[amp_mcq option1=”customer’s acceptance” option2=”banker’s acceptance” option3=”federal acceptance” option4=”treasury acceptance” correct=”option2″]
Detailed SolutionFirm’s promise to pay and is backed or guaranteed by bank is classified as
Financial management
22. Financial securities that can be converted into cash at closing to their book value price are classified as
[amp_mcq option1=”inventories” option2=”short-term investments” option3=”cash equivalents” option4=”long-term investments” correct=”option3″]
23. Operating Leverage is calculated as:
[amp_mcq option1=”Contribution ÷ EBIT” option2=”EBIT ÷ PBT” option3=”EBIT ÷ Interest” option4=”EBIT ÷ Tax” correct=”option1″]
24. According to traditional approach, the average cost of capital _______________.
[amp_mcq option1=”Remains constant up to a degree of leverage and rises sharply thereafter with every increase in leverage” option2=”Rises constantly with increase in leverage” option3=”Decrease up to certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point” option4=”Decrease at an increasing rate with increase in leverage” correct=”option3″]
Detailed SolutionAccording to traditional approach, the average cost of capital _______________.
25. 80% of sales of Rs. 10,00,000 of a firm are on credit. It has a receivable turnover of 8. What is the average collection period (360 days a year) and average debtors of the firm?
[amp_mcq option1=”45 days and Rs. 1,00,000″ option2=”360 days and Rs. 1,00,000″ option3=”45 days and Rs. 8,00,000″ option4=”360 days and Rs. 1,25,000″ correct=”option3″]
26. Rational traders immediately sell stock when price is
[amp_mcq option1=”conditional” option2=”inefficient portfolio” option3=”too low” option4=”too high” correct=”option2″]
Detailed SolutionRational traders immediately sell stock when price is
27. Markowitz’s main contribution to portfolio theory is___________.
[amp_mcq option1=”that risk is the same for each type of financial asset” option2=”that risk is a function of credit, liquidity and market factors” option3=”risk is not quantifiable” option4=”insight about the relative importance of variances and co variances in determining portfolio risk” correct=”option4″]
Detailed SolutionMarkowitz’s main contribution to portfolio theory is___________.
28. Bond call provision that is not practiced even after several years of issuance is classified as
[amp_mcq option1=”original provision” option2=”deferred call” option3=”deferred provision” option4=”permanent provision” correct=”option4″]
29. Risk-Return trade off implies:
[amp_mcq option1=”Minimization of Risk” option2=”Maximization of Risk” option3=”Ignorance of Risk” option4=”Optimization of Risk” correct=”option4″]
30. Owning two securities instead of one will not reduce the risk taken by an investor if the two securities are______________.
[amp_mcq option1=”perfectly positively correlated with each other” option2=”perfectly independent of each other” option3=”perfectly negatively correlated with each other” option4=”of the same category, eg blue chips” correct=”option1″]