1.Which of these is not a part of capital structure?

(B) Equity Skares

(B) Debentures

(C) Short-term Borrowing:

(D) Bonds

2.Cost of Capital is lowest in case of :

(A) Debt

(B) Equity

(C) Loans

(D) Bonds

3.Modigliani and Miller's Dividend policy of a tirm is:

(A) Relevant

(B) Irrelevant

(C) Unrealistic

(D) None of the above

4.If the sharcholders prefer Regular income, how does this affect the dividen decision:

(A) It will lead to payment of dividend

(B) It is the indicator to retain more earnings

(C) It has no impact on dividend decisions

(D) Can't say

5.Which of the following is the proportions of earnings paid to common shareholders in the form
of cash dividend ?

(A) Price-Earning Ratio

(B) Retention Rate

(C) Growth Rate

(D) Dividend-Payout Ratio

8.Which of the following indicates the concept of Net working capital?

(A) Current Liabilities over Current Assets

(B) Total Assets minus fixed Assets

(C) Current Liabilities Less than current Assets and Fixed Assets

(D) None of the above

9.A Negative working Capital means that

(A) The company has no current assets at all

(B) The company currently is unable to meet its short term liabilities

(C) The company has negative carnings before lnterest and Tax

(D) The company currently is able to meet its short-term liabilities

10.Gross Working Capital refers to:

(A) The amount utilized at the time of contingencies

(B) The capital which is required at the time of the commencement of business

(C) The firm's investment in current Assets

(D) All of the above

12. refers to the length of time allowed by a firm for its customers to make pryment for their
purchases:

(A) Holding Period

(B) Pay-Back Period

(C) Average Collection Period

(D) Credit Period

13. Current Assets are usually financed through

(A) Equity Capital, Preference Capital, Debentures, Bound and Long-term Bank Loans

(B) Mode of Overdraff, Cash Credit, Public Deposits and Retained Earnings

(C) Money market instruments and long-term securities

(D) Both long and short-term sources

14.Which of the following statements are correct?

(A) Working Capital is also known as circulating Capital

(B) Large Organizations need Larger working Capital

(C) Shortage of working Capital reduces return on investment

(D) All of the above

15.Which is not an example of current liabilities?

(A) Outstanding Expenses

(B) Statutory Liabilities

(C) Provident Fund Dues

(D) Sundry Debtors

16.Which of the following analyzes the accounts Receivable, inventory, and accounts payables
cycles in terms of number of days?

(A) Operation Cycle

(B) Current Asset Cycle

(C) Operating Cycle

(D) Business Cycle

17.Capital which is needed to meet the Seasonal requirements of the business:

(A) Gross Working Capital

(B) Fluctuating Working Capital

(C) Reserve Margin Working Capital

(D) Net Working Capital

18.A higher current Assets/fixed Assets ratio indicates:

(A) Hedging Approach

(B) Conservative Approach

(C) Matching/Hedging Approach

(D) Aggressive Approach

20.Dividend Policy determines:

(N) What portion of earnings will be paid out to stockholders

(B) What portion will be retained in the business to facilitate long-term growth

(C) Only (A) not (B)

(D) Both (A) and (B)

21.A ___ is a payment of additional shares to shareholders in lieu of cash.

(A) Stock Split

(B) Stock Dividend

(C) Extra Dividend

(D) Regular Dividend

22.According to Walter, the firm should pay 100% dividend if:

(A) 𝑟>𝑘r>k

(B) 𝑟=𝑘r=k

(C) 𝑟<𝑘r<k

(D) None of the above

23.Determinants of Dividend Policy are:

(A) Nature of the Company

(B) Expectations of the shareholders

(C) Taxation policy of the Government

(D) All of the above

24.The Bird in Hand Theory concept was given by:

(A) Residual Theory

(B) Myron Gordon

(C) Modigliani and Miller

(D) Francis A. Walter

25.Capital structure is an optimal mix of which one of the following options:

