Financial Management 1

Multiple Choice Multiple Answer 

Question Advantages of letter of credit to the Importer 

Correct Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods 

Your Answer the importer can bargain for better trading terms , he is assured to get proper supply of the goods 

Select The Blank 

Question ________ can be issued for the maturity period of 15 days to one year 

Correct Answer Commercial Paper

Your Answer Commercial Paper

Select The Blank 

Question ________ in assets involves inflow of funds 

Correct Answer Decrease

Your Answer Decrease

Select The Blank 

Question In case of Mortgage, the party who transfers the interest is called ________ 

Correct Answer Mortgager

Your Answer Mortgager

Multiple Choice Multiple Answer 

Question Top management who can accept or reject capital expenditure proposals may be in the form of 

Correct Answer Board of Directors , Executive committee , Management committee 

Your Answer Board of Directors , Executive committee

Select The Blank 

Question The economical use of the asset is permitted by the lessor on the payment of periodical amount which is in the form of ________. 

Correct Answer Lease rent

Your Answer Lease rent

Multiple Choice Single Answer 

Question The traditional approach to financial management refers only to the procurement of funds by Correct Answer Corporate entity

Your Answer Corporate entity

Select The Blank 

Question To meet the working capital needs of the company, banks may grant the working capital term loans for a period of ________ 

Correct Answer 3 to 7 years

Your Answer 3 to 7 years

Multiple Choice Multiple Answer 

Question Limitations of credit rating are 

Correct Answer Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating 

Your Answer Credit rating is based upon the evaluation made by the agencies which may vary depending upon the experience, knowledge and individual opinion of the rators which may be biased in some cases , Credit rating is primarily based upon the past performance whereas the future prospects should be given more importance while deciding the credit rating , Multiplicity of the rating agencies can be considered to be the limitation of the credit rating

Multiple Choice Multiple Answer 

Question Situation of capital rationing may involve problems in the form of 

Correct Answer Project Indivisibility , Mutually dependent project , Multi period projects 

Your Answer Project Indivisibility , Mutually dependent project , Multi period projects

Multiple Choice Multiple Answer 

Question The normal process which may be followed under the capital rationing situations may be Correct Answer Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted 

Your Answer Rank the projects according to some measure of profitability , Select projects in the descending order of profitability till the available funds are exhausted

Multiple Choice Multiple Answer 

Question The sources of cash are 

Correct Answer Long term loans , cash from other sources 

Your Answer Long term loans , cash from other sources

Multiple Choice Single Answer 

Question Feature of term loan is 

Correct Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc. 

Your Answer They are required to be repaid during the lifetime of the company at the predecided intervals say monthly, quarterly, yearly etc.

Multiple Choice Single Answer 

Question The main function of finance under the traditional approach comprises of 

Correct Answer Procurement of funds 

Your Answer Working Capital management

Multiple Choice Multiple Answer 

Question Unsecured loans includes 

Correct Answer Fixed Deposit , Inter corporate unsecured deposits 

Your Answer Fixed Deposit , Inter corporate unsecured deposits

True/False 

Question Reserve Bank of India appointed the Marathe Committee with the intention to recognize the contribution made by the SSI Sector to the economy 

Correct Answer False

Your Answer False

Select The Blank 

Question The projects having Profitability index of more than ________ will be accepted

Correct Answer one

Your Answer one

Select The Blank 

Question A wrong decision in respect of capital expenditure proposals may disturb the entire ________ structure of the organisation 

Correct Answer financial

Your Answer financial

True/False 

Question Solvency ratios consists of current ratio and Price earnings ratio 

Correct Answer False

Your Answer False

Multiple Choice Single Answer 

Question Net Profit is the difference between Sales and 

Correct Answer All types of cost

Your Answer All types of cost

Select The Blank 

Question The project having ________ profitability index will be ranked highest 

Correct Answer highest

Your Answer highest

Multiple Choice Single Answer 

Question The amount of funds borrowed by one company from another company, then it is termed as Correct Answer Intercorporate deposit

Your Answer Intercorporate deposit

True/False 

Question Internal rate of return considers time value of money 

Correct Answer True

Your Answer True

Multiple Choice Single Answer 

Question Financing consists of the raising, providing, managing of all the money, capital or funds of any kind to be used in connection with the business' is defined by 

Correct Answer Bonneville and Dewey

Your Answer Bonneville and Dewey

Multiple Choice Multiple Answer 

Question Debt Service coverage ratio may be considered to be one of the most important ratios calculated by the Correct Answer Bankers , Financial Institutions 

Your Answer Bankers , Financial Institutions

Select The Blank 

Question Break even point is that level of sales revenue at which there is ________ 

Correct Answer no profit no loss

Your Answer no profit no loss

Select The Blank 

Question Financial Institution plays the role of ________ in factoring service offered 

Correct Answer Factor

Your Answer Factor

True/False 

Question Under hypothecation mode of security neither the property not the possession of the goods hypothecated is transferred to the Bank 

Correct Answer True

Your Answer True

True/False 

Question The lessor is the nominal owner of the asset as the possession and economic use of the asset rests with the lessee 

Correct Answer True

Your Answer False

Multiple Choice Single Answer 

Question Composite cost is calculated as 

Correct Answer Total weighted cost / Total weights 

Your Answer Total weighted cost / Total weights

True/False Question Cash flow statement is important financial tool for the management 

Correct Answer True

Your Answer True

Select The Blank 

Question In ABC analysis C class consist of ________. 

