixed cost,

7. A 10% increase in both S.P. & V.C per unit,

8. A 10% increase in both S.P. per unit & 10% decrease in the

physical sales volume.

9. A 50% increase in the V.C per unit & 50% decrease in fixed cost,

10. An increase in the angle of incidence.

Answers :

1. No change 2. No changeb 3. Increase 4. decrease 5. Increase 6. No change 7. no change 8. Increases 9. Decreases 10. Increase

Q.7 True or Falsea) The techniques of marginal costing can be used in conjunction with standard costing or

budgetary control (T)

b) The fixed costs are included in the valuation of work in progress & finished good stock

in case of marginal costing. (F)

c) Semi-variable cost form a part of product cost in marginal costing.(F)

d) Absorption costing is not as suitable for division-making as marginal costing.(T)

e) Direct costing & marginal costing technique are same in all cases.(F)

f) Break-even carts depicts cost-volume profile relationship.(T)

g) The angle formed at the intersection of the sales line & the total cost line is called as angle of incidence.(T)

h) A high margin of safety show that the actual sales are much more than break even sales. (T)

i) Increase in selling price will have no effect on marginal of safety.(F)

j) Profit volume ratio indicates the relationship between profit & sales.(F)

k) Differential cost analysis can be made in case of both absorption costing as well as margin costing.(T)

Q.8 Multiple choice:-

a) Contribution margin is also known a,

1. Margin (Income)

2. Gross profit

3. Net Income

b) Period cost means:-

1. V.C.

2. F.C.

3. Prime cost.

c) The costing method in which fixed factory overheads are added to inventory is :-

1. Direct costing

2. marginal costing

3. absorption costing

d) When F.C. is Rs.10,000 & P/V ratio is 50%, the BEP will be :-

(i) Rs.20,000

(ii) Rs.40,000

(iii) Rs.50,000

(iv) None

e) When PV ratio is 40% & sales value Rs.10,000 the variable cost will be :-

(i) Rs.4,000

(ii) Rs.6,000

(iii) Rs.10,000 (iv) None

(f) When M.C.S. is 20% & P/V ratio is 60% the profit will be :-

1

(i) 30%(ii) 33 %(iii) 12%

(iv) None

3

(g) When sales are Rs.2 lakhs, fixed cost Rs.30,000 P/V ratio 40% the amount of profit

will be:-

(i) Rs.50,000

(ii) Rs.80,000

(iii) Rs.22,000

Answers:

a) i b) ii c)iii d) i e) ii f) iii g) i

# Lease Financing

(A)

State whether each of the following statements is True or False

1. The term finance lease & capital lease are synonymous.

2. Basic lease period refers to the period during which the lease is irrevocable.

3. In case of net lease agreements the less or pays all the costs.

4. In case of operating lease the less or agrees to transfer to the lesse title to the asset at

the end of the lease period.

5. The less or can product himself against absence by entering into a capital lease

agreement with the lessor.

6. The lessee or gets the right of investment allowance & depreciation charge on the asset

taken on lease.

Answers:

(1) & (2) => True.

(3), (4), (5) & (6) => False

(B) MCQs Q.1 A lease agreement grants less or the right to

a) Own the asset

b) Use the asset

c) Both (a) & (b)

d) None

Ans: b

Q.2 Operating lease is favored by the lessee in respect of assets which

depreciate in value on account of :-

a) Obsolescence

b) Wear & tear

c) Exhaustion

d) None

Ans: a

Q.3 A sale & lease back agreements is suitable for a lessee having

a) Liquidity crisis

b) Surplus funds

c) High profits

d) None

Ans: a

Q.4 The less or should record as asset given under a finance lease as :-

a) Property, plant & equipment

b) Receivables

c) Current liability

d) None

Ans: b

Q.5 A finance lease transaction appears in a lesses balance sheet on :-

a) Assets side

b) Liabilities side

c) Both sides

d) None

Ans. c

(INVESTMENT PORTFOLIO MGT.)

(A) State whether each of the following transaction / statements True or False :-

1. Buying & selling of securities (shares) merely involves speculation. Ans: (F)

2. The security prices are affected by a no. of economic, political, social & psychological

factors.Ans: (T)

3. A finance manager gives more importance to the present earnings of a Co. as

compared to the growth potential while identifying proper investment channels. Ans: (T)

4. According to Dow Jones theory, identification of turn is made on the basis of daily

movement of prices. Ans: (F)

5. Formula places provide an automatic mechanism for making proper. Alteration in

investment port folio. Ans: (T)

6. Future growth prospects of a Co. can be judge on the basis of its post performance &

future plans within the legal framework. Ans: (T)

(MCQs)

Q.1 A finance manager is basically concerned with the concept of :-

a) Economic investment

b) Business investment

c) Financial investment

d) All of the above

e) None

Ans.(c)

