01-26-2011, 04:35 PM
Download the attachment file of data bank mcq's from vuhelp
Question No: 1 ( Marks: 1 ) - Please choose one
A project would be financially feasible in which of the following situations?
4 If Internal Rate of Return of a project is greater than zero
4 If Net Present Value of a project is less than zero
4 If the project has Profitability Index less than one
4 If the project has Profitability Index greater than one
Question No: 2 ( Marks: 1 ) - Please choose one
Which one of the following statements applies to Dividend Growth Model?
4 It is difficult to understand and use
4 It is used for non-listed companies
4 It is used for debt securities also
4 It do not consider risk level of a security
(page 60)
Finally, this approach does not take into account the risk level. There is no direct adjustment for the riskyness of the investment. For instance, there is no adjustment for the degree of certainty or uncertainty in estimated growth rate for dividends
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following statements is true regarding Weighted Average Cost of Capital (WACC)?
4 WACC of a levered firm is greater than that of an un-levered firm
4 WACC of a levered firm is lesser than that of an un-levered firm
4 WACC of a levered firm is equal to that of an un-levered firm
4 An Un-levered firm has zero WACC.
Ref: PAGE # 71
[FONT="]
[/FONT] The after tax cash flow of two identical firms in terms of EBIT but having
different capital structure – debt – equity weight age will effect the value of firm. This is because debt in capital structure provides tax shield as interest on debt is tax deductible expense. Thus tax shield increases the value of firm: a levered firm’s value is greater than the un-levered firm.
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following risks is independent of capital structure of a firm?
4 Financial risk
4 Systematic risk
4 Business risk
4 Total risk
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following is a dividend that is paid in the form of additional shares, rather than a cash payout?
4 Stock Dividend
4 Cum Dividend
4 Ex Dividend
4 ExtraDividend
Ref: PAGE # 75 Dividend:
A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend) or other property.
Question No: 6 ( Marks: 1 ) - Please choose one
In which of the following situations, a company has the ability to pay off its short-term obligations easily?
4 If the company has a positive working capital
4 If the company has a negative working capital
4 If the company has a zero working capital
[FONT="]
[/FONT] [URL="http://www.ehow.com/how_4421978_calculate-working-capital.html"][FONT="]
[/URL][/FONT]
Working capital is often used as a barometer to measure a company's over health and liquidity. If a company has negative working capital, it means that the current liabilities are greater than the current assets. This may mean that the company may have trouble paying off it's short-term obligations. This can impact the overall efficiency of the company because the company may not be able to spend as aggressively as its competitors. Investors often watch working capital closely to check on the financial health of a company.
And
If a company has ample positive working capital, then they are in good shape with plenty of cash on hand to pay for everything they might need to buy. If a company has negative working capital, then their current liabilities are actually greater than their current assets and they lack the ability to spend
[url=http://www.fool.com/Features/1996/sp0708a.htm][/url]
Question No: 7 ( Marks: 1 ) - Please choose one
2FS
I
In the formula Q = , “I” denotes which of the following?
4 Initial cash out flow
4 Interest cost of holding cash
4 Investment required
4 Initial investment
Q = ¥ 2 FS / i
Where:
S = is the amount of cash to be used in each period F = fixed cost of obtaining new funds
i = interest cost of holding cash
Q = quantity of cash to be held per period.
Drawbacks of inventory approach:
Question No: 8 ( Marks: 1 ) - Please choose one
Keeping all other things constant, an increase in storage cost will result__________ in the EOQ (Economic Order Quantity).
4 A decrease
4 No change
4 An increase
4 Cannot be told without additional information
Note: Storage Cost = Carrying cost = Holding cost
[FONT="]
[/FONT] Ref: see below McQ from this link
42. Which of the following statements about the basic EOQ model is true?
a. If the ordering cost were to double, the EOQ would rise.
b. If annual demand were to double, the EOQ would increase.
c. If the carrying cost were to increase, the EOQ would fall.
d. If annual demand were to double, the number of orders per year would decrease.
e. All of the above statements are true.
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the following is a re-structuring strategy in which employees buy a majority share in their own firm?
4 Employee Dividend Scheme
4 Employee Buyout
4 Employee Empowerment
4 Leverage Buyout
(page 124)
A restructuring strategy in which employees buy a majority stake in their own firms. This form of buyout is often done by firms looking for an alternative to a leveraged buyout. Companies being sold can be either healthy companies or ones that are in significant financial distress
Question No: 10 ( Marks: 1 ) - Please choose one
All of the following could be an outcome of financial distress of a firm EXCEPT:
4 Employees are leaving the firm
4 Suppliers refuse to supply on credit
4 Banks do not provide loans
4 Financial markets become instable
Question No: 1 ( Marks: 1 ) - Please choose one
A project would be financially feasible in which of the following situations?
