Finance MCQs

Page No. 37

Which of the following ratios are particularly interesting to shortterm creditors?


aLiquidity Ratios

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bLong-term Solvency Ratios

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cProfitability Ratios

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dMarket Value Ratios

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View Answer Liquidity Ratios

You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?


aRs. 1,000 because it has the higher future value

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bRs. 1,000 because you receive it sooner

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cRs. 1,050 because it is more money

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dEither because both options are of equal value

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Which of the following is a special case of annuity, where the stream of cash flows continues forever?


aOrdinary Annuity

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bSpecial Annuity

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cAnnuity Due

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dPerpetuity

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View Answer Perpetuity

Quick Ratio is also known as_________?


aCurrent Ratio

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bAcid-test Ratio

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cCash Ratio

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dNone of the given options

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View Answer Acid-test Ratio

Balance Sheet is based upon which of the following formula?


aAssets = Liabilities – Stockholder’s equity

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bAssets + Liabilities = Stockholder’s equity

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cAssets + Stockholder’s equity = Liabilities

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dAssets = Liabilities + Stockholder’s equity

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Which of the following ratios are intended to address the firm’s financial leverage?


aLiquidity Ratios

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bLong-term Solvency Ratios

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cAsset Management Ratios

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dProfitability Ratios

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Which of the following relationships holds TRUE if a bond sells at a discount?


a Bond Price < Par Value and YTM > coupon rate

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b Bond Price > Par Value and YTM > coupon rate

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cBond Price > Par Value and YTM < coupon rate

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dBond Price < Par Value and YTM < coupon rate

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The conflict of interest between stockholders and management is known as:


aAgency problem

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b Interest conflict

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cManagement conflict

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dAgency cost

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View Answer Agency problem

Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods?


aOrdinary annuity

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bAnnuity due

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c Perpetuity

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dNone of the given options

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View Answer Ordinary annuity

Which of the following is not a quality of IRR ?


aMost widely used

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b Ideal to rank the mutually exclusive investments

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cEasily communicated and understood

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dCan be estimated even without knowing the discount rate

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