Finance MCQs Quiz Test Questions with Answers

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Finance Mcqs:
___________ 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
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
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
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
Profit maximization is the maximizing a firm’s Earning:
A. Before Tax
B. After Tax
C. Both A and B
D. None of Them
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
Stakeholders include:
A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them
All the constituencies with a stake in the fortunes of the company are termed as:
A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates
The system by which companies are managed and controlled is known as:
A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System
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
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
A major facet of financial management involves providing the financing necessary to support:
A. Liabilities
B. Debts
C. Loans
D. Assets
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
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
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
Earning per share is computed as:
A.   ____________Earning After Tax_____________
          No of common shares outstanding
B.   ____No of common shares outstanding___
Earning after Tax
C.  ____Earning before Tax____
Common shares
D.   None of Them
Period costs include which of the following?
A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead
Product costs include which of the following?
A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses
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
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
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
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
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
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
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
In which type of market, new securities are traded?
A. Primary market
B. Secondary market
C. Tertiary market
D. None 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
Quick Ratio is also known as_______________?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio
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
Which of the following is measured by profit margin?
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
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
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
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
The difference between current assets and current liabilities is known as____________?
A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio
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
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 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
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)
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
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)
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
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
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
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.
When real rate is high, all the interest rates tend to be ___________?
A) Higher
B) Lower
C) Constant
D) None of the given options
Profitability index (PI) rule is to take an investment, if the index exceeds___________?
A. -1
B. 0
C. 1
D. 2
Average Accounting Return is a measure of accounting profit relative to:
A. Book value
B. Intrinsic value
C. Cost
D. Market value
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.
_______________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
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
________ 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
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
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
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
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
The conflict of interest between stockholders and management is known as:
A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost
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 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
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
Quick Ratio is also known as_________?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options
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
Business Finance addresses which of the following?
A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options
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
Which of the following is measured by retention ratio?
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
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
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
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
If a firm uses cash to purchase inventory, its quick ratio will?
A. Increase
B. Decrease
C. Remain unaffected
D. Become zero
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
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
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
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
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
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
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%
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
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
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
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.
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
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
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
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
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
The Capital Asset Pricing Model calculate expected:
A. Risk
B. Risk and Return
C. Return
D. None of the above
A technique uses in comparative analysis of financial statement is____________?
A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis
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%
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%
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
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
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
Companies that help to set benchmarks are classified as__________?
A. competitive companies
B. Benchmark companies
C. Analytical companies
D. Return companies
Total assets divided common equity is a formula uses for calculating___________?
A. Equity multiplier
B. Graphical multiplier
C. Turnover multiplier
D. Stock multiplier
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
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
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
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
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
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
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
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 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
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
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
High price to earning ratio shows company’s_____________?
A. Low dividends paid
B. High risk prospect
C. High growth prospect
D. High marginal rate
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
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 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
Profitability index in capital budgeting is used for_________?
A. Negative projects
B. Relative projects
C. Evaluate projects
D. Earned projects
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
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
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
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
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
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 estimating value of cash flows, compounded future value is classified as its__________?
A. Terminal value
B. Existed value
C. Quit value
D. Relative value
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
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
Cash inflows are revenues of project and are represented by__________?
A. Hurdle number
B. Relative number
C. Negative numbers
D. Positive numbers
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
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
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
Falling interest rate leads change to bondholder income which is__________?
A. Reduction in income
B. Increment in income
C. Matured income
D. Frequent income
Bonds that have high liquidity premium are usually have_________?
A. Inflated trading
B. Default free trading
C. Less frequently traded
D. Frequently traded
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
Payment divided by par value is classified as______________?
A. Divisible payment
B. Coupon payment
C. Par payment
D. Per period payment
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
Coupon rate of convertible bond is_________?
A. Higher
B. Lower
C. Variable
D. Stable
An outstanding bond are also classified as__________?
A. Standing bonds
B. Outdated bonds
C. Dated bonds
D. Seasoned bonds
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
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
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
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
Price of an outstanding bond increases when market rate___________?
