Imt CDL

Finc 521

Assignment – 1 (2019)

 

1. Why depreciation has to be added back in the calculation of cash-flow as it is a ___ ?

• manufacturing expense
• Cash expense
• Non-cash expense
• non-operating expense

2. Dividend payment linked to profits left-out after meeting the expansion needs is based on ____ theory/policy?

• Signaling Theory
• Residual payout policy
• Stable Dividend policy
• Constant pay-out policy

3. Brexit, Greece Crises, Chinese Crises, Sub-Prime Crises are the examples of which of the following?

• Systematic Risk
• Unsystematic Risk
• Total Risk
• Specific Risk

4. The cash flows forecasted at the end of projection period for capital budgeting decisions are known as___?

• Initial Cash Flows
• Operating Cash Flows
• Terminal Cash Flows
• Regular Cash Flows

5. The underlying assumption in IRR method is that all the intermittent cashflows are reinvested at.

• Cut-off rate
• required rate of return
• cost of capital
• IRR

6. If the credit period is increased for the customers of the company, operating cycle will___

• reduce
• increase
• remain same
• unaffected

7. Calculate the expected return with the help of following data: p=.3 r=30%, p=.4 r= 16%, p=.3 r=8%

• 17.8
• 18
• 5.8
• 7.35

8. Cost of preference share is ___

• Preference Dividend Rate
• Pref Dividend/Pref. share market price
• Both of the above
• None of the above

9. The internal rate of return generated by an fixed income investment, if held till maturity is known as

• Current Yield
• YTM
• Yield Curve
• Coupon rate

10. Current year dividend of Sun Ltd is Rs 5 per share. Expected growth rate is 8% and market capitalization rate is 10%. Calculate the intrinsic value of stock?

• 5.4
• 67.5
• 54
• 270

11. Market interest rate is 9%. A bond with 10% coupon will sell ____ par value?

• Above
• Below
• at
• None of the above

 

 

 

12. Which of the following is the spontaneous source of financing the working capital requirements?

• Commercial Paper
• Accounts Payable
• Bank Finance
• All of the above

13. Which of the following is ultimate objective of financial management?

• Profit maximization
• Shareholder's wealth maximization
• Leverage  Minimization
• Funding maximization

14. Sheela needs Rs 500000 at the end of 5 years. How much amount she should invest right now @ 10%. Present Value of 1 Rs at 10% for 5 years is .6209

• 100000
• 155225
• 310450
• 400000

15. In case of capital budgeting decisions, the projects in which choice of one automatically excludes the another are known as ___ ?

• Dependent Projects
• Independent Projects
• Mutually Exclusive Projects
• Mutually Inclusive Projects

16. For a firm, weight of equity & debt is 0.6 & 0.4 respectively and cost of equity is 15%, Cost of debt is 9%, tax rate is 30%. Calculate the WACC for the firm?

• 0.126
• 0.1152
• 0.12
• 0.084

 

 

 

17. Moon Ltd invests Rs 800000 in a paper manufacturing plant This is expected to generate Rs 150000 every year for next seven years. Cost of capital for the project is 10%. PVAF for 7 years at 10% is 5.3349. Calculate the NPV of the project?

• 800000
• 800235
• 235
• -235

18. Growth of the company can be expected to be higher when ______ is high?

• pay-out ratio
• distribution ratio
• dividend rate
• retention ratio

19. If business risk of a company goes up than price of stock will.____ ?

• decrease
• increase
• remain same
• fluctuate

20. Which of the following instrument is riskiest?

• Shares
• Preference Shares
• Debentures
• Fixed Deposit

21. As per Bird in hand theory, high dividend pay-out is. _____ to low  pay-out?

• Preferred
• not preferred
• irrelevant for investor
• None of the above

22. 1/ 10,30 credit term means?

• 1% discount
• 0.1% discount
• 1% discount for payment within 10 days
• 0.1% discount for payment within 30 days

 

23. Which of the following AAA debentures will have highest price if YTM is ___?

• 0.07
• 0.08
• 0.075
• 0.085

24. Increased financial leverage gives rise to ____ volatile EPS?

• more
• less
• non
• None of the above

25. Calculate the standard deviation with the help of following data: p=.3 r=30%, p=.4 r= l6%, p=.3 r=8%

• 74.76
• 24.92
• 4.21
• 8.64

26. Cost of debt is. ____ ?

• Coupon rate
• YTM (I-tax rate)
• YTM
• YTM/Bond Price

27. Discounted payback period is considered an improvement over payback period because it considers. ____ ?

• All cash-flows
• Time Value of Money
• Easy to understand
• All of the above

28. If credit sales is 100000, credit period is 30 days, calculate the average receivables?

• 8219
• 8333
• 3333
• 3288

29. The risk which can be reduced by diversification is known as ____ ?

• Systematic Risk
• Unsystematic Risk
• Total Risk
• Market Risk

30. A stock's average return in last 3 years were 12% and Standard deviation is 8%. Calculate the coefficient of variation?

