Question 1

SEBI Act was passed in the year------
A)1956
B)1988
C)1992
D)1947

Accepted Answer

The SEBI Act was passed in 1992 to establish the Securities and Exchange Board of India (SEBI) for regulating the securities market in India.

Question 2

Goodwill is an example of ---- asset
A)tangible.
B)intangible.
C)fictitious
D)current

Accepted Answer

Goodwill is considered an intangible asset because it is not a physical asset but represents the value of a business's brand name, customer relationships, intellectual property, and employee relations.

Question 3

Traditionally UTI was a-----
A)bank
B)mutual fund.
C)financial institution
D)insurance company

Accepted Answer

Traditionally, UTI (Unit Trust of India) was a mutual fund, established in 1963 as India's first mutual fund.

Question 4

Members of recognised stock exchanges are termed as
A)brokers
B)underwriters
C)shareholder s
D)lead managers.

Accepted Answer

Members of recognized stock exchanges are termed as brokers. Brokers are individuals or firms that act as intermediaries between buyers and sellers in securities markets, facilitating transactions on behalf of their clients.

Question 5

A shareholder invests in a Company's Shares mainly------
A)for capital appreciation
B)to receive dividends.
C)to receive bonus and rights shares
D)to receive interest on investment regularly.

Accepted Answer

Shareholders primarily invest in a company's shares for capital appreciation, which is the increase in the value of the shares over time.

Question 6

Which of the following is not applicable to IRR?
A)considers all cash flows
B)based on time value of money
C)common for all projects
D)stated in % return

Accepted Answer

The Internal Rate of Return (IRR) is not common for all projects because it is specific to each individual investment's cash flows and timing, reflecting the unique return profile of each project.

Question 7

PQR Ltd. Is a profit-making company. It is absorbed into another group company XYZ Ltd. Which is a loss Company. This case is off
A)hostile takeover bid
B)horizontal merger
C)reverse merger
D)takeover

Accepted Answer

A reverse merger occurs when a smaller or more profitable company merges with or is absorbed by a larger or less profitable company, often to take advantage of the larger company's market position or infrastructure despite its financial struggles.

Question 8

ABC Ltd. acquires hundred percent of preference share capital of PQR Ltd. It would result in
A)hostile takeover bid
B)vertical merger
C)no relationship
D)holding subsidiary relationshi p

Accepted Answer

When a company acquires 100% of the preference share capital of another company, it establishes a holding-subsidiary relationship. The acquiring company becomes the holding company, and the acquired company becomes its subsidiary.

Question 9

TCs Ltd. acquires HCL Ltd., MPS of HCL Ltd. Is Rs.20 and EPS is Rs. 5 for an exchange ratio of 1.5: 1, what was the PE ratio used in acquiring HCL Ltd.?
A)rs. 4
B)rs. 5
C)rs. 6
D)rs. 2.67

Accepted Answer

The PE ratio is calculated as Market Price per Share (MPS) divided by Earnings per Share (EPS). Here, PE ratio = Rs. 20 / Rs. 5 = 4. However, considering the exchange ratio of 1.5:1, the effective PE ratio becomes 6 (4 * 1.5).

Question 10

Commercial papers is a type of
A)fixed coupon bond
B)unsecured short term debt
C)equity share capital
D)governmen t bond

Accepted Answer

Commercial papers are unsecured, short-term debt instruments issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities. They do not have fixed coupons like bonds and are not equity or government-issued securities.

Question 11

Which of the followings is an item of Current Liability?
A)bank balance
B)bank overdraft
C)cash balance
D)unsecured loans

Accepted Answer

Bank overdraft is considered a current liability because it represents an amount that the company owes to the bank within a short period, typically within a year.

Question 12

In the Balance-sheet----- stock is indicated
A)opening
B)closing
C)average
D)finished goods

Accepted Answer

In the balance sheet, closing stock is indicated. This represents the unsold goods that are carried over to the next accounting period.

Question 13

Rights issue is also called as -----
A)privileged subscription.
B)equity shares
C)stock dividend.
D)bonus shares

Accepted Answer

A rights issue is often referred to as a privileged subscription because it gives existing shareholders the right to purchase additional shares before the new shares are offered to the public.

Question 14

…… increases the number of shares without actually increasing the paid - up value of the share capital.
A)consolidation of shares.
B)stock split- ups
C)bonus issue
D)rights issue

Accepted Answer

The answer of …… increases the number of shares without...

Question 15

A merchant banker-------
A)is a bank of merchants and businessmen.
B)provides loan to merchants.
C)accepts deposits from merchants.
D)renders corporate advisory services.

Accepted Answer

Merchant bankers primarily offer corporate advisory services to their clients, which can include companies and governments, on matters related to finance, mergers, acquisitions, and other corporate restructuring activities. They do not function as banks for merchants in the traditional deposit and loan sense.

Question 16

Decision involving purchase of fixed assets are also termed as:
A)capital structure decisions.
B)capital budgeting
C)capital restructurin g
D)capital mix decisions

Accepted Answer

Capital budgeting refers to the process of making decisions about investments in fixed assets, which are long-term investments that a company makes to expand, improve, or replace its physical assets.

Question 17

A Balance Sheet tallies; because:

A)it is based on double entry system of accounting
B)it is based on single entry system of accounting.
C)all accounts are computerise
D)total of assets equals to the total of liabilities

Accepted Answer

It is based on the double entry system of accounting, which means that every transaction is recorded twice, once as a debit and once as a credit. This ensures that the total of assets always equals the total of liabilities plus equity.

Question 18

Which of the following is a security on a moveable property?
A)pledge
B)mortgage
C)hypothecati on
D)lien

Accepted Answer

The answer of Which of the following is a security...

Question 19

Time value of Money is based on the principle of:
A)a stich in time saves nine
B)a bird in hand; is worth two in a bush.
C)as you sow; so shall you reap.
D)hard work pays in the long run

Accepted Answer

The principle of "a bird in hand is worth two in the bush" reflects the concept of the time value of money, emphasizing that money available now is more valuable than the same amount in the future due to its potential earning capacity.

Question 20

An ideal liquid ratio must be -----
A)1 : 1
B)1 : 2
C)2 : 1
D)1.33 : 1

Accepted Answer

An ideal liquid ratio, also known as the quick ratio, is typically 1:1. This means that a company has enough liquid assets to cover its current liabilities without relying on the sale of inventory.

Quiz 2: Financial Management

SEBI Act was passed in the year------

Goodwill is an example of ---- asset

Traditionally UTI was a-----

Members of recognised stock exchanges are termed as

A shareholder invests in a Company's Shares mainly------

Which of the following is not applicable to IRR?

PQR Ltd. Is a profit-making company. It is absorbed into another group company XYZ Ltd. Which is a loss Company. This case is off

ABC Ltd. acquires hundred percent of preference share capital of PQR Ltd. It would result in

TCs Ltd. acquires HCL Ltd., MPS of HCL Ltd. Is Rs.20 and EPS is Rs. 5 for an exchange ratio of 1.5: 1, what was the PE ratio used in acquiring HCL Ltd.?

Commercial papers is a type of

Which of the followings is an item of Current Liability?

In the Balance-sheet----- stock is indicated

Rights issue is also called as -----

…… increases the number of shares without actually increasing the paid - up value of the share capital.

A merchant banker-------

Decision involving purchase of fixed assets are also termed as:

A Balance Sheet tallies; because:

Which of the following is a security on a moveable property?

Time value of Money is based on the principle of:

An ideal liquid ratio must be -----