A. Never changes
B. Increases
C. Decreases
D. Earned
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
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
Stated value of bonds or face value is considered as_____________?
A. State value
B. Par value
C. Bond value
D. Per value
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
Bonds with deferred call have protection which is classified as__________?
A. Provision protection
B. Provision protection
C. Deferred protection
D. Call protection
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
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
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
Reinvestment risk of bond’s is usually higher on______?
A. Income bonds
B. Callable bonds
C. Premium bonds
D. Default free bonds
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
Coupon payment of bond which is fixed at time of issuance____________?
A. Remains same
B. Becomes stable
C. Becomes change
D. Becomes low
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 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
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
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
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
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
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 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
Type of options that permit bond holder to buy stocks at stated price are classified as______?
A. Provision
B. Guarantee
C. Warrants
D. Convertibles
Bond that has been issued in very recent timing is classified as_______?
A. Mature issue
B. Earning issue
C. New issue
D. Recent issue
Bonds issued by local and state governments with default risk are____________?
A. Municipal bonds
B. Corporation bonds
C. Default bonds
D. Zero bonds
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
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
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
An increasing in interest rate leads to decline in value of__________?
A. Junk bonds
B. Outstanding bonds
C. Standing bonds
D. Premium bonds
Coupon rate of bond is also called____________?
A. Nominal rate
B. Premium rate
C. Quoted rate
D. Both a and c
Bonds issued by small companies tend to have_____________?
A. High liquidity premium
B. High inflation premium
C. High default premium
D. High yield premium
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
Reinvestment risk of bonds is higher on__________?
A. Short maturity bonds
B. High maturity bonds
C. High premium bonds
D. High inflated bonds
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
Cash outflows are costs of project and are represented by___________?
A. Negative numbers
B. Positive numbers
C. Hurdle number
D. Relative number
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
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
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
Situation in which firm limits expenditures on capital is classified as________?
A. Optimal rationing
B. Capital rationing
C. Marginal rationing
D. Transaction rationing
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
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
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
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
Number of years forecasted to recover an original investment is classified as________?
A. Payback period
B. Forecasted period
C. Original period
D. Investment period
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
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
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
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
High price to earnings ratio shows company’s_________?
A. Low dividends paid
B. High risk prospect
C. High growth prospect
D. High marginal rate
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
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
A technique uses in comparative analysis of financial statement is_________?
A. Graphical analysis
B. Preference analysis
C. Common size analysis
D. Returning analysis
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%
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
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
Notes, mortgages, bonds, stocks, treasury bills and consumer loans are classified as______________?
A. Financial instruments
B. Capital assets
C. Primary assets
D. Competitive instruments
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
Price for debt is called_________?
A. Debt rate
B. Investment return
C. Discount rate
D. Interest rate
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
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
Bonds issued to individuals by corporations are classified as__________?
A. Municipal bonds
B. Corporate bonds
C. U.S treasury bonds
D. Mortgages
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
Capital gain expected by stockholders and dividends are included in____________?
A. Debt rate
B. Investment return
C. Interest rate
D. Cost of equity
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
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
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
In weighted average cost of capital, capital components are funds that usually offer by____________?
A. Stock market
B. Investors
C. Capitalist
D. Exchange index
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
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
Beta which is estimated as regression slope coefficient is classified as___________?
A. Historical beta
B. Market beta
C. Coefficient beta
D. Riskier beta
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
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
Variability for expected returns for projects is classified as___________?
A. Expected risk
B. Stand-alone risk
C. Variable risk
D. Returning risk
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
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
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
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
Price of an outstanding bond decreases when market rate is_______________?
A. Increased
B. Decreased
C. Earned
D. Never changed
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
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
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
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
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
Nominal interest rates and nominal cash flows are usually reflected the____________?
A. Inflation effects
B. Opportunity effects
C. Equity effects
D. Debt effects
In cash flow estimation, depreciation shelters company’s income from_______?
A. Expansion
B. Salvages
C. Taxation
D. Discounts
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
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
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
In cash flow estimation, depreciation is considered as________________?
A. Cash charge
B. Non cash charge
C. Cash flow discounts
D. Net salvage discount
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
Real interest rate and real cash flows do not include_____________?