• 1.5
• 0.33
• 0.67
• 9.6

 

 

Assignment – 2

 

1. A company replaces an old machinery with salvage value of Rs I 00000 replaced by a machinery costing Rs 500000. The relevant cash flows for evaluation of this project is ___ ?

• 100000
• 500000
• 400000
• 600000

2. In India, dividend is ____ in the hands of investors?

• Taxable
• not-taxable
• Heavily taxable
• None of the above

3. Calculate the standard deviation with the help of following data: p=.3 r=30%, p=.4 r= l6%, p=.3 r=8%

• 74.76
• 24.92
• 4.21
• 8.64

4. Which of the following evaluation techniques for long-term investment decisions doesn't consider the time value of money?

• NPV
• IRR
• Pay-Back Period
• Profitability Index

5. Calculate the expected return with the help of following data: p=.3 r=30%, p=.4 r= 16%, p=.3 r=8%

• 17.8
• 18
• 5.8
• 7.35

6. As per liquidity premium theory, interest rates on long term bonds will be        than short term bonds?

• Lower
• Same
• Higher
• Fluctuating

7. Increase in the frequency of compounding results into _______ maturity value.

• Higher
• Lower
• Same
• Fluctuating

8. If the cost of capital of a project goes up then NPV will

• decrease
• increase
• remain same
• fluctuate

9. Shyam deposits Rs 5000 every year for next 3 years at 6% semiannual compounding . Calculate the future value if investment? Future value annuity factor at 3% for 3years and 6 years is 3.0909 & 6.4684 respectively and at 6% for 3years and 6 years is 3.1836 & 6.9753 respectively.

• 15454.5
• 16171
• 15918
• 17438.25

10. Discounted payback period is considered an improvement over payback period because it considers.

• All cash-flows
• Time Value of Money
• Easy to understand
• All of the above

11. For a firm, weight of equity & debt is 0.6 & 0.4 respectively and cost of equity is 15%, Cost of debt is 9%, tax rate is 30%. Calculate the WACC for the firm?

• 0.126
• 0.1152
• 0.12
• 0.084

12. As per :MM proposition without taxes, value of firm is ____ by changing the capital structure?

• affected
• not affected
• increases
• decreases

13. Which of the following method is considered the best evaluation techniques for Long-term investment decisions?

• NPV
• IRR
• Pay-Back Period
• Profitability Index

14. If proportion of debt is increased in capital structure, overall cost of capital will ____?

• Decrease
• increase
• remain same
• fluctuate

15. The risk which can be reduced by diversification is known as_____ ?

• Systematic Risk
• Unsystematic Risk
• Total Risk
• Market Risk

16. If business risk of a company goes up than price of stock will.

• decrease
• increase
• remain same
• fluctuate

17. Moon Ltd invests Rs 800000 in a paper manufacturing plant This is expected to generate Rs 150000 every year for next seven years. Cost of capital for the project is 10%. PVAF for 7 years at 10% is 5.3349. Calculate the NPV of the project?

• 800000
• 800235
• 235
• -235

18. In ABC classification of inventory, maximum attention has to be paid on _____ items?

• A category
• B category
• C category
• All of them

19. The internal rate of return generated by an fixed income investment, if held till maturity is known as

• Current Yield
• YTM
• Yield Curve
• Coupon rate

20. Dividend declared at 12% means that this % age will be applied on _____ ?

• Issue Price
• Market Price
• Face Value
• Profits

21. When interest rates on long term bonds are higher than short term bonds, yield curve will be. ____ ?

• upward slopping
• downward slopping
• flat
• none of the above

22. Dividend payment linked to profits left-out after meeting the expansion needs is based on ___ theory/policy?

• Signaling Theory
• Residual payout policy
• Stable Dividend policy
• Constant pay-out policy

23. Sheela needs Rs 100000 at the end of each year in the next 5 years. How much amount she should invest now @ 10%. Present Value of annuity factor at 10% for 5 years is 3.7908

• 131898.28
• 500000
• 100000
• 379080

24. The cashflows invested in a project at t=O period is known as_________.

• Initial Cash Flows
• Operating Cash Flows
• Terminal Cash Flows
• Regular Cash Flows

25. If  growth rate of expected earnings goes up than price of stock will_____ .

• decrease
• increase
• remain same
• fluctuate

26. In case of share buy-back, number of outstanding share will_____.

• reduce
• increase
• remain same
• unaffected

27. A stock's average return in last 3 years were 12% and Standard deviation is 8%. Calculate the coefficient of variation?

• 1.5
• 0.33
• 0.67
• 9.6

28. _____ method tells the period in which original investment in a project will be recovered.

