Sr.

No, Question Option 1 Option 2 Option 3 Option 4 Answers

Identify Which of the Machine breakdown Advertising costs
following costs of costs
management is likely to have Buildings insurance
1 the least control? Wage costs costs 4
Choose from of the following Factory rates Production manager's
is most likely to be an salary
allocated production overhead Power used on
cost to the finishing cost Salary of the finishing finishing cost center
2 centre? cost center supervisor machines 2
Select from of the following is Indirect departmental Direct product cost Direct departmental Service department
a valid classification of the cost cost correct cost
salary paid to the foreman in
charge of the packing
3 department? 3
4 Identify what Packing cost is production cost selling cost administration cost distribution cost 4
Select ,the allotment of whole
item of cost to cost centre or
5 cost units is known as : cost allocation cost apportionment cost absorption cost disbursement 1
Illustrate from the following
6 which is Indirect cost Indirect overheads overheads Work overheads Chargeable overheads 2
Explain which Cost is incurred
7 to secure orders selling overheads Office overheads Variable overheads Factory overheads 1
Identify the Material which
8 cannot be charged directly Direct material indirect material overheads Factory overheads 2
Explain a cost that is easily
traceable to a cost object is
9 known as: Direct cost Indirect cost . Variable cost Fixed cost 1
Identify which of the
following is not a regulatory
10 institutions in Indian financial RBI CIBIL SEBI IRDA 2
 system.
Choose which is the central
11 banking authority in India? RBI NABARD Ministry of Finance SEBI 1
12 Find the odd one out : commercial paper share certificate Certificate of deposit Treasury bill 2
When the concept of ratio is
defined in respected to the
items shown in the financial
13 statements, it is termed as Accounting ratio Financial ratio Costing ratio liquidty ratio 1
Determine the users of ratio Creditors and financial
14 analysis? Management institutions Investors All the stakeholders 4
The ascertainment of trends
15 helps in making Standards Forecasts Budget Bills 2
Identify the serious limitation Price level changes
16 of ratio analysis? Window dressing not considered Personal bias Actual pricing 2
What is the value of the firm The value of debt and The value of assets
17 usually based on? equity. The value of debt. The value of equity. plus liabilities. 3
Shareholders wealth increases Market value of the Dividend & market Market price of the
18 with the increase in: EPS firm value of the firm equity share 3
Leasing of machinery can be Capital budgeting
19 categorized as Financing decision Investment decision Fixed asset decision 1
Present value of a single
amount is simply termed as
20 current value of? Present Payments Future Payments Annuity Payments Discount payments 2
What does net present value Future values of Present values of Present values of Future values of future
21 give? present cash flows present cash flows future cash flows cash flows 3
Which of the following is not a
22 source of long-term finance Equity shares Preference shares Commercial papers Reserve and surplus 3
Traditional function of finance To get capital from To appoint finance
23 means? available source To use efficiently To distribute profit manager 1
What do you mean by raising To get capital for
24 finance? business To use capital To distribute profit None of the above 1
 Traditional function of finance
25 means?
Which of the followings is an
26 executive finance function?
Provision of finance is the
27 function of________
Credit sales comes under which
28 of the followings?
Decision about the assets in
which the long term funds to be
29 invested is called_______.
30 Finance functions are
In his traditional role the
financial manager is responsible
31 for
Which of the followings is not an
objectives of financial
32 management?
________ is concerned with the
branch of economics relating the
behavior of principals and their
33 agents.
_______ is concerned with the
maximization of a firm's earnings
34 after taxes.
What is the most appropriate
35 goal of the firm?
Which of the following
statements is correct regarding
profit maximization as the
primary goal of the firm?