A. Equity effects
B. Debt effects
C. Inflation effects
D. Opportunity effects
Real rate expected cash flows and nominal rate expected cash flows must be______________?
A. Accelerated
B. Equal
C. Different
D. Inflated
Double declining balance method and sum of years digits are included in__________?
A. Yearly method
B. Single methods
C. Double methods
D. Accelerated methods
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
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
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
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
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
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
Long period of bond maturity leads to_________?
A. More price changes
B. Stable prices
C. Standing prices
D. Mature prices
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
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
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
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
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
A price for equity is called______________?
A. Interest rate
B. Cost of equity
C. Debt rate
D. Investment return
Hewlett-Packard and Microsoft are examples of__________?
A. Limited corporate business
B. Unlimited corporate business
C. Controlled corporate business
D. Corporation
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
Ability to trade at net price very quickly is classified as___________?
A. Original trading
B. Liquidity
C. Offline trading
D. Fixed price trading
Price of stock that companies observe in financial markets is called____________?
A. Market price
B. Intrinsic price
C. Extrinsic price
D. Fundamental price
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
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
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
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
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
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
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
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
Financial markets include___________?
A. Primary markets
B. Capital markets
C. Physical asset markets
D. All of above
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
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
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
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
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
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
Money lends to corporations by banks is classified as___________?
A. Eurodollar market deposits
B. Commercial loans
C. Consumer credit loans
D. Consumer credit loans
Future beta is needed to calculate in most situations is classified as____________?
A. Historical betas
B. Adjusted betas
C. Standard betas
D. Varied betas
Beta reflects stock risk for investors which is usually_________?
A. Individual
B. Collective
C. Weighted
D. Linear
Difference between actual return on stock and predicted return is considered as___________?
A. Probability error
B. Actual error
C. Prediction error
D. Random error
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
An unsystematic risk which can be eliminated but market risk is the__________?
A. Aggregate risk
B. Remaining risk
C. Effective risk
D. Ineffective risk
Stocks which has lower book for market ratio are considered as__________?
A. Optimistic
B. More risky
C. Less risky
D. Pessimistic
An efficient set of portfolios represented through graph is classified as an__________?
A. Attained frontier
B. Efficient frontier
C. Inefficient frontier
D. Unattainable frontier
Stocks which has high book for market ratio are considered as_____________?
A. More risky
B. Less risky
C. Pessimistic
D. Optimistic
If market value is greater than book value, then investors for future stock are considered as___________________?
A. Experienced
B. Inexperienced
C. Pessimistic
D. Optimistic
In capital market line, risk of efficient portfolio is measured by its____________?
A. Standard deviation
B. Variance
C. Aggregate risk
D. Ineffective risk
A high portfolio return is subtracted from low portfolio return to calculate_________?
A. HML portfolio
B. R portfolio
C. Subtracted portfolio
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
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
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
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
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
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 capital asset pricing model, characteristic line is classified as____________?
A. Regression line
B. Probability line
C. Scattered points
D. Weighted line
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
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
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
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
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
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
An analysis of decision making of investors and managers is classified as_________?
A. Riskier finance
B. Behavioral finance
C. Premium finance
D. Buying finance
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
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
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
Standard deviation of tighter probability distribution is____________?
A. Long-termed
B. Short-termed
C. Riskier
D. Smaller
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
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
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
A portfolio consists of all stocks in a market is classified as____________?
A. Market portfolio
B. Return portfolio
C. Correlated portfolio
D. Diversified portfolio
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
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
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
A tighter probability distribution shows the___________?
A. Higher risk
B. Lower risk
C. Expected risk
D. Peaked risk
Coefficient of variation is used to identify an effect of__________?
A. Risk
B. Return
C. Deviation
D. Both A and B
Chance of happening any unfavorable event in near future is classified as___________?
A. Chance
B. Event happening
C. Probability
D. Risk
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
Tendency of measuring correlation of two variables is classified as_________?
A. Tendency coefficient
B. Variable coefficient
C. Correlation coefficient
D. Double coefficient
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
Chance of occurrence of any event is classified as_____________?
