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Assignment: 1

Instructions:
Number of Questions: 20
Maximum Marks: 20
Each question carries 1 Mark.
All questions are compulsory.
Attempts: 1
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3
Of the following list, which is a potential implication for agency issues when

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shareholders are dispersed?

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More shareholders have a controlling say in what happens in the firm.
The likelihood of management pleasing all shareholders is greatly improved.
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A firm’s chief executive officer (CEO) is more able to choose his or her
friends to sit on the board of directors.
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None of the above

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Why do shareholders have a greater preference for risk than do managers?

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Shareholders are always richer than managers, and can afford to take more
risk.
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Shareholders can diversify risk by holding many securities, while a

manager’s career is tied up with the firm.
Because they are investing in the stock market, shareholders must naturally
prefer more risk than do managers.
Managers do not like risk because it hurts the value of the company.

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Which of the following is not a source of corporate financing?

Equity
Retained earnings
Bonds
Fixed capital

4
Which of the following is the least important of the financial manager’s
responsibilities?

Keep an up-to-date record on past operations

Contain costs and foster productivity improvements
Raise funds to support the ongoing operations and planned investments
Control the dispersal of funds to ensure efficiency and adequate returns

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5
Debenture having face value Rs. 100 is issued by company for Rs. 120. Coupon
rate is 12%. Calculate return on debt

10%
11%
12%
10.5%

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7
200 shares with face value Rs. 10 of Infosys Ltd. Purchased at Rs. 200 each.

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Dividend received is 20%. Shares sold for at Rs. 250 each. Calculate return on
equity

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24% 76
25%
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26%
28%
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7
The following are the examples of financial assets except?
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Stocks
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Bank loan
Bond
Raw material

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The following are important functions of financial markets: I. Source of financing II.
Provide liquidity III. Reduce risk IV. Source of information

I and IV only
II and III only
I, II and III only
I, II, III and IV

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The sale of financial assets is also referred to as the

Capital decision
CFO decision
Financing decision
Investment decision

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10
The construction of new manufacturing plant is also referred to as the

Capital decision
CFO decision
Financing decision
Investment decision

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We say about a particular investment that it is risky, because

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it is dangerous
it has low returns

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its returns are uncertain
its raw material is unavailable
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12
Ownership of goods under hire purchase agreement is transferred at the time of
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Payment of down payment

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Payment of first instalment

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Payment of last instalment

At the time of agreement
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13
Which of the following statements is correct?

A Higher Receivable Turnover is not desirable

Interest Coverage Ratio depends upon Tax Rate
Increase in Net Profit Ratio means increase in Sales
Lower Debt-Equity Ratio means lower Financial Risk

14
What is the most appropriate goal of the firm?

Shareholder Wealth maximization

Profit maximization
Stakeholder maximization
EPS maximization

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15
____ are financial contracts whose values are obtained from the values of
underlying assets.

Bonds
Mortgages
Stocks
Derivatives

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In a(n) _________ market, all information about any securities for sale is

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continuously and freely available to investors.

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inefficient
efficient 76
perfect
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imperfect
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____ are depository financial institutions.

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Savings banks
Finance companies
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Mutual funds
Securities firms

18
When security prices fully reflect all available information, the markets for these
securities are said to be efficient.

True
False

19
Securities firms can act both as brokers and as dealers.

True
False

20
Statement of profit and loss account shows the operating performance of an
enterprise for a period of time.

True
False

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Assignment: 2

Instructions:
Assignment 2 is based on the following text/paragraph of case study/situational exercise etc. You
first need to read this text and then answer the following MCMR i.e. Multiple choice multiple
response questions.
Number of Questions: 5
Each question carries 2 Mark
All Five Questions are Mandatory.
Attempts: 1

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Soham is trying to coordinate the functioning of various departments in the company XYZ.

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Departments include like Sales, Production & Marketing. He has been trying to do this with the
help of financial Management. He quiet often call people of all the departments and tells them to
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work within means he has been prescribed a budget for it. During the time when he is doing a
analysis of all the things, he connects the decisions of present with the outcomes of future. This
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can especially be seen two of the prominent decisions, one is the Investment & other is the
financing decisions. So, the interlinking of these two decisions is assumed by him. When the year
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ends it is easy for him to take some strong decisions regarding the various departments. This
happens because he can evaluate the performance of various departments in terms of revenue
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generated and the expense incurred. He knows that no business is the risk proof. However, he
knows that at least business stocks which a business can suffer can be minimised, thus laying
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foundation for a better future. Less involvement in the work is appreciable.

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2 Which concepts has been highlighted in above case?

Financial Management
Capital Budgeting
Capital Structure
Financial Planning

3 Identify that the importance of Financial Planning is discussed in following lines? “Soham is trying
to coordinate the functioning of various departments in the company XYZ. Departments include like
Sales, Production & Marketing.”
Helps in avoidance of business shocks & Surprises.
Helps in coordinating financial management functions.
Provide link between investment & Financing decisions.
Helps in coordinating various business functions.

4 During the time when he is doing a analysis of all the things, he connects the decisions of present
with the outcomes of future. Which importance of financial planning is discussed in above lines.
Helps in coordinating various business activities.
Tries to link between present & Future
Helps in forecasting what may happen in future under different situation.
Tries to link between present financial planning & Future financial Planning

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5 “One is the Investment and other is the financing …. assumed by him.” Which importance of
financial planning is discussed in above paragraph?
Helps in Capital structure decisions.
Helps in linking the present with future
Helps in linking the investment decision.
Helps in linking the financing decision.

6 Which type of financial planning is focused in the above case.

Short term Financial Planning

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Long term Financial Planning

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Medium term financial Planning

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Instant Planning

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