4 If Internal Rate of Return of a project is greater than zero
4 If Net Present Value of a project is less than zero
4 If the project has Profitability Index less than one
4 If the project has Profitability Index greater than one
Question No: 2 ( Marks: 1 ) - Please choose one
Which one of the following statements applies to Dividend Growth Model?
4 It is difficult to understand and use
4 It is used for non-listed companies
4 It is used for debt securities also
4 It do not consider risk level of a security
(page 60)
Finally, this approach does not take into account the risk level. There is no direct adjustment for the riskyness of the investment. For instance, there is no adjustment for the degree of certainty or uncertainty in estimated growth rate for dividends
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following statements is true regarding Weighted Average Cost of Capital (WACC)?
4 WACC of a levered firm is greater than that of an un-levered firm
4 WACC of a levered firm is lesser than that of an un-levered firm
4 WACC of a levered firm is equal to that of an un-levered firm
4 An Un-levered firm has zero WACC.
Ref: PAGE # 71
[FONT="]
[/FONT] The after tax cash flow of two identical firms in terms of EBIT but having
different capital structure – debt – equity weight age will effect the value of firm. This is because debt in capital structure provides tax shield as interest on debt is tax deductible expense. Thus tax shield increases the value of firm: a levered firm’s value is greater than the un-levered firm.
Question No: 4 ( Marks: 1 ) - Please choose one
Which of the following risks is independent of capital structure of a firm?
4 Financial risk
4 Systematic risk
4 Business risk
4 Total risk
Question No: 5 ( Marks: 1 ) - Please choose one
Which of the following is a dividend that is paid in the form of additional shares, rather than a cash payout?
4 Stock Dividend
4 Cum Dividend
4 Ex Dividend
4 ExtraDividend
Ref: PAGE # 75 Dividend:
A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend), but they can also take the form of stock (stock dividend) or other property.
Question No: 6 ( Marks: 1 ) - Please choose one
In which of the following situations, a company has the ability to pay off its short-term obligations easily?
4 If the company has a positive working capital
4 If the company has a negative working capital
4 If the company has a zero working capital
[FONT="]
[/FONT] [URL="http://www.ehow.com/how_4421978_calculate-working-capital.html"][FONT="]
[/URL][/FONT]
Working capital is often used as a barometer to measure a company's over health and liquidity. If a company has negative working capital, it means that the current liabilities are greater than the current assets. This may mean that the company may have trouble paying off it's short-term obligations. This can impact the overall efficiency of the company because the company may not be able to spend as aggressively as its competitors. Investors often watch working capital closely to check on the financial health of a company.
And
If a company has ample positive working capital, then they are in good shape with plenty of cash on hand to pay for everything they might need to buy. If a company has negative working capital, then their current liabilities are actually greater than their current assets and they lack the ability to spend
[url=http://www.fool.com/Features/1996/sp0708a.htm][/url]
Question No: 7 ( Marks: 1 ) - Please choose one
2FS
I
In the formula Q = , “I” denotes which of the following?
4 Initial cash out flow
4 Interest cost of holding cash
4 Investment required
4 Initial investment
Q = ¥ 2 FS / i
Where:
S = is the amount of cash to be used in each period F = fixed cost of obtaining new funds
i = interest cost of holding cash
Q = quantity of cash to be held per period.
Drawbacks of inventory approach:
Question No: 8 ( Marks: 1 ) - Please choose one
Keeping all other things constant, an increase in storage cost will result__________ in the EOQ (Economic Order Quantity).
4 A decrease
4 No change
4 An increase
4 Cannot be told without additional information
Note: Storage Cost = Carrying cost = Holding cost
[FONT="]
[/FONT] Ref: see below McQ from this link
42. Which of the following statements about the basic EOQ model is true?
a. If the ordering cost were to double, the EOQ would rise.
b. If annual demand were to double, the EOQ would increase.
c. If the carrying cost were to increase, the EOQ would fall.
d. If annual demand were to double, the number of orders per year would decrease.
e. All of the above statements are true.
Question No: 9 ( Marks: 1 ) - Please choose one
Which of the following is a re-structuring strategy in which employees buy a majority share in their own firm?
4 Employee Dividend Scheme
4 Employee Buyout
4 Employee Empowerment
4 Leverage Buyout
(page 124)
A restructuring strategy in which employees buy a majority stake in their own firms. This form of buyout is often done by firms looking for an alternative to a leveraged buyout. Companies being sold can be either healthy companies or ones that are in significant financial distress
Question No: 10 ( Marks: 1 ) - Please choose one
All of the following could be an outcome of financial distress of a firm EXCEPT:
4 Employees are leaving the firm
4 Suppliers refuse to supply on credit
4 Banks do not provide loans
4 Financial markets become instable