A. Probability
B. Risk
C. Chance
D. Event happening
Tendency of moving together of two variables is classified as_____________?
A. Correlation
B. Move tendency
C. Variables tendency
D. Double tendency
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
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
Mostly in financials, risk of portfolio is smaller than that of asset’s________?
A. Mean
B. Weighted average
C. Mean correlation
D. Negative correlation
Portfolio which consists of perfectly positive correlated assets having no effect of___________?
A. Negativity
B. Positivity
C. Correlation
D. Diversification
Correct measure of risk of stock is called_____________?
A. Alpha
B. Beta
C. Variance
D. Market relevance
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
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
In an individual stock, relevant risk is classified as___________?
A. Alpha coefficient
B. Beta coefficient
C. Stand-alone coefficient
D. Relevant coefficient
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
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
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
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
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
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
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
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
Process of calculating future value of money from present value is classified as____________?
A. Compounding
B. Discounting
C. Money value
D. Stock value
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
Purchase cost of assets over its useful life is classified as_________?
A. Appreciation
B. Depreciation
C. Appreciated assets
D. Appreciated liabilities
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
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
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
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
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
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
Land, buildings, and factory fixed equipment are classified as____________?
A. Tangible asset
B. Non-tangible assets
C. Financial asset
D. Financial liability
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
Intangible assets such as copyrights, trademarks and patents are applicable for____________?
A. Depreciation
B. Amortization
C. Stock amortization
D. Perishable assets
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
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
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
Prices of bonds will be decreased if an interest rates_________?
A. Rises
B. Declines
C. Equals
D. None of above
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
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
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
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
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
Procedure of finding present values in time value of money is classified as____________?
A. Compounding
B. Discounting
C. Money value
D. Stock value
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
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
An annuity with an extended life is classified as_____________?
A. Extended life
B. Perpetuity
C. Deferred perpetuity
D. Due perpetuity
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
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
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
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
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
Values recorded as determined in marketplace are considered as_______________?
A. Market values
B. Book values
C. Appreciated values
D. Depreciated values
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
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
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
Stocks in market portfolio are graphically represented with_____________?
A. Dashed line
B. Straight line
C. Market line
D. Risk line
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
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
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
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
Financial security kept by non-financial corporations is____________________?
A. Deposit cheque
B. Distribution cost
C. Short term treasury bills
D. Short term capital cost
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
Cost of money is affected by factors which includes______________?
A. Production opportunities
B. Risk
C. All of above
D. Inflation
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
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
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
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
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
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
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
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
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
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
All partners have limited liability in_________________?
A. Unlimited liability partnership
B. Limited liability partnership
C. Controlled partnership
D. Uncontrolled partnership
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
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
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
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
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
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
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
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
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
According to Black Scholes model, selling and buying of stock have_______?
A. Discount rate
B. Transaction costs
C. No transaction costs
D. No discounts
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
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
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
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
In financial planning, most high option price will lead to__________?
A. Longer option period
B. Smaller option period
C. Lesser price
D. Higher price
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
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
Long-term equity anticipation security is usually classified as__________?
A. Short-term options
B. Long-term options
C. Short money options
D. Yearly call
Low price for earnings ratio is result of________________?
A. Low riskier firms
B. High riskier firms
C. Low dividends paid
D. High marginal rate
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%
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
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
In capital budgeting, number of non-normal cash flows have internal rate of returns are____________?
A. One
B. Multiple
C. Accepted
D. Non-accepted
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
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
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
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
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
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%
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
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
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
According to Black Scholes model, stocks with call option pays the__________?
A. Dividends
B. No dividends
C. Current price
D. Past price
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%
When the stock market is rising it is called__________?
A. Booming
B. Bullish
C. Upward tendency
D. Hawkish
Dow Jones is stock exchange market of__________?
A. Tokyo
B. London
C. New York
D. None of these
Income that is saved and not invested is known as____________?
A. Capital
B. Deposit
C. Hoarding
D. None
Rise in stock market is called_______?
A. bullish
B. bearish
C. hawkish
D. none of this

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