Q.2 Gambling is :-

a) Intelligent speculation

b) Unintelligent speculation

c) Successful speculation

d) None

Ans.(b)

Q.3 Debentures form :-

a) Aggressive Component

b) Defensive Component of investment portfolio

c) Progressive

d) None

Ans: (b)

Q.4 Capital assets pricing model (CAPM) explain the relationships between :-

a) Expected return & avoidable risk

b) Expected return & avoidable risk & valuation of securities

c) Expected return & avoidable risk & valuation of securities

d) None

Ans.(b)

Q.5 CAPM is based on the which assumptions :-

a) Capital markets are highly efficient.

b) Investors are well informed.

c) Transaction costs are nil.

d) Investors are risk

e) All of the above

Ans.(e)

(International F.M)

True or False

1. A Co. can protect itself against exchange risk fluctuations means of forward markets.

Ans.True

2. A swap deal involves purchase of currency on spot.

Ans.False

3. A foreign currency is said to beat premium if it is costlier under the forward rate as

compared to the spot rate.

Ans.True

4. Arbitrage involves making guaranteed profit through simultaneously purchasing &

selling of currency in one or more foreign exchange markets.

Ans.False

MCQs :

Q.1 International financial management involves varied problems because :-

a) It involves large no. of transactions.

b) The business enterprise has to operate in diltt. Environments.

c) There is risk involved in dealing with unknown parties.

d) None

Ans.(b)

Q.2 A swap deal is basically governed by :-

a) Forward margin

b) Buying & selling rate

c) The currency involved

e) None

Ans.(a)

Q.3 Currency swap is a method of :-

a) Speculating in foreign exchange

b) Hedging against foreign

c) Making money by banks

d) None

Ans.(b)

Q.4 Space arbitrage results because of :-

a) Physical distances among the markets.

b) Dealing in one currency only.

c) Preference of one currency by banks.

d) None

Ans.(a)

Q.5 Euro currency is term used for :-

a) Denoting Euro dollar

b) US dollar

c) Petro dollar

d) None

Ans.(d)

Q.6 Which of the following mode of payment is adopted in case of expensive capital

Equipments or M/C.

a) Bills of exchange

b) Hundis

c) Letter of credit

d) Deferred payments.

Ans.(d)

Q.7 In case of consignment sales :-

a) Importer has selling agents abroad.

b) Importer has selling agents abroad.

c) No selling agents abroad.

d) No such concept.

Ans.(b)

Finance ( MB2001)

Q1 ______ are mainly used for hedging against price risk.

a)Financial derivatives

b)currency derivatives

c)Commodity derivatives

d)None of these

Ans A

Q2 Derivative instrument derives the value from some underlying______

a)Asset

b)Variable

c)both A & B

d) None of these

Ans C

Q3 Following are the features of

1 They are bilateral contracts.

2 Each party is exposed to counter party risk

3 It is setteled on the due date of delivery.

4 Contract cannot be reversed.

a)Forward Contract

b}Future Contract

c)Both a & b

d) None of these

Ans A

Q5 ________ is concerned with avoiding the adverse price risk.

a)Speculation

b)Hedging

c)Rollover

d) None of these

Ans B

Q6 Buying the asset in the cash market involves

1 making the full payment

2 risk of deterioration in the quality

3 Less storage space

4 credit payment

a) 123

b) 134

c) 12

d) 124

Ans C

Q7 ______ is a ________contract traded in an exchange.

a) Future, Forward

b) Forward, Future

c) Cash, Spot

d) Spot, Cash

Ans A

Q8 Match the following

Part A

1Forward Contract

2 Future Contract

Part B

i standardized

ii No counter party risk

iii Secondary market

iv Difficult to close before maturity

v There is marking to market

a)1-iv 2-i, ii,iii,v

b)1-i,ii 2-iii,iv,v

c)1-i,ii,iii2-iv,v

d)1-i,iii 2-ii,iv,v

Ans A

Q9 There is a interrelation ship between ______ &_________.

a)Cash price, Future price

b)Forward price, Cash price

c)Forward price, Future price

d)Both A & B

Ans A

Q10 Carrying charges are of ___ types.

a)3

b)4

c)5

d)6

Ans C

Q 11 Complete the formula

Future price =Cash price Financing cost+_________

a)Storage Cost

b}Insurance Cost

c}Prime cost

d)Borrowing cost

Ans A

Q12 If the future price is _______full carry cost________ would start

a)more than,speculators

b)Less than,Arbitrage

c) more than,Arbitrage

d) Less than ,speculators

Ans C

Q 13 Match the following

Part A

1Contango

2 Backwardation

Part B

i Basis is positive

ii Basis is negative

iii Basis is Zero

a)1i, 2ii

b}1ii,2i

c)1i,iii 2 ii

d)1i,ii 2 iii

Ans B

Q14 The essence of backwardation is _______ of the commodity

a)Shortage

b)more

c)Both a&b

d) None of these

Ans A

Q15 Cost of carry is ______ when time to maturity is _______.