(A) Sales and Profits

(B) Debt and Equity

(C) Current Assets and Fixed Assets

(D) None of the above

26.The Cost in the process of Raising fund through equity is called as:

(A) Financial Risk

(B) Flotation Cost

(C) Cost of Debt

(D) Cost of Capital

27.Over-Capitalization results from:

(A) Payment of excessive amount for Goodwill

(B) Underestimation of the rate of capitalization

(C) Raising more money than can be profitably used

(D) Raising only the money

27.Under-Capitalization can be remedied by:

(A) Issue of Bonus Shares

(B) Redemption of Preference Shares

(C) Reduction of Debentures

(D) Reduction of Interest of Debentures.

28.Name the decision which affects both the profitability and the financial risk:

(A) Financial Planning Decision

(B) Capital Budgeting Decisions

(C) Capital Structure Decisions

(D) All of the above

29.If an initial investment is ₹765,000 and the payback period is 4.5 years, then increase in
future cash flow will be:

Answer: We need to calculate the additional cash flow required to achieve the payback period.

Additional cash flow required = Initial investment - Cash flow recovered in payback period

Additional cash flow required = ₹765,000 - (₹765,000 / 4.5) = ₹765,000 - ₹170,000 = ₹595,000

So, the correct answer would be (D) ₹254,42,000.

30/The term 'Capital structure' implies:

(A) Share Capital + Reserves + Long-Term Debts

(B) Share Capital + Long and Short-Term Debts

(C) Share Capital + Long-Term Debts

(D) Equity and Preference Share Capital

31.The Cost of Capital of a firm is:

(A) The dividend paid on the equity capital

(B) The Weighted average of the cost of various long-term and short-term sources of finance

(C) The average Rate of Return it must earn on investment to satisfy the investors

(D) The minimum Rate of Return it must earn on investment to keep its investors satisfied

31.Name the financial decision which relates to disposal of profits:

(A) Investment Decision

(B) Financing Decision

(C) Dividend Decision

(D) Capital Budgeting Decisions

32.Wealth maximization objective is described by:

(A) FW Paish

(B) John J. Hampton

(C) Ezra Solomon

(D) Weston and Brigham

33.The basic finance function is wealth maximization, which aims to enhance the value of the
shares and can be better described by which of the following financial decisions:

(A) Investment Decisions

(B) Financing Decisions

(C) Dividend Decisions

(D) All of the above

34.The basic objective of Financial Management is:

(A) Profit Maximization

(B) Wealth Maximization

(C) Discharging Social Responsibilities

(D) Run the Business/firm Smoothly

35.Which of the following formulas is used to calculate ARR?

(A) ARR = (Net Income) / (Average Investment)

(B) ARR = (Average Loss) / (Net Investment)

(C) ARR = (Net Income) / (Net Investment)

(D) ARR = (Gross Profit) / (Average Investment)

36.The finance Manager is accountable for:

(A) Earning capital assets of the company

(B) Effective management of a fund

(C) Management of financial Resources

(D) Utilization of funds

37.Which method does not consider the time value of money?

(A) Net Present Value

(B) Internal Rate of Return

(C) Average Rate of Return

(D) Profitability Index

38.The rate of discount at which NPV of a project becomes zero is also known as:

(A) Average Rate of Return

(B) Internal Rate of Return

(C) Net Present Rate of Return

(D) None of the above

39.Capital budgeting is related to:

(A) Long-term Assets

(B) Short-term Assets

(C) Long-term and Short-term Needs

(D) Fixed Assets

40.Now, let's match the following:

(a) Capital Budgeting - (iv) Planning capital expenditure

(b) Time Adjusted Rate of Return - (ii) Profitability Index

(c) Internal Rate of Return - (i) Irreversible

(d) Capital Investment Decisions - (iii) Deriving/Cost

So, the correct matching would be:

(A) (iv)

(B) (ii)

(C) (i)

(D) (iii)