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1. Which of the following is the process of planning and managing a firmís long-term investments?
Select correct option:


  • Capital Structuring
  • Capital Rationing
  • Capital Budgeting
  • Working Capital Management


2. Which of the following refers to the cash flows that result from the firmís day-to-day activities of producing and selling?
Select correct option:


  • Operating Cash Flows
  • Investing Cash Flows
  • Financing Cash Flows
  • All of the given options


3. The coupon rate of a floating-rate bond is capped and upper and lower rates are called:
Select correct option:


  • Float
  • Collar
  • Limit
  • Surplus



4. Which of the following is the acronym for GAAP?
Select correct option:


  • Generally Applied Accountability Principles
  • General Accounting Assessment Principles
  • Generally Accepted Accounting Principles
  • General Accepted Assessment Principles



5. Which of the following strategy belongs to restrictive policy regarding size of investments in current assets?
Select correct option:


  • To maintain a high ratio of current assets to sales
  • To maintain a low ratio of current assets to sales
  • To less short-term debt and more long-term debt
  • To more short-term debt and less long-term debt


6. Quick Ratio is also known as:
Select correct option:


  • Current Ratio
  • Acid-test Ratio
  • Cash Ratio
  • None of the given options


7. 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?
Select correct option:


  • Sole-proprietorship
  • Partnership
  • Corporation
  • None of the given options


8. If you have Rs. 30 in asset A and Rs. 120 in another asset B, the weights for assets A and B will be __ and __ respectively.
Select correct option:


20%; 80%
37%; 63%
63%; 37%
80%; 20%

9. Which of the following terms refers to the costs to store and finance the assets?
Select correct option:


  • Carrying costs
  • Shortage costs
  • Storing costs
  • financing costs



12. Which of the following statement is CORRECT regarding compound interest?
Select correct option:

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


13. Mr. A has just recently started a business by investing a capital of Rs. 500,000. He will be the only owner of the business and also enjoy all the profits of the business. Which type of business is being employed by Mr. A?
Select correct option:


  • Sole-proprietorship
  • Partnership
  • Corporation
  • None of the given options


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14. Time value of money is an important finance concept because:
Select correct option:


  • It takes risk into account
  • It takes time into account
  • It takes compound interest into account
  • All of the given options



15. The preferred stock of a company currently sells for Rs. 25 per share. The annual dividend of Rs. 2.50 is fixed. Assuming a constant dividend forever, what is the rate of return on this stock?
Select correct option:


  • 5.00 percent
  • 7.00 percent
  • 8.45 percent
  • 10.0 percent


16. Which of the following ratios are particularly interesting to short-term creditors?
Select correct option:


  • Liquidity Ratios
  • Long-term Solvency Ratios
  • Profitability Ratios
  • Market Value Ratios


17. Which of the following equation is known as Cash Flow (CF) identity?
Select correct option:


  • CF from Assets = CF to Creditors Ė CF to Stockholder
  • CF from Assets = CF to Stockholders Ė CF to Creditors
  • CF to Stockholders = CF to Creditors + CF from Assets
  • CF from Assets = CF to Creditors + CF to Stockholder


18. One would be indifferent between taking and not taking the investment when:
Select correct option:


  • NPV is greater than Zero
  • NPV is equal to Zero
  • NPV is less than Zero
  • All of the given options


19. Which of the following is (are) a non-cash item(s) ?
Select correct option:


  • Revenue
  • Expenses
  • Depreciation
  • All of the given options


20. Which of the following is NOT a shortcoming of Payback Rule?
Select correct option:


  • Time value of money is ignored
  • It fails to consider risk differences
  • Simple and easy to calculate
  • None of the given options


21. You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?
Select correct option:


  • Rs. 1,000 because it has the higher future value
  • Rs. 1,000 because you receive it sooner
  • Rs. 1,050 because it is more money
  • Either because both options are of equal value


22. What is the effective annual rate of 7 percent compounded monthly?
Select correct option:


7.00 percent
7.12 percent
7.19 percent
7.23 percent

23. Which of the following forms of business organizations is created as a distinct legal entity owned by one or more individuals or entities?
Select correct option:


  • Sole-proprietorship
  • General Partnership
  • Limited Partnership
  • Corporation


24. Business risk depends on which of the following risk of the firmís assets ?
Select correct option:


  • Systematic Risk
  • Diversifiable Risk
  • Unsystematic Risk
  • None of the given options


25. Which of the following type of risk can be eliminated by diversification?
Select correct option:


  • Systematic Risk
  • Market Risk
  • Unsystematic Risk
  • None of the given options



26. Which of the following measure reveals how much profit a company generates with the money shareholders have invested?
Select correct option:


  • Profit Margin
  • Return on Assets
  • Return on Equity
  • Debt-Equity Ratio


27. Which of the following is(are) the basic area(s) of Finance?
Select correct option:


  • Financial institutions
  • International finance
  • Investments
  • All of the given options


28. Which of the following is the return that firmís creditors demand on new borrowings ?
Select correct option:


  • Cost of debt
  • Cost of preferred stock
  • Cost of common equity
  • Cost of retained earnings


29. Systematic Risk is also known as:
Select correct option:


  • Diversifiable Risk
  • Market Risk
  • Residual Risk
  • Asset-specific Risk


30. ABC Corporation has two shareholders; Mr. Aamir with 50 shares and Mr. Imran with 70 shares. Both want to be elected as one of the four directors but Mr. Imran doesnít want Mr. Aamir to be director. How much votes would Mr. Aamir be able to cast as per cumulative voting procedure?
Select correct option:


70
120
200
280