a)More, Less

b)Less, More

c)More, More

d)Less, Less

Ans C

Q 16 Arrange Mechanics of buying & selling Futures

1 Exchange

2 Engaging a futures commission merchant

3 Floor Brokers

4 Clearing House

5 Execution

Of orders

6 Liquidating

a)124365

b)146523

c)124563

d)214356

Ans D

Q17 The basic aim of initial margin is to protectagainst largest potential loss in _____ day.

a)1

b)2

c)3

d)4

Ans a

Q18 If one sells the futures contracts to hedge is known as ________ hedge.

a)Short

b)Long

c) Equal

d)Either short or long

Ans B

Q19 ________gets the leverage benefit

a)Speculators

b)Arbitrators

c)Hedgers

d)Agents

Ans A

Q20 In the cash market _____ commodities are traded

a)Actual

b)Non real

c)Both A & B

d) None of these

Ans A

Q21______market index is an indicator of the broad market.

a)Stock

b)Commodity

c)Exchange

d)Bond

Ans A

Q22 A poorly constructed index will not reflect the correct______ of the stock market.

a)size

b)trend

c)power

d)mood

Ans D

Q23 Factors to be considered for constructing the index are

1 Sample size

2 Inflation

3 Liquidity

4 Base Year Selection

5 Sensex

6 Industrial Environment

7 Weightage

8 Representatives

a)12458

b)2456

c)15678

d)13478

Ans D

Q24 Match the Following

Part A

1 BSE Sensex

2 S&P CNX NIFTY

3 BSE 100

Part B

i 1995

ii 1983-1984

iii 1978-1979

a)1 i,2 ii,3iii

b)1ii,2iii,3i

c)1iii,2i,3ii

d)1iii,2ii,3i

Ans C

Q25 _____ Index

1Sample size 30 Scrips

2 Price weighted Index

a)S&P Midcap

b)The Nikki 225

c) Crisil 500

d)Dow Jones Industrial Average

Ans D

Q26 Stock Index Futures are futures contract where the underlying asset is ______

a) Gold

b)Stock

c)Index

d)Bonds

Ans C

Q27 Following are the uses of _____

1. Used for speculation purpose

2. can buy about 20% margin money

3. used for hedging the adverse price risk

4. used for arbritage between cash and future

market

a) stock future

b) stock option

c) both a & b

d) none of the above

ans: a

Q28. Stocks on which futures are available in both BSE & NSE

a) ACC

b) Dr. Reddy

c) MTNL

d) All of these

ans: d

Q29. The first trading in options begin in ______ & _____

a) Europe , U.S

b) England , U.S

c) Europe, England

d) None of the above

ans: A

Q30. CBOE refers to-

a) China Board of Options Exchange

b) Chicago Board of Options Exchange

c) Central Board of Options Exchange

d) Central Board of Oprations Exchange

ans: b

Q31. Following points are related with

1. deferred delivery contracts

2. give the buyer right to buy or sell

3. Buyer exercise his right on or before a

specified date

4. buyer has no obligation to buy or sell

a) options

b) futures

c) call option only

d) put option only

Ans: a

Q32. Match the following:

SET A

1. Call buyer

2. call seller

SET B

i. unlimited profit

ii. unlimited loss

iii. limited loss

iv. limited profit

a) 1-i, iii ;2-ii, iv

b) 1-ii, iii ;2-i, iv

c) 1-iii ;2-i, ii, iv

d) 1-ii, iv ;2-i, iii

ans: a


SET A

1. bullish

2. bearish

SET-B

i. Call option buyer

ii. Call option seller

iii. Put option buyer

iv. Put option seller

A) 1-ii,iv; 2-i, iii

B) 1-i,iv; 2-ii, iii

C) 1-i,ii; 2-iv, iii

D) 1-i,iii; 2-iv, iii

Ans: b

Q34. _____ is the price paid by the buyer to seller to acquire right to buy or sell.

a) premium

b) discount

c) advance

d) both a & c

Ans: a

Q35. Match the following in case of Call Option:

SET A

1. stock price> exercise price

2. stock price= exercise price

3. stock price< exercise price

SET B

i. ITM

ii OTM

iii. ATM

a) 1-ii, 2-iii, 3-i

b) 1-iii, 2-i, 3-ii

c) 1-ii, 2-i, 3-iii

d) 1-i, 2-iii, 3-ii

Ans: d

Q36. In case of OTM (Call) intrinsic value is

a) zero

b) positive

c) negative

d) infinity

Ans: a

Q37. Intrinsic value of a Put Option

a) Min(0,E-S)

b) Max (0,E-S)

c) Equal (0,E-S)

d) Max (0,S-E)

