Financial management

41. Which of the following is a basic principle of finance as it relates to the management of working capital?

Profitability varies inversely with risk
Liquidity moves together with risk
Profitability moves together with risk
Profitability moves together with liquidity

Detailed SolutionWhich of the following is a basic principle of finance as it relates to the management of working capital?

42. Type of options that permit bond holder to buy stocks at stated price are classified as

provision
guarantee
warrants
convertibles

Detailed SolutionType of options that permit bond holder to buy stocks at stated price are classified as

43. An expected final stock price is Rs 70 and an expected capital gain is Rs 25 then an original investment would be

Rs 45.00
-Rs 45.00
Rs 95.00
-Rs 95.00

Detailed SolutionAn expected final stock price is Rs 70 and an expected capital gain is Rs 25 then an original investment would be

44. Collection of money from investors and spending money in other investment activities is classified as

future funds
hedge funds
retirement funds
pension funds

Detailed SolutionCollection of money from investors and spending money in other investment activities is classified as

45. If an investor states that Intel is overvalued at 65 times, he is referring to___________.

earnings per share
dividend yield
book value
P/E ratio

Detailed SolutionIf an investor states that Intel is overvalued at 65 times, he is referring to___________.

46. Growth rate which is predicted by marginal investors for dividends is classified as

expected growth rate
annual growth rate
past growth rate
unexpected growth rate

Detailed SolutionGrowth rate which is predicted by marginal investors for dividends is classified as

47. Treasury bills are traded in the __________.

money market
capital market
government market
regulated market

Detailed SolutionTreasury bills are traded in the __________.

48. If net present value is positive then profitability index will be

greater than two
equal to
less than one
greater than one

Detailed SolutionIf net present value is positive then profitability index will be

49. Preferred stocks are also classified as

intrinsic preference
perpetuities
extrinsic preference
weak preference

Detailed SolutionPreferred stocks are also classified as

50. If NAV > market price of a fund, then the fund ________

is selling at a discount
is selling at a premium
is an index fund
is an exchange traded fund

Detailed SolutionIf NAV > market price of a fund, then the fund ________

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