Correct Answer a very large number of items which are less important 

Your Answer a very large number of items which are less important

Multiple Choice Single Answer 

Question The technique which tries to find out the present value of Re 1 if received or spent after n years, provided that the interest rate of I can be earned on investment is termed as 

Correct Answer Discounting 

Your Answer Discounting

Multiple Choice Multiple Answer 

Question The committees appointed by the Reserve Bank of India to control the working capital financing 

Correct Answer Tandon committee , Marathe committee , Nayak committee 

Your Answer Tandon committee , Marathe committee , Nayak committee

Multiple Choice Multiple Answer 

Question The patterns of Dividend policy are 

Correct Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy Your Answer Stable Dividend policy , Irregular Dividend policy , No immediate Dividend policy 

True/False 

Question A high degree of operating leverage means that the component of fixed cost is too high in the overall cost structure 

Correct Answer True

Your Answer True

Multiple Choice Single Answer 

Question An increase in the share premium account is 

Correct Answer Source of funds

Your Answer Source of funds

True/False Question Ordering cost of inventory includes cost incurred for insurance 

Correct Answer False

Your Answer False

Multiple Choice Single Answer 

Question The effect of Purchase of building against a long term loan payable on funds ( cash concept ) is 

Correct Answer No change in cash

Your Answer No change in cash

Multiple Choice Single Answer 

Question Which of the following assets get generated during course of operations or get utilized within one year 

Correct Answer Current assets

Your Answer Current assets

Match The Following 

Question Correct Answer Your Answer Mortgage Mode of security pertains to immovable properties like land and building Mode of security pertains to immovable properties like land and building Hypothecation Neither the property not the possession of the goods is transferred to the bank Neither the property not the possession of the goods is transferred to the bank Pledge Possession of the goods is with the bank Possession of the goods is with the bank Lien Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid Bank has a right to retain the goods belonging to the company until the debt due to the bank is paid

Match The Following 

Question Correct Answer Your Answer Internal rate of return less than cost of capital Project rejected Project rejected Internal rate of return breakeven rate of borrowing for the company breakeven rate of borrowing for the company Profitability Index ratio between total discounted cash inflows and total discounted cash outflows ratio between total discounted cash inflows and total discounted cash outflows Profitability Index more than one Project accepted Project accepted

Multiple Choice Multiple Answer 

Question The recommendations of the Dahejia committee included 

Correct Answer the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories 

Your Answer the banks should not only be security oriented but they should take into consideration total financial position of the client , all cash credit accounts with banks should be bifurcated in two categories

True/False 

Question Re-order level is the highest level of inventory to be maintained above which the inventory should not rise 

Correct Answer False

Your Answer False

Multiple Choice Single Answer 

Question The objective of Working Capital management is to ensure 

Correct Answer Optimum investment in current assets 

Your Answer Optimum investment in current assets

Multiple Choice Single Answer 

Question An increase in current liabilities 

Correct Answer decreases working capital 

Your Answer decreases working capital

True/False 

Question Net Present value presupposes that the cash inflows can be reinvested to yield the return equivalent to the Internal rate of return 

Correct Answer False 

Your Answer False

Multiple Choice Multiple Answer

Question The causes of undercapitalisation are 

Correct Answer Future earnings may be underestimated , Company following too conservative policy for paying the dividends 

Your Answer Company following too conservative policy for paying the dividends , Future earnings may be underestimated

Select The Blank 

Question Subscription list of a public issue of shares shall be kept open for minimum ________ working days 

Correct Answer 3

Your Answer 3

Select The Blank

Question ________ in liabilities involves outflow of funds 

Correct Answer Decrease 

Your Answer Decrease

Multiple Choice Single Answer

Question The Investment decisions are mainly concerned with 

Correct Answer Application of funds 

Your Answer Application of funds

Multiple Choice Multiple Answer

Question The following techniques can be used to delay cash payments 

Correct Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments 

Your Answer Payments can be made from a bank which is distant from the bank of the company to which payment is to be made , Attempts should be made by the company to get the maximum credit for the goods or service supplied , Avoid early payments

Select The Blank 

Question Till the sales revenue reaches the break even point, the company ________ 

Correct Answer incurs the losses 

Your Answer incurs the losses