Ans: b

Q38 When the investor owns the asset and than writes a Call option it is called _____

a) Put option

b) Covered call

c) Naked call

d) Both b& c

Ans: b

Q39. _____options can be exercised at any time before expiry

a) American

b) European

c) Call

d) Put

Ans: a

Q40. Quantifiable factors for determining option price are

1. Risk free interest rate

2. Volatility of the stock price

3. No. of transaction and contracts trading volume on any given day

4. Expiry date

5. Stock price

a) 1,2,3,5

b) 2,5

c) 1,2,4,5

d) 3,4,5

Ans: c

Q41. Finance is the life blood of every ------

a) Business

b) Company

c) Organization


Ans. a

Q42. Finance is very ------- needed for all types of organization

a) Specially

b) Essentially

c) Rightly


Ans. b

Q43. ------- is a relationship between two or more variable expressed in

a) Ratio

b) Profit

c) Loss


Ans. a

Q44. --------- is an important technique of financial analysis

a) P/L A/C

b) Balance Sheet

c) Ratio Analysis


Ans. c

Q45. -------- is the life blood of every business

a) Cash

b) Finance

c) Money

d) None

Ans. b

Q46. Value engineering is considered as ------- and -------- as cost reduction

a) Cost avoidance, value analysis

b) Standardization and ratio analization

c) Value, design


Ans. a

Q47. Match the Following

Set - 1

1. Record all facts

2. Identify the essential activity

3. Combine, eliminators develop alternatives

4. Select one alternative for each proposed

Method install proposed methods

Set - 2

a) Identify use and esteem values

b) Combine, eliminate or develop alternatives

c) Select one alternative for implementation put

value analyzed alternative into production

d) Decide the article for analysis

A) 1-d,2-a,3-b,4-c

B) 1-b,2-a,3-d,4-c

C) 1-c,2-a,3-b,4-d

D) 1-a,2-b,3-d,4-c

Ans. A

Q48. Value analysis is a systematic application of ------ and --------- common sense.

a) Product, design

b) Commercial, technical

c) Standardization and rationalization


Ans. b

Q49. There are thee approaches to the practice of the value analysis

1) Committee arrangement

2) Operating personnel

3) Value analysis

4) Systematic

5) Fulfilling

a) 1,2,3

b) 2,3,5

c) 3,4,5

d)1,3,5

Ans. a

Q50. The -------- are basically aimed at fulfilling the aspirations of people

a) Value analysis

b) Economic activities

c) Recourses


Ans. b

Q51. The income tax leviled under income tax act, 1961 as known as ------

a) Tax planning

b) Tax evasion

c) Corporate Tax


Ans. c

Q52. The term -------- refer to dodging the payment of the taxes without breaking the law

a) Tax evasion

b) Tax avoidance

c) Corporate tax

d) All of the above

Ans. b

Q53. --------- planning is a legitimate right of the tax payer.

a) Tax evasion

b) Tax avoidance

c) Corporate tax

d) Scientific Tax

Ans. d

Q54. -------- implies an investment in the form of equity for high risk projects with the expectation of higher returns.

a) Venture capital

b) Finance

c) Tax evasion


Ans. a

Q55. To routes of disinvestments practiced in a real life situation they are

1) Going public

2) Sale of shares to entrepreneurs

3) Sale of the company to another company

4) Finding a new investor

5) Liquidation

6) Expansion finance

7) Replacement capital

A) 1,2,3,4,5,6

B) 1,2,3,4,5

C) 1,2,3,4,5,7

D) 1,2,3,5,6

Ans. b

Q56. ------- prefers to finance the project at the later stage than at the start up stage.

a) Investor

b) Venture capitalist

c) Government

d) None

Ans. b

Q57. OTCEI known as

a) Over the counter exchange of India

b) Order the counter exchange of India

c) Overall the counter exchange of India


Ans. a

Q58. The financial system of a country works through a set of -------- and -------

a) Financial markets, Institutions

b) Money markets, Short term funds

c) Seller and buyer


Ans. a

Q59. Financial markets, in essence are the ------

a) Money markets

b) Cash Markets

c) Credit markets


Ans. c

Q60. Credit is ------- and ------- on short term or long term basis

a) Required, supplied

b) Debtors, creditors

c) Cash, Finance


Ans. a

Q61. Money market for -------- up to one year

a) Long term funds

b) Short term funds

c) Temporary funds


Ans. b

Q62. ------- is a market for dealing in monetary assets

a) Capital market

b) Finance market

c) Money market


Ans. c

Q63. --------- deals in short term funds whereas ------- deals in long term funds

a) Money market, capital market

b) Finance market, cash market

c) Capital market, Money market


Ans. a

Q64. In a money market ------- and capital market ------ are the financial institutions.

