FINC002
1. Increase in the frequency of compounding results into _________ maturity value. (Higher)
2. In Excel in order to calculate the EMI for Loan repayment, which function has to be used? (PMT)
3. 1/10, 30 credit term means? (1% discount for payment within 10 days)
4. Which of the following cost is important while evaluating the investment decisions? (Sunk Cost)
5. The rate beyond which the preference between two independent projects reverses is known as_______?
(Reversal Rate)
6. What will be the price of bond with face value of Rs.1000 carrying a coupon of 10% maturing in 3 years at 10%
premium on par value? Present value factor and PVAF at 10% for 3years is .7513 and 2.4869 respectively?
(1075.12)
7. If the cost of capital of a project goes up then NPV will________? (Increase)
8. Stream of equal cash flows at regular interval is known as? (Annuity)
9. If proportion of debt is increased in capital structure, overall cost of capital will ______? (Decrease)
10. Arun buys an stock at Rs. 20 & sells at Rs 25 after 10 months, During this period, he receives a dividend of Rs. 5
on his investments. Calculate the Holding Period Return? (0.50)
11. Which of the following is combined measure of risk and return? (Coefficient of variation)
12. As per matching approach, permanent working capital requirements should be funded by________? (Long Term
Funds)
13. Calculate the expected return with the help of following data: p=.3 r=30%, p=.4 r=16%, p=.3 r=8% (0.178 or
17.8%)
14. For A Ltd. Annual demand is 10000 units, carrying cost is 2 Rs, per unit and order cost is Rs. 50. Calculate the
EOQ (707)
15. If business risk of a company goes up than price of stock will_____? (Decrease)
16. Which of the following will result in Shareholder’s wealth maximization? (Maximum Utilization of Resources)
17. If credit sales is 100000, credit period is 30 days, calculate the average receivables? (8333)
18. Mathematical model for calculating the optimum inventory order quantity is known as _______? (EOQ or
Economic Order Quantity Model)
19. Preference share is a ____ instrument? (Hybrid)
20. If growth rate of expected earnings goes up than price of stock will_____? (Increase)
21. In case of capital budgeting decisions, the projects in which choice of one automatically excludes the another
are known as ______? (Mutually Exclusive Projects)
22. Sheela needs Rs. 100000 at the end of each year in the next 5 years. How much amount she should invest now
@ 10%. Present value of annuity factor at 10% for 5 years is 3.7908 (3,79,080)
23. Which of the following AAA debentures will have highest price if YTM is_____? (0.07)
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24. Why depreciation has to be added back in the calculation of cash-flow as it is a______? (Non-cash expense)
25. Cost of debt is______? (Coupon Rate)
26. Sheela needs Rs. 500000 at the end of 5 years. How much amount she should invest right now @ 10%. Present
value of Rs.1 at 10% for 5 years is .6209 (3,10,450)
27. A stock average return in last 3 years were 12% and standard deviation is 8%. Calculate the coefficient of
variation? (0.67)
28. Which of the following evaluation techniques for long term investment decisions doesn’t consider the time
value of money? (Pay-Back Period)
29. Calculate the standard deviation with the help of following data: p=.3 r=30%, p=.4 r=16%, p=.3 r=8% (4.21)
30. Divided Profit linked to profits left-out after meeting the expansion needs is based on _______ theory/policy?
(Residual Payout Policy)
31. Which of the following are the two components of Holding Period Return? (Periodic Return & Capital
Appreciation)
32. Dividend declared @12% means that this %age will be applied on_______? (Face Value)
33. If the annual rent expense goes up, the operating leverage will ______ and will give rise to more than
proportionate change in _______ ? (Increase, EBIT)
34. As per MM Proposition with taxes, value of unlevered firm is _____ than levered firm? (Higher)
35. Which of the following instrument is riskiest? (Shares)
36. Sales proceeds from the asset sold at the end of project forecasting period is treated as ______? (Terminal Cash
Flow)
37. A tight working capital policy will lead to ______ ? (Low Debtors)
38. Which of the following is an example of unsystematic risk? (Global Economic Crisis)
39. The cash flows forecasted during the projection period for capital budgeting decisions are known as _____?
(Initial Cash Flow)
40. Brexit, Greece Crises, Chinese Crises, Sub-Prime Crises are the examples of which of the following? (Systematic
Risk)
41. For projects with different scales, which of the evaluation techniques should be used? (Pay Back Period)
42. Discounted payback period is considered an improvement over payback period because it considers_______? (
All Cash-Flows, Time Value of Money, Easy to Understand , All of the above)
43. A company replaces an old machinery with salvage value of Rs 100000 replaced by a machinery costing 500000.
The relevant cash flows for evaluation of the project is _______ ? (4,00,000)
44. Stream of equal cashflows at regular interval starting at the beginning of the period is known as? (Annuity Due)
45. If the credit period is increased for the customers of the company, operating cycle will _____? (Increase)
46. Which of the following is ultimate objective of financial management? (Profit Maximization)
47. The risk which can be reduced by diversification is known as _______? (Unsystematic Risk)
48. For calculation of present value of annuity regular, in excel, the value of of type should be _______? (Type = 0)
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49. If the face value of a bond is 100 and it’s redemption value is 110, bond is maturing at _____ ? (10% Premium)
50. Sales of Zing Ltd. For 2016 was Rs.10000, COGS Rs. 6000, Depreciation Rs. 1000 Interest Rs. 800. Tax Rate 30%.
Calculate the operating cashflows of Zing Ltd for 2016. (2540)
51. The underlying assumption in IRR method is that all intermitant cashflows are reinvested at _____? (Required
Rate of Return)
52. Which of the following is spontaneous source of financing the working capital requirements? (Commercial
Paper, Accounts Payable, Bank Finance, All of the above)
53. Increase in the frequency of compounding results into _____ maturity value. (Higher)
54. Proportion of profit distributed among the shareholders is known as______? (Pay-Out Ratio)
55. _______ method tells the period in which original investment in a project will be recovered. (Pay-Back Period)
56. Shyam deposits Rs. 5000 every year for next 3 years at 6% semi annual compounding. Calculate the future value
in investment? Future value annuity factor at 3% for 3 years and 6 years is 3.0909 & 6.4864 respectively and at
6% for 3 years and 6 years is 3.1836 & 6.9753 respectively. (15454.5)
57. For a firm, weight of equity & debt is 0.6 & 0.4respectively and cost of equity is 15%. Cost of Debt is 9%, tax rate
is 30%. Calculate WACC for the firm? (0.126)
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