Financial Management-6

Financial Management 6
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

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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

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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

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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

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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