a) Investments banks, commercial banks

b) Commercial banks, Investments banks

c) Private and co operative banks


Ans. b

Q65. The most important supplier of short term funds is

a) Central bank

b) Commercial bank

c) Insurance companies

d) Acceptance houses

Ans. b

Q66. The market for ------ very short period loan is called

a) Money market

b) Collateral loan market

c) Call money market

d) Bill market

Ans. c

Q67. Bankers acceptance is very popular in

a) New York Money market

b) London money market

c) Mumbai money market


Ans. a

Q68. Hundies is the unique feature of

a) Organized sector of the Indian money market

b) Unorganized sector of the Indian money

market

c) Both these sectors


Ans. d

Q69. Hundies of some of the well-known ______ are discounted in the money market

a) indigenous bankers

b) unorganized sector

c) organized sector


Ans: a


SET A

i. Aim

ii. Risk

iii. Time

iv. Transactions

SET-B

a) to make profit

b) forward transaction

c) high degree of risk

d) speculators holds for a shorter time

A) i-a, ii-c, iii-d, iv-b

B) i-b, ii-a, iii-d, iv-c

C) i-d, ii-b, iii-c, iv-a

D) i-c, ii-a, iii-d, iv-b

Ans: a

Q71. ______ necessary for investors to take all decisions

a) speculation

b) investment portfolio

c) gambling

d) none of these

Ans: b

Q72. _____ represents creation of risk not previously existing

a) speculation

b) gambling

c) investment


Ans: b

Q73. The institutional investors have both _______ & ______ to dig deeper than the individual investors

a) time & resources

b) value & money

c) finance & money


Ans: a

Q74. The institutional investors own an major portion of the______

a) company

b) corporate securities

c) investment decision


Ans: b

Q75. ______ the securities of crucial significance for the finance manager

a) timing of purchase

b) investment portfolio

c) government securities


Ans: a


SET A

1. primary movement

2. secondary movement

3. daily movement

4. commercial paper

SET B

a) 3 to 6 months

b) Daily

c) 3 weeks to 3 months

d) 1 year to 3 years

A) i-d, ii-c, iii-b, iv-a

B) i-a, ii-c, iii-b, iv-d

C) i-b, ii-a, iii-c, iv-d

D) i-c, ii-d, iii-b, iv-a

Ans: a

Q77. Development Banks define :

i. IDBI

ii. ICICI

iii. LIC

iv. IFCI

v. GIC

vi. UTI

vii. IRBI

viii. NABARD

ix. NHB

x. DFHI

xi. SIDBI

xii. EXIMBANK

a) i, ii, iii, iv ,x

b) i, iii, iv, vii,viii, ix, x, xi, xii

c) i, ii, iv, viii, ix, x, xi, xii


Ans: b


SET A

i. Rupee cost averaging plan

ii. Modified rupee averaging plan

iii. Ratio formula plan

iv. Formula plans

SET B

a) buy or sell the securities

b) timing & amount of transaction

c) equal amount of money

d) fixed rupee amount

A) i-b, ii-c, iii-d, iv-a

B) i-a, ii-c, iii-b, iv-d

C) i-d, ii-c, iii-b, iv-a

D) i-c, ii-d, iii-b, iv-a

Ans: c

Q79. Markowitz Efficient Model was developed by _____ in _____

a) Herry Markotwiz, 1952

b) J.H Westing , 1960

c) Joseph Zeng, 1955


Ans: a

Q80. The investors prefer a _____ to _____ for a given degree of risk level

a) large & extra

b) higher returns, lower returns

c) profit, loss


Ans: b

Q81. CAPM refers to-

a) the capital pricing model

b) the cost assets price map

c) the current assets pricing model

d) none of these

Ans: a

Q82. CADM was developed by ______ in _____

a) J,H. Westing, 1960

b) Sharpe & Linter, 1960

c) Joseph Zeng, 1955


Ans: b

Q83. The CADM explains the relationship between

i. expected results

ii. unavoidable risk

iii. valuation of securities

iv. diversification

a) i, ii, iii only

b) ii, iii only

c) i, ii, iv


Ans: a

Q84. -------- means the risk which simply cannot be avoided by diversification

a) Risk averse

b) Risk free

c) Unavoidable risk

d) None

Ans. c

Q85. Match the following

Set - 1

1. Re 2. Rf 3. Rm 4. Wc

Set - 2

a. Working capital

b. Expected rate of return for the entire market

as a whole

c. Risk free return

d. Expected return

A) 1-d,2-c,3-b,4-a

B) 1-a,2-c,3-b,4-d

C) 1-b,2-c,3-d,4-a

D) 1-c,2-d,3-b,4-a

Ans. A


Set - 1

1. RM RF

2. CA CL

3. C.R.

4. GP

Set - 2

a G.P. / Sales

b. Working capital

c. Current assets / CL

d. Risk premium

A) 1-d,2-b,3-c,4-a

B) 1-d,2-c,3-b,4-a

C) 1-b,2-c,3-d,4-a

D) 1-a,2-c,3-b,4-d

Ans. a

Q87. Capital markets are highly ------ and ------ are well informant

a) Efficient, investors

b) risks, speculators

c) Profit, Gamblers


Ans. a

Q88. Investment can divided into two groups

a) Individual investor, Institutional investor

b) Financial investor, Money Investor

c) Partial investment, fulfillment investment


Ans. a

Q89. A bill market first developed in -------

a) Bombay

b) Delhi

c) London

d) None

Ans. c

Q90. Is committed to a definite date of repayment.