• NPV
• IRR
• Pay-Back Period
• Profitability Index

29. After the 2 for 1 share split number of shares will_____?

• remain same
• reduce
• be half
• double

30. If credit sales is 100000, credit period is 30 days, calculate the average receivables?

• 8219
• 8333
• 3333
• 3288

 

 

 

 

TEST -1 ( 2019)

 

Q1. Inwhich of the following form of business, income is taxed separately from its owners

• Sole Proprietorship
• Partnership
• Corporation
• All of the above

2. The Share Capital of a company is Rs I 0 Cr divided in I 0 Lac number of shares. Calculate the face value of share

• Rs 100
• Rs 1000
• Rs O
• Rs l

3. Which of the following is an operating item?

• Interest paid
• salary paid
• dividend received
• share capital issued

4. Proceeds on the sale of fixed assets will be shown in which part of the cash flow statement, if indirect method is followed.

• Operating Cash Flow
• Financing Cash Flow
• Investing Cash Flow
• None of the above
• 5.wich of the following statement shows the Net Profit/Loss earned by a business entity?
• Income Statement
• Balance  Sheet
• Trial Balance
• Cash Flow Statement

6. A credit sale of goods to Mohan should be credited to

• Sales accowit
• Mohan accowit
• Goods accowit
• Purchase accowit

7. Both assets and owner 's equity would be increased by             

• capital brought in
• Purchase of an asset on credit.
• Payment of creditors.
• Proprietors drawings

 

8. There was a fire in M Ltd Godown.It resulted into loss of Rs 5 Cr goods. However, the insurance company accepted the claim of Rs 4.5 Cr only. This will result in         in equity by Rs  

• Increase, 4.5 Cr
• Decrease, 0.5 Cr
• Increase, 0.5 Cr
• Decrease, 5 Cr

9. A business has paid the rent for the period Jan-March 2016 in Jwie'2016, in which year financial statements this rent expenses will be recorded?

• 2015
• 2016
• 2017
• All of the above

10. Inwhich of the following firm structure liability of owners is wilimited

• Sole   Proprietorship
• Ltd Liability Partnership
• Pvt. Ltd Company
• Public Ltd Company

11. While preparing cash flow statements, the repayments of a loan during the year should be included wider the heading of.

• Operating Cash Flow
• Financing Cash Flow
• Investing Cash Flow
• None of the above

12. Inwhich of the following books, taransactions are first time recorded?

• Ledger
• Accowiting Equation
• Trial Balance
• Journal

13. The balance of cash account indicates _          _

• Net income for the period
• Net loss for the period
• Net cash on hand
• Net worth of the business

14.          Every accounting transaction must at least affect               account?

• One
• Two
• Three
• Four

15. On 1st April 2017 P Ltd sells 100000 shares of Dabur India Ltd to Q Ltd at Rs 400 per share (Market price on that day) with an agreement to repurchase the same at Rs 4 12 per share on 31st Dec 2017. How the transaction should be presented in financial statements of P Ltd

• Sale of Investment
• Sale of Shares
• Borrowings
• Investment

16.          Advance from Customers is an example of            ?

• Asset
• Liability
• income
• Expense

17. Which of the following self-generated intangible asset can be recorded in books of account

• Goodwill
• Technical Know-How
• Software
• All of the Above

18. Inwhich of the following statement, final balances of all the account are prepared in the form of a list

• Ledger
• Accounting Equation
• Trial Balance
• Journal

19. Wages paid to workers must be debited to account

• Wages
• Machinery
• Factiry Expenses
• Office Expenses

20. Which of the following can be categorized as discretionary Expense

• Purchase
• Salary
• Repair & Maintenance
• R&D Expense

 

21. Higher Debt-Equity ratio indicates

• High Operating Risk
• Low Operating Risk
• High Financial Risk
• Low Financial Risk

22. When a Liability is increased, it is recorded on the

• Credit Side
• Debit Side
• Left Hand Side
• Any of the above

23           Ram's account in the accounts  payable ledger has a Rs.2000 beginning balance. After a transaction for Rs.500 is posted from the purchases journal, the balance in Ram's account is       __

• 1500 Credit
• 1500 Debit
• 2500 Credit
• 2500 Debit

24. Which of the following measure will be used for calculation of Inventory Turnover Ratio

 

• Net Sales
• Credit Sales
• Cost of Goods Sold
• Cos of Sales

25. Credit sales for the year is Rs I 00000 and closing debtors are Rs I 0000. Calculate the collection period of the firm?

• 10 days
• 36.5 days
• 27.39     days
• None of the above

26. Loss on the sale of Fixed Assets will be shown in which part of the cash flow statement, if indirect method is followed?

• Operating Cash Flow
• Financing Cash Flow
• Investing Cash Flow
• None of the above

27. Which of the following can be categorized as Revenue

• Sale of goods
• Sale of Old Furniture
• Dividend Received
• All of the above

28. Inwhich of the following firm structure compliance cost is maximum

• Sole Proprietorship
• Ltd Liability Partnership
• Pvt. Ltd Company
• Public Ltd Company

29. In order to reflect the efficiency in debtor's management, Debtor turnover ratio should be.    ?

• increased
• Decreased
• Kept Constant
• None of the above

30. Purchase of machinery against issue of shares will be shown in which part of the cash flow statement?

• Operating Cash Flow
• Financing Cash Flow
• Investing Cash Flow
• None of the above

 

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