Finance MCQs

Page No. 37

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


aLiquidity Ratios


bLong-term Solvency Ratios


cProfitability Ratios


dMarket Value Ratios


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


bRs. 1,000 because you receive it sooner


cRs. 1,050 because it is more money


dEither because both options are of equal value



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


aOrdinary Annuity


bSpecial Annuity


cAnnuity Due


dPerpetuity


View Answer Perpetuity

Quick Ratio is also known as_________?


aCurrent Ratio


bAcid-test Ratio


cCash Ratio


dNone of the given options


View Answer Acid-test Ratio

Balance Sheet is based upon which of the following formula?


aAssets = Liabilities – Stockholder’s equity


bAssets + Liabilities = Stockholder’s equity


cAssets + Stockholder’s equity = Liabilities


dAssets = Liabilities + Stockholder’s equity



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


aLiquidity Ratios


bLong-term Solvency Ratios


cAsset Management Ratios


dProfitability Ratios



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


a Bond Price < Par Value and YTM > coupon rate


b Bond Price > Par Value and YTM > coupon rate


cBond Price > Par Value and YTM < coupon rate


dBond Price < Par Value and YTM < coupon rate



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


aAgency problem


b Interest conflict


cManagement conflict


dAgency cost


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


bAnnuity due


c Perpetuity


dNone of the given options


View Answer Ordinary annuity

Which of the following is not a quality of IRR ?


aMost widely used


b Ideal to rank the mutually exclusive investments


cEasily communicated and understood


dCan be estimated even without knowing the discount rate



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