a) Lenders

b) Borrower

c) accepters

d) None

Ans. b

Q91. Investors have homogenous expectations regarding ------ and ----- on securities

a) Risk, Return

b) Cost, value

c) Profit, Loss

d) None

Ans. a

Q92. To routes of disinvestments practiced in a real life situation they are

1) Going Public

2) Sale of shares to entrepreneurs

3) Sale of the company to another company

4) Finding a new investor

5) Liquidation



A) 1,2,3,4,5,6

B) 1,2,3,4,5

C) 2,3,4,5,6,7

D) None of the above

Ans. b

Q93. Prefers to finance the project at the later stage than at the start up stage

a) Investor

b) Venture capitalist

c) Government

d) None

Ans. b

Q94. Lease arrangement involves parties the

1) The Lessee

2) The Lesser

3) The Lender

a) Only 1

b) Only 1,2

c) None

d) all

Ans. d

Q95. A leasing arrangement provides a firm with the ----- and ------ is the asset without incurring huge capital expenditure

1) Use

2) Control

3) Lessee

4) Lesser

a) 1,2 only

b) 2,3 only

c) 3,4 only


Ans. a

Q96. Leasing companies are more accommodating than ----- and -------

a) Borrow

b) Lender

c) Banks

d) Financing

a) 1,2 only

b) 2,3 only

c) 3,4 only


Ans. c

Q97. The rental payments are considered to be of a ---------

a) Leveraged leasing

b) Operating lease

c) Revenue nature


Ans. c

Q98. Leasing entails a long term relationship between the ------ and ------

1) Lesser

2) Lessee

3) Lender

4) Creditors

a) 1,2 only

b) 2,3 only

c) 3,4 only


Ans. a

Q99. The international accounting standard board issued IAS : 17 in

a) Sep 1983

b) Sep 1954

c) Sep 1982

d) Sep 1980

Ans. c

Q100. FLC define

a) First leasing company of India

b) First leasing company

c) Financial leasing company


Ans. a

Q101. FLC stated -----

a) 1970

b) 1973

c) 1975

d) 1972

Ans. b

Q102.------- are set up under Indian trusts act.

a) Shares

b) Mutual funds

c) Debentures


Ans. b

Q103. MMFS Define

a) Money market financial services

b) Money market fund scheme

c) Money market mutual funds


Ans. c


Set - 1

1) AMCS

2) SEBI

3) NAV

4) UTI

Set - 2

a) Securities exchanges board of India

b) Asset management companies

c) Unit trust of India

d) Net asset value

a) 1-c,2-a,3-d,4-b

b) 1-b,2-c,3-d,4-a

c) 1-a,2-b,3-d,4-c

d) 1-b,2-a,3-d,4-c

Ans. d

Q105. ------- analysis means sizing up the competition

a) Supply

b) The property

c) Demand


Ans. a

Q106. The most popular income approach is called ------

a) Cost approach

b) Market value

c) Direct capitalization

d) None

Ans. c

Q107. A plan of action which is vital pervasive, or continuing importance to the organization as a whole

a) D. Chandler

b) Arthur Sharplin

c) Herry markowitz

d) None

Ans. b

Q108. A ------- is a long term arrangement

a) Operating lease

b) Capital lease

c) Leveraged lease


Ans. b

Q109. The -------- and ------- arrangement is beneficial both for the lesser and the lessee

a) Operating lease

b) Sale

c) Leasebacks

d) Leveraged Leasing

A) a only

B) b,c

C) a,d

D) None

Ans. B

Q110. The sale and leaseback arrangements are --------

a) Long terms

b) Short term

c) Daily


Ans. b

Q111. Investment in inventories is ------ and ------- of loss.

a) Revenue, value

b) Decisions, uncertainty

c) Costly, Risk


Ans. c

Q112. Capital budgeting probably spells the difference between ------ and -------- for many business firms

a) Cost, value

b) Finance capital

c) Return, risk

d) Success, failure

Ans. d

Q113. The company should consider the ------- of money.