36
To get capital from To appoint finance
available source To use efficiently To distribute profit manager 1
Financial planning Production planning Purchase planning None of the above 1
Production manager Marketing manager Finance manager None of the above 3
Financial policy Financial function Financial control None of the above 1
Asset management
policy Financial planning policy current asset policy None of the above 1
Planning for funds Raising of funds Allocation of Resources All of the above 4
Proper utilization of Arrangements of Acquiring capital assets efficient management of
funds financial resources of organization capital 2
Maximization of wealth Arrangements of Mobilization of funds at Ensuring discipline in the
of shareholders financial resources an acceptable cost organization 4
Corporate Social
Financial management Profit maximization Agency theory Responsibility 3
Shareholder wealth Stakeholder
maximization Profit maximization maximization EPS maximization 2
Shareholder Wealth Stakeholder
maximization Profit maximization maximization EPS maximization 1
Profit maximization will
not lead to increasing Profit maximization does Profit maximization is
Profit maximization short-term profits at the consider the impact on concerned more with
considers the firm's risk expense of lowering individual shareholder's maximizing net income
level. expected future profits. EPS. than the stock price. 4
 The __________ decision
involves determining the
appropriate make-up of the
right-hand side of the balance
37 sheet. asset management financing investment capital budgeting 2
The __________ decision
involves a determination of the
total amount of assets needed,
the composition of the assets,
and whether any assets need to
be reduced, eliminated, or
38 replaced. asset management financing investment accounting 3
How are earnings per share Use the income Use the income
calculated? statement to determine statement to determine
earnings after taxes (net Use the income earnings after taxes (net
income) and divide by Use the income statement to determine income) and divide by
the previous period's statement to determine earnings after taxes (net the forecasted period's
earnings after taxes. earnings after taxes (net income) and divide by earnings after taxes.
Then subtract 1 from the income) and divide by the number of common Then subtract 1 from the
previously calculated the number of common and preferred shares previously calculated
39 value. shares outstanding. outstanding. value. 2
The __________ decision
involves efficiently managing the
assets on the balance sheet on a
day-to-day basis, especially
40 current assets. asset management financing investment accounting 1
All constituencies with a stake in
the fortunes of the company are
41 known as ________. shareholders stakeholders creditors customers 2
Which of the following EPS maximization does
statements is not correct EPS maximization not specify the timing or EPS maximization EPS maximization is
regarding earnings per share ignores the firm's risk duration of expected naturally requires all concerned with
42 (EPS) maximization as the level. EPS. earnings to be retained. maximizing net income. 4
 primary goal of the firm?
_______ is concerned with the
maximization of a firm's stock Shareholder wealth Stakeholder welfare
43 price. maximization Profit maximization maximization EPS maximization 1
Finance Function comprises Safe custody of funds Expenditure of funds Procurement of finance Procurement & effective
44 only only only use of funds 4
When owners are managers
(such as in a sole proprietorship),
45 a firm will have agency costs. TRUE FALSE 2
The primary goal of a financial
manager should be to maximize
the value of shares issued to new
46 investors in the corporation. TRUE FALSE 2
Maximization of the current
earnings of the firm is the main
47 goal of the financial manager. TRUE FALSE 2
In capital budgeting, the financial
manager tries to identify
investment opportunities that
are worth more to the firm than
48 they cost to acquire. TRUE FALSE 1
When evaluating a project in
which a firm might invest, the
size but not the timing of the
49 cash flows are important. TRUE FALSE 2
The board of directors has the
power to act on behalf of the
shareholders to hire and fire the
operating management of the
firm. In a legal sense, the
directors are "principals" and the
50 shareholders are "agents". TRUE FALSE 2
 The principal-agent problem
describes a situation where:
51
A(n) would be an example of a
principal, while a(n) would be an
example of
52 an agent.
The principal–agent relationship
53 entails that the principal
Which of the following is not an
ingredient of a principal–agent
54 problem?
Which one of the following is the
best example of an agency
problem? Assume the company
is paying the employees' travel
expenses.
55
Which one of the following
represents the best effort to
reduce the agency problem?
56
Which of the following is an
example of an agency cost?
