Financial Management | Chapter 4 | Part 3 | MBA MCQs | FM

Finacial Management MCQs

  

 

1. Markets which deals with high liquid and short term debt securities are classified as
   1.   capital markets
   2.   short-term markets
   3.   liquid markets
   4.   money markets
2. Mutual fund allows investors to sale out their share during any normal trading hours is classified as
   1.   capital trade fund
   2.   exchange traded fund
   3.   management expense
   4.   money trade fund
3. Financial security which is tax exempted and issues by state governments to individuals is classified as
   1.   U.S treasury bond
   2.   municipal bonds
   3.   mortgages
      C.
   4.   corporate bonds
4. To financial analysts, "working capital" means the same thing as __________.
   1.   total asset
   2.   fixed asset
   3.   current asset
   4.   current assets minus current liabilities
5. Compared to other frms in the industry, a company that maintains aconservative working capital policywill tend to have a
   1.   Greater percentage of short-term fnancing
   2.   Higher ratio of current assets to fixed assets
   3.   Higher total asset turnover.
   4.   Greater risk of needing to sell current assets to repay debt.
6. A firm following an aggressive working capital strategy would_____________
   1.   Hold substantial amount of fixed assets.
   2.   fiinance fluctuating assets with long-term fnancing.
   3.   minimise the amount of short-term borrowing
   4.   minimise the amount of fun ds held invery liquid asset
7. The working capital fnancing policy that sub)ects the frm to the greatest risk of being unable to meetthe frm*s maturing obligations is the policy that fnances
   1.   fluctuating current assets with long-term debt
   2.   permanent current assets with long-term debt
   3.   permanent current assets with short term debt.
   4.   fluctuating current assets with short-term debt
8. Activities related to coordinating, controlling and planning flow of inventory are classified as
   1.   decisional management
   2.   inventory management
   3.   Mnaufacturing Management
   4.   throughput management
9. The following classes of costs are usually involved in inventory decisions except
   1.   Cost of ordering
   2.   Carrying cost
   3.   Cost of shortages
   4.   Machining cost
10. The cost of insurance and taxes are included in
    1.   Cost of ordering
    2.   Inventory carrying cost
    3.   Set up cost
    4.   Cost of shortages
11. Profit forgone by capital investment in inventory rather than investment of capital to somewhere else isclassified as ____________
    1.   relevent purcgase order costs
    2.   relevent inventory carrying costs
    3.   irrelevent inventory carrying costs
    4.   relevent opportunity cost of capital
12. The market price of a share of common stock is determined by
    1.   the board of directors of the firm.
    2.   the stock exchange on which the stock is listed.
    3.   the president of the company.
    4.   individuals buying and selling the stock.
13. ______________ is the price at which the bond is traded in the stock exchange
    1.   Redemption value
    2.   Face value
    3.   Market value
    4.   Maturity value
14. _______________ refers to the amount invested in various components of current assets.
    1.   Temporary working capital
    2.   Gross working capital
    3.   Permanent working capital
    4.   Net working capital
15. ____________ is the length of time between the firms actual cash expenditure and its own cash receipt
    1.   Gross operating cycle
    2.   Net operating cycle
    3.   Cash conversion cycle
    4.   Working capital cycle
16. . _______________ refers to the length of time allowed by a firm for its customers to make paymentfor their purchases.
    1.   holding period
       .
    2.   pay back period
    3.   average collection period
    4.   Credit period
17. ____________ and____________ carry a fixed rate of interest and are to be paid off irrespective of thefirms revenues.
    1.   Debentures, Dividends
    2.   Debentures, Bonds
    3.   Dividends, Bonds
    4.   Dividends, Treasury notes
18. Credit policy of every company is largely influenced by _____________ and _____________.
    1.   Liquidity, accountability
    2.   Liquidity, profitability
    3.   Liability, profitability
    4.   Liability, liquidity
19. How are earnings per share calculated?
    1.   Use the income statement to determine earnings after taxes (net income) and divide by the previousperiod's earnings after taxes. Then subtract 1 from the previously calculated value
    2.   Use the income statement to determine earnings after taxes (net income) and divide by the number ofcommon shares outstanding
    3.   Use the income statement to determine earnings after taxes (net income) and divide by the number ofcommon and preferred shares outstanding
    4.   Use the income statement to determine earnings after taxes (net income) and divide by the forecastedperiod's earnings after taxes. Then subtract 1 from the previously calculated value
20. Which of the following would NOT improve the current ratio?
    1.   Borrow short term to finance additional fixed assets.
       .
    2.   Sell fixed assets to reduce accounts payable.
    3.   Sell common stock to reduce current liabilities.
    4.   Issue long-term debt to buy inventory.