a) Time value

b) Risk

c) Return

d) None

Ans. a

Q114. The company should consider the rate of ------- and ------ associated with the project

a) Return, risk

b) Finance, capital

c) Success, failure

d) None

Ans. a

Q115. ------- are formulated and articulated by a central leadership

a) Entrepreneurial strategy

b) Precise intentions

c) Income approach


Ans. b

Q116. Management of cash brings into sharp focus on the trade-off between ------- and ------ faced by the financial managers.

a) Risk, return

b) Profit, loss

c) Cost, value


Ans. a

Q117. The management of accounts receivables involves many ----- and -----

a) Value, cost

b) Complex, interrelated decisions

c) Cash flows, measured


Ans. b

Q118. The desirable debt-equity ratio for private sector firms is ------

a) 2:3

b) 1:1

c) 1:2

d) 2:1

Ans. d

Q119. Match the followings

Set 1

1. Source of funds

2. Usage of funds

3. Management of funds

4. Dividend policy

Set 2

a. Proportion of profit

b) Cash flows in the fore sable future amount

c) Internal rate of return on the basis of past

performance

d) Long term debt

A) 1-d,2-c,3-b,4-a

B) 1-a,2-c,3-b,4-d

C) 1-d,2-b,3-c,4-a

D) 1-b,2-c,3-d,4-a

Ans. a


Set 1

1. Management of cash

2. Management of A/c receivables

3. Management of inventory

4. Capital budgeting

Set 2

a) Success and failure

b) Risk and return

c) Complex and interrelated decisions

d) Costing and risk of loss

A) 1-a,2-c,3-d,4-b

B) 1-b,2-c,3-a,4-d

C) 1-b,2-c,3-d,4-a

D) 1-d,2-c,3-b,4-a

Ans. c

Q121. Which is the correct feature of the Indian money market?

a) It is organized

b) It is well established

c) It is developed

d) It is dichotomized into unorganized and

organized sectors.

Ans. d

Q122. Expand GIC

a) General investment company

b) General Insurance company

c) General investment corporation

d) General insurance corporation

Ans. b

Q123. One of the reasons for the absence of well developed bill market is

a) Low stamp duties

b) High stamp duties

c) Too many Institutions


Ans. b

Q124. The money market that has become synonymous with the Indian money market

a) Mumbai money market

b) Calcutta money market

c) Chennai money market


Ans. a

Q125. Money market deals in

a) Money

b) Short term funds

c) Credit

d) bonds

Ans. b

Q126. The example of a fully developed money market is

a) Mumbai money market

b) London money market

c) Calcutta money market


Q127. The leader of the money market is the

a) Commercial bank

b) Central bank

c) Co operative banks

d) Indigenous Bankers

Ans. b


Set 1

1. Call money market

2. Collateral loan market

3. Acceptance market

4. Bill market

Set 2

a) Discount market

b) Bill of exchange

c) Tangible securities

d) call loans

A) 1-d,2-c,3-b,4-d

B) 1-a,2-c,3-d,4-b

C) 1-b,2-c,3-d,4-a

D) 1-a,2-d,3-c,4-b

Ans. a


Set 1

1. Foreign exchange fluctuations

2. Financing facilities

3. Spot exchange transactions

4. Forward exchange transactions

Set 2

a. An internal source or from an external source

b. Rise or fall of value of one currency

c. Delivery at a future data

d. Immediate delivery

A) 1-d,2-c,3-b,4-d

B) 1-b,2-a,3-d,4-c

C) 1-d,2-b,3-c,4-d

D) 1-a,2-c,3-b,4-d

Ans. b

Q130. ------- an investor benefits by executing as pot and a forward contract to buy and sell a currency

a) Time arbitrage

b) Space Arbitrage

c) Heading

d) None

Ans. a

Q131. Discounting of trade bills is used as a financing method

a) Long term

b) Short term

c) Middle term

d) None

Ans. b

Q132. When the currency is deposited out side the country of origin, it is termed as ------

a) Eurocurrency

b) Commercial Banks

c) Trade bills

d) Euro bond markets

Ans. a

Q133. Credit insurance has reduced the ------ extension

a) Loss of credit

b) Risk of credit

c) Profit of credit


Ans. b

Q134. Telegraphic transfer is also known as ---

a) Bank transfers

b) Cable transfer

c) Mail transfer


Ans. b

Q135. -------- is the most common method of remittance used in the export trade

a) Letters of credit

b) Bill of exchange

c) Mail transfer


Ans. a


Set 1

1. The cost approach

2. The comparative sales approach

3. The Income approach

4. Matrix approach

Set 2

a. Present value of future income

b. Check against a price estimate

c. Input variable the sales prices

d. Making investment decisions

A) 1-a,2-b,3-c,4-d

B) 1-b,2-a,3-c,4-d

C) 1-a,2-c,3-b,4-d

D) 1-b,2-c,3-a,4-d

Ans. d

Q137. In case of many organizations international transaction account for ------ there profit like ------

a) 40%, IBM

b) 50%, IBM

c) 50%, Ptizer

d) Both B) and c)