57
managers follow their
managers disagree with own inclinations, which shareholders prevent
employees on often differ from the managers from firms fail to maximise
production issues aims of shareholders maximising profits. long-term investment 2
shareholder; manager manager; owner accountant; bondholder shareholder; bondholder 1
is smarter than the provides guidance to the
hires the agent. agent. agent. is hired by the agent. 1
Asymmetric
Conflict of interest. information. Equilibrium. Surplus available. 3
Ann, the controller,
Mike, the president, travels to Orlando,
Juan, the chief financial travels to China to Florida to visit Disney
officer, travels to France attend an international World with friends. Luisa, the marketing
to meet with the bank convention related to While there, she talks director, travels to
that is loaning the firm the company's line of with her friends about California to attend a
money to build a factory business. While there, employment sales convention. While
in France. While in he tours the Great Wall opportunities at the there she visits
France, he tours Paris. of China. firm. Disneyland. 3
giving senior managers
paying senior managers bonuses consisting of
a cash bonus each year shares of company increasing the salary of Providing company cars
based on the number of share whenever the the company president to all managers
people employed by the company improves its every time the company employed by the firm for
company production efficiency opens a new store more than one year 2
Senior management
A company always buys receives stock options Managers can use the
the latest computer enabling them to buy company float plane to Sales reps are provided
equipment for its company stock at an fly to their cottages on with company cars to
employees exercise price well weekends use when visiting clients 3
 above the current stock
price
Agency problems are best problems arising due to problems arising due to
defined as: potential misalignment the complete alignment issues surrounding
difficulties arising in between the interests of of the interests of whether or not to
dealings with real estate owners, creditors, and owners, creditors, and outsource production to
58 agencies managers managers an external agency 2
Managers can ignore the
objective of shareholder wealth
in the short-run in favour of
other stakeholders’ interests, but
59 not in the long run TRUE FALSE 1
Sole proprietorships can be
60 vulnerable to agency costs TRUE FALSE 1
Stock options are an example of
61 an agency cost TRUE FALSE 2
Agency costs do not include
expenses of monitoring and
controlling the actions of
62 management TRUE FALSE 2
Of the following list, which is a A firm’s chief executive
potential implication for agency The likelihood of officer (CEO) is more
issues when shareholders More shareholders have management pleasing able to choose his or her
are dispersed? a controlling say in what all shareholders is friends to sit on the
63 happens in the firm. greatly improved. board of directors. None of the above 3
Why do shareholders have a Because they are
greater preference for risk than Shareholders can investing in the stock
do managers? Shareholders are always diversify risk by holding market, shareholders
richer than managers, many securities, while a must naturally prefer Managers do not like risk
and can afford to take manager’s career is more because it hurts the
64 more risk. tied up with the firm. risk than do managers. value of the company. 2
Which of the following is not a
65 source of corporate financing? Equity Retained earnings Bonds Fixed capital 4
 Which of the following is the Control the dispersal of
least important of the financial Keep an up-to-date Contain costs and foster Raise funds to support funds to ensure
manager’s responsibilities? record on past productivity the ongoing operations efficiency and adequate
66 operations improvements and planned investments returns 1
Financial markets that facilitate
the flow of long-term funds with
maturities of more than one year
67 are known as ________ money markets capital markets primary markets secondary markets 2
Financial markets facilitating the
issuance of new securities are
68 known as _________ money markets capital markets primary markets secondary markets 3
_______ are not considered
69 capital market securities. bonds mortgages retail CDs stocks 3
____ are financial contracts
whose values are obtained from
70 the values of underlying assets. Bonds Mortgages Stocks Derivatives 4
In a(n) _________ market, all
information about any securities
for sale is continuously and freely
71 available to investors. inefficient efficient perfect imperfect 3
____ are depository financial
72 institutions. Savings banks Finance companies Mutual funds Securities firms 1
The main source of funds for
________________ is deposits
from households, businesses,
and government agencies, while
their main use of funds is the
purchase of government and
corporate securities and
mortgages and other loans to mutual fundsmutual
73 households. savings institutions commercial banks funds finance companies 1
The federal government
74 commonly acts as a surplus unit. TRUE FALSE 2
 An investor who holds bonds has
partial ownership in a
75 corporation. TRUE FALSE 2
When security prices fully reflect
all available information, the
markets for these securities are
76 said to be efficient. TRUE FALSE 1
Securities firms can act both as
77 brokers and as dealers. TRUE FALSE 2
Functions of financial services
78 exclude ----------------------. Mobilization of savings Allocation of fund Specialized services Collection of tax 4
Debenture having face value Rs.
100 is issued by company for Rs.
120. Coupon rate is 12%.
79 Calculate return on debt 10% 11% 12% 10.50% 1
200 shares with face value Rs. 10
of Infosys Ltd. Purchased at Rs.
200 each. Dividend received is
20%. Shares sold for at Rs. 250
80 each. Calculate return on equity 24% 25% 26% 28% 3
The following are the examples
81 of financial assets except? Stocks Bank loan Bond Raw material 4
The following are important
functions of financial markets: I.
Source of financing II. Provide
liquidity III. Reduce risk IV.
