KMB204 Financial Management & Corporate finance mcq set 2

11th September 2020 1 By indiafreenotes
  1. The only feasible purpose of financial management is

a) Wealth Maximization

b) Sales Maximization

c) Profit Maximization

d) Assets maximization

 

  1. Financial management process deals with

a) Investments

b) Financing decisions

c) Both a and b

d) None of the above

 

  1. Agency cost consists of

a) Binding

b) Monitoring

c) Opportunity and structure cost

d) All of the above

 

  1. Finance Function comprises

a) Safe custody of funds only

b) Expenditure of funds only

c) Procurement of finance only

d) Procurement & effective use of funds

 

  1. The objective of wealth maximization takes into account

 a) Amount of returns expected

b) Timing of anticipated returns

c) Risk associated with uncertainty of returns

d) All of the above

 

  1. Financial management mainly focuses on

a) Efficient management of every business

b) Brand dimension

c) Arrangement of funds

d) All elements of acquiring and using means of financial resources for financial activities

 

  1. Time value of money indicates that

a) A unit of money obtained today is worth more than a unit of money obtained in future

b) A unit of money obtained today is worth less than a unit of money obtained in future

c) There is no difference in the value of money obtained today and tomorrow

d) None of the above

 

  1. Time value of money supports the comparison of cash flows recorded at different time period by

a) Discounting all cash flows to a common point of time

b) Compounding all cash flows to a common point of time

c) Using either a or b

d) None of the above

 

9. If the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be:

a) 10% per annum

b) 10.10 per annum

c) 10.25%per annum

d) 10.38% per annum

 

  1. Relationship between annual nominal rate of interest and annual effective rate of interest, if frequency of compounding is greater than one:

a) Effective rate > Nominal rate

b) Effective rate < Nominal rate

c) Effective rate = Nominal rate

d) None of the above

 

  1. Mr. X takes a loan of Rs 50,000 from HDFC Bank. The rate of interest is 10% per annum. The first installment will be paid at the end of year 5. Determine the amount of equal annual installments if Mr. X wishes to repay the amount in five installments.

a) Rs 19500

b) Rs 19400

c) Rs 19310

d) None of the above

 

  1. If nominal rate of return is 10% per annum and annual effective rate of interest is 10.25% per annum, determine the frequency of compounding:

a) 1

b) 2

c) 3

d) None of the above

 

  1. Heterogeneous cash flows can be made comparable by

a) Discounting technique

b) Compounding technique

c) Either a or b

d) None of the above

 

  1. Risk of two securities with different expected return can be compared with:

a) Coefficient of variation

b) Standard deviation of securities

c) Variance of Securities

d) None of the above

 

  1. Capital market line is:

a) Capital allocation line of a market portfolio

b) Capital allocation line of a risk free asset

c) Both a and b

d) None of the above

 

  1. CAPM accounts for:

a) Unsystematic risk

b) Systematic risk

c) Both a and b

d) None of the above

 

  1. Which statement is prepared in the process of funds flow analysis?

a) Schedule of changes in working capital

b) Funds Flow Statement

c) Both a and b

d) None of the above

 

  1. Funds Flow Statement is prepared on the basis of data of P&L statement and two consecutive balance sheets.

a) True

b) False

c) Value delivery

d) None of the above

 

  1. Which of the following rules stands true while preparation of Schedule of changes in working capital?

A) An increase in current assets increases working capital.

B) An increase in current assets decreases working capital.

C) An increase in current liabilities decreases working capital.

D) An increase in current liabilities increases working capital

a) A and C

b) A and D

c) B and D

d) A, B, C and D

 

20. Funds Flow Statement is also known as

a) Statement of Funds Flow

b) Statement of Sources and Application of Funds

c) Statement of Sources and Uses of Funds

d) All of the above

 

  1. Net Profit ratio is calculated by

a) (Gross Profit/Gross sales)*100

b) (Gross Profit/Net sales)*100

c) (Net Profit/Net sales)*100

d) None of the above

 

  1. Net operating profit ratio determines ___________ while net profit ratio determines

a) Overall efficiency of the business, working efficiency of the management

b) Working efficiency of the management, overall efficiency of the business

c) Overall efficiency of the external market, working efficiency of the internal management

d) None of the above

 

  1. Operating ratio is calculated by:

a) (Operating Cost/Gross sales)*100

b) (Operating Cost/Gross sales)*100

c) (Operating cost/Net sales)*100

d) None of the above

 

  1. Which of the following is expenses ratio?

A) Administrative expenses ratio

B) Selling and Distribution expenses ratio

C) Factory expenses ratio

D) Finance Expenses ratio

a) A, B and D

b) A, C and D

c) A, B and C

d) A, B , C, D

 

  1. Marginal costs is taken as equal to

a) Prime Cost plus all variable overheads

b) Prime Cost minus all variable overheads

c) Variable overheads

d) None of the above

 

  1. If total cost of 100 units is Rs 5000 and those of 101 units is Rs 5030 then increase of Rs 30 in total cost is

a) Marginal cost

b) Prime cost

c) All variable overheads

d) None of the above

 

  1. Marginal cost is computed as

a) Prime cost + All Variable overheads

b) Direct material + Direct labor + Direct Expenses + All variable overheads

c) Total costs – All fixed overheads

d) All of the above

 

  1. Marginal costing is also known as

a) Direct costing

b) Variable costing

c) Both a and b

d) None of the above

 

  1. Management accounting is

A) Subjective

B) Objective

 

a) Only A

b) Only B

c) Both A and B

d) None of the above

 

  1. The use of management accounting is

a) Optional

b) Compulsory

c) Legally obligatory

d) Compulsory to some and optional to others

 

  1. The management accounting can be stated an extension of

A) Cost Accounting

B) Financial Accounting

C) Responsibility Accounting

 

a) Both A and B

b) Both A and C

c) Both B and C

d) A, B, C

 

  1. Which of the following is true about management accounting?

A) Management accounting is associated with presentation of accounting data.

B) Management accounting is extremely sensitive to investors needs.

 

a) Only A

b) Only B

c) Both A and B

d) None of the above

 

  1. Management accounting assists the management

a) Only in control

b) Only in direction

c) Only in planning

d) In Planning, Direction and Control

 

  1. Management accountancy is a structure for

a) Costing

b) Accounting

c) Decision making

d) Management

 

  1. Who coined the concept of management accounting?

a) R.N Anthony

b) James H. Bliss

c) J. Batty

d) American Accounting Association