And. D

Q138. A major reason of ------ is the expectation of ------- for a given ------

a) Investing abroad, higher return, risk level

b) Investing India, higher return, risk level

c) Investing abroad, lower return, risk level


Ans. a

Q140. The type of ----- and ------ vary from country to country

a) Tax rate, subsidiaries

b) Tax rate, Tax

c) all

d) None

Ans. b

Q141. The government policy provides the biggest threat to the existence of a -------

a) National organization

b) Multinational organizations

c) State organizations

d) All of the above

Ans. b

Q142. Foreign exchange fluctuations and financing facilities are the ------

a) Basic problems in financial management

b) Basic problems in staff management

c) Basic problems in marketing


Ans. a

Q143. Spot exchange transactions means

a) Currencies are traded after stock reached

b) Currencies are traded for immediately

delivery

c) all of the above


Ans. b


Set 1

1. Finance lease

2. Operating lease

3. Minimum lease payments

4. Face value

Set 2

a) Exchanged between a knowledgeable and willing buyer

b) The payment over the lease

c) Property, plant etc.

d) Financial income

A) 1-d,2-c,3-b,4-a

B) 1-a,2-b,3-c,4-d

C) 1-d,2-a3-c,4-d

D) 1-b,2-a,3-c,4-d

Ans. a

Q145. --------- should have a duration fixed in no. of years.

a) Open end scheme

b) Closed end Scheme

c) Net Asset value


Ans. b

Q146. Match of the following

Set 1

1. Magnum income funds

2. Magnum gift fund

3. Magnum equity fund

4. Magnum tax gain

Set 2

a. Investment in shares of cement pharmacies well as psu stocks

b. Investments in PSUs are to cement, banks etc.

c. Investment in G-sec

d. Investment in AAA rated investment

A) 1-b,2-c,3-d,4-aB) 1-d,2-b,3-c,4-a

C) 1-a,2-c,3-b,4-b

D) 1-d,2-c,3-b,4-a

Ans. d

Q147. UTI set up as statutory corporation under UTI act.

a) 1963

b) 1964

c) 1965

d) 1970

Ans. a

Q148. -------- first 45 days of subscription period should be considered for determining the target figure or minimum size

a) Open end schemes

b) Closed end schemes

c) Net asset value


Ans. a

Q149. UTI started functioning with effect from ------

a) 1st July 1965

b) 1st July 1964

c) 30th July 1964

d) 25th July 1965

Ans. b

Q150. The sponsor banks should contribute the minimum amount or high amount specified by the --------

a) SEBI

b) RBI

c) UTI

d) None

Ans. b

Q151. According to -------- the fund flow statement describes the sources from which additional funds were derived and the uses to which these funds were put.

a) Mr. Charles

b) Robert Anthony

c) Dow Jones


Ans. b

Q152. Following are the objectives of -------

1) To reduce burden of planning high percentage of tax.

2) To take advantage of exemptions

3) To avoid worries & tensions

a) Tax planning

b) Tax avoidance

c) Tax evasion


Ans.(a)

Q 53.Arrange venture capital investment process in sequence:

1. Preliminary Evolution

2. Establish contact between Entrepreneur & the venture capital

3. Sensitivity analysis

4. Detailed Approval

5. Invest mention the project

6. Monitoring the project & Post investment support

a) 1,3,4,5,2,6

b) 1,2,4,3,2,5

c) 1,3,4,2,5,6

d) 2,1,4,3,5,6

Ans.(d)

154. Following are the stage financing methods:-



3) MBO

4) Rescue capital

a) Later stage

b) Early stage

c) Start up

d) All of the above

Ans. a

Q 155 In real estate, estimating the current market value a piece of property is done through a process known as a real estate_______

a)Valuation

b)Calculation

c) Appraisal

d)Estimation

Ans A

Q156 The cash flows a property earn can be influenced significantly through________ & __________

a)promotion, negotiation

b)location, negotiation

c)Promotion, location

d)negotiation,Govt policy

Ans A

Q157 The CAPM was developed by _________&_________in ________

a)Sharp,Linte,1960

b)Sharpen,Linte,1961

c)Sharp,Linte,1969

d)Sharpe,Linter,1960

Ans D

Q158 Equation of CAPM is

a)Re =Rm + *(Rm-Rf)

b)Re =Rf + *(Rf-Rm)

c)Rm =Rf + *(Rm-Rf)

d)Re =Rf + *(Rm-Rf)

Ans D

Q159 ____are without any definite trend .

a)Daily movements

b)Secondary movements

c)Primary movements

d)None of these

Ans A

Q160 Secondary movements represent _________ term movements in the stock exchange prices lasting from _________weeks to ______months.

a)long,4,6

b)short,3,3

c)short,4,4

d)long,8,9

Ans A

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