82 Source of information I and IV only II and III only I, II and III only I, II, III and IV 4
The sale of financial assets is also
83 referred to as the Capital decision CFO decision Financing decision Investment decision 3
The construction of new
manufacturing plant is also
84 referred to as the Capital decision CFO decision Financing decision Investment decision 4
 We say about a particular
investment that it is risky, its raw material is
85 because it is dangerous it has low returns its returns are uncertain unavailable 3
The risk that can be eliminated
86 by diversification is called specific risk security risk market risk beta 1
The ratio between the amount of
profit and investment is called
87 the NPV opportunity cost risk premium rate of return 4
An investment should be Rate of Return > Rate of Return < Rate of Return =
88 accepted if Opportunity Cost Opportunity Cost Opportunity Cost A, B and C are irrelevant 1
The interest rate earned if a
financial asset is held until its
89 maturity is called term structure spinning yield spread 3
What is the maximum duration
for which term money can be
90 lent/borrowed? 1 day 15 days 30 days 1 year 4
What is the minimum duration
for which term money can be
91 lent/borrowed? 1 day 15 days 30 days 1 year 2
Which among the following Survey of Professional
surveys is not conducted by Inflation Expectations Forecasters on
Reserve Bank of India? Consumer Confidence Survey of Households Macroeconomic Annual Survey of
92 Survey (CCS) (IESH) Indicators Industries 4
Who is the issuing authority of
93 coins in India? RBI Government of India Ministry of Finance Both 1 and 2 2
Which of the followings is not
an objectives of financial Maximization of Arrangements of Mobilization of funds Ensuring discipline in
94 management? wealth of shareholders financial resources at an acceptable cost the organization 4
What is the most appropriate Shareholder Wealth Stakeholder
95 goal of the firm? maximization Profit maximization maximization EPS maximization 1
Which of the following Profit maximization Profit maximization Profit maximization Profit maximization is
96 statements is correct regarding considers the firm's will not lead to does consider the concerned more with 4
 profit maximization as the risk level. increasing short-term impact on individual maximizing net
primary goal of the firm? profits at the expense shareholder's EPS. income than the stock
of lowering expected price.
future profits.
Which of the following is not a
97 source of corporate financing? Equity Retained earnings Bonds Fixed capital 4
Financial markets facilitating
the issuance of new securities
98 are known as money markets capital markets primary markets secondary markets 3
The ratio between the amount
of profit and investment is
99 called the NPV opportunity cost risk premium rate of return 4
Gross Profit Ratio for a firm
remains same but the Net
Profit Ratio is decreasing. The
reason for Increase in Costs of
100 such behavior could be: Goods Sold If Increase in Expense Increase in Dividend Decrease in Sales 2
Capital required for running
the business smoothly and
efficiently on day-to-day basis working capital of
101 is known as Leverage Analysis Ratio Analysis company. Cost of Capital 3
Ratio analysis shows whether
financial position of company
102 is Improving Detoriating Same as the previous More than the previous 1
The principal-agent problem managers follow their
describes a situation where: own inclinations,
managers disagree with which often differ shareholders prevent
employees on from the aims of managers from firms fail to maximise
103 production issues shareholders maximising profits. long-term investment 2
To whom dividend is given at To preference
104 a fixed rate in a company? To equity shareholders shareholders To debenture holders To promoters 2
105 Which one of the following is the Juan, the chief financial Mike, the president, Ann, the controller, Luisa, the marketing 3
 best example of an agency officer, travels to France travels to China to travels to Orlando, director, travels to
problem? Assume the company is to meet with the bank attend an international Florida to visit Disney California to attend a
paying the employees' travel that is loaning the firm convention related to the World with friends. sales convention. While
expenses. money to build a factory company's line of While there, she talks there she visits
in France. While in business. While there, with her friends about Disneyland.
France, he tours Paris. he tours the Great Wall employment
of China. opportunities at the firm.
Why do shareholders have a Because they are
greater preference for risk than do Shareholders can investing in the stock
managers? Shareholders are always diversify risk by holding market, shareholders
richer than managers, many securities, while a must naturally prefer Managers do not like risk
and can afford to take manager’s career is more because it hurts the value
106 more risk. tied up with the firm. risk than do managers. of the company. 2
The liquidty status of certificate
of deposits which is morele is
107 negotiable is considered as certificate liquidity term liquidity more liquid less liquid 3
We say about a particular
investment that it is risky, its raw material is
108 because it is dangerous it has low returns its returns are uncertain unavailable 3
A(n) would be an example of a
principal, while a(n) would be an
example of
109 an agent. shareholder; manager manager; owner accountant; bondholder shareholder; bondholder 1
The ratio between the amount of
110 profit and investment is called the NPV opportunity cost risk premium rate of return 4
Inventory Turnover measures the Average Sales Cost of Goods Sold Total Purchases Total Assets
111 relationship of inventory with: 2
Which of the following statements is A Higher Receivable Interest Coverage Ratio Increase in Net Profit Ratio Lower Debt-Equity Ratio
112 correct? Turnover is not desirable depends upon Tax Rate means increase in Sales means lower Financial Risk 4
The interest rate earned if a
financial asset is held until its
113 maturity is called term structure spinning yield spread 3
The commercial paper issued
with low interest rate thus the
114 commercial paper are categorized payables rating commercial rating poor credit rating better credit rating 4
 as
A dollar today is worth more than a risk of nonpayment in the the dollar can be invested inflation will reduce None of the above
dollar to be received in the future future. today and earn interest. purchasing power of a
115 because future dollar. 2
An investment should be Rate of Return > Rate of Return < Rate of Return =
116 accepted if Opportunity Cost Opportunity Cost Opportunity Cost A, B and C are irrelevant 1
Ownership of goods under hire Payment of down payment Payment of first instalment Payment of last instalment At the time of agreement
purchase agreement is transferred at
117 the time of 3
118 The cheapest source of finance is debenture equity share capital preference share retained earning 4
Which of the following has the Equity shares Loans Bonds Preference shares
119 highest cost of capital? 1
The three major sources of long-term
funds are surplus, internal cash
funds, debit capital, and equity
120 capital. TRUE FALSE 1
(Gross profit / Net sales) x (Gross profit x Sales / (Net profit / Total assets) x
121 Return on Investment Ratio (ROI) = 100 Fixed assets) x 100 (Net profit / Sales) x 100 100 4
Weighted Average Cost of Capital is Ka Kw Ko Ke
122 generally denoted by: 3
A firm should select the capital produces the highest cost of maximizes the value of the minimizes taxes. equates the value of debt
123 structure that: capital. firm. with the value of equity. 2
The optimal capital structure has debt-equity ratio is equal to weight of equity is equal to debt-equity ratio is such Debt-equity ratio results in
been achieved when the: 1. the weight of debt that the cost of debt the lowest possible
exceeds the cost of equity weighted average cost of
124 capital. 4
Which one of the following giving senior managers
represents the best effort to paying senior managers a bonuses consisting of
reduce the agency problem? cash bonus each year shares of company share increasing the salary of Providing company cars
based on the number of whenever the company the company president to all managers
people employed by the improves its production every time the company employed by the firm for
125 company efficiency opens a new store more than one year 2
A firm with high operating leverage low fixed costs in its high variable costs in its high fixed costs in its high price per unit.
126 has: production process. production process. production process. 3
Which of the following is not a
127 source of corporate financing? Equity Retained earnings Bonds Fixed capital 4
 Which of the following is the Control the dispersal of
least important of the financial Contain costs and foster Raise funds to support funds to ensure
manager’s responsibilities? Keep an up-to-date productivity the ongoing operations efficiency and adequate
128 record on past operations improvements and planned investments returns 1
Which of the followings is not an Maximization of wealth of Arrangements of financial Mobilization of funds at an Ensuring discipline in the
129 objectives of financial management? shareholders resources acceptable cost organization 4
The size of the accounts payable is Cash float Accounts receivable Credit sales A new personal computer
affected by the level of the firm’s for the office
cost of goods sold and the average
130 payment period. 4
What is the most appropriate goal Shareholder Wealth Stakeholder
131 of the firm? maximization Profit maximization maximization EPS maximization 1
What is the net present value? the future value of a the present value of a the future value of a the present value of a
project’s cash flows plus its project’s cash flows plus project’s cash flows minus project’s cash flows minus
132 initial cost its initial cost its initial cost its initial cost 4
Which among the following Survey of Professional
surveys is not conducted by Inflation Expectations Forecasters on
Reserve Bank of India? Consumer Confidence Survey of Households Macroeconomic Annual Survey of
133 Survey (CCS) (IESH) Indicators Industries 4
Which of the following is an Senior management
example of an agency cost? receives stock options
enabling them to buy
A company always buys company stock at an Managers can use the
the latest computer exercise price well company float plane to Sales reps are provided
equipment for its above the current stock fly to their cottages on with company cars to use
134 employees price weekends when visiting clients 3