Accounting and Financial Management 12

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Objective Questions and Answers of MBA: Accounting and Financial Management 12

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 12

Part 12: Objective questions and answers of Accounting and Financial Management


Q1. All of the following are advantages of rights offerings except:

a) The position of current shareholders is protected

b) A rights offering provides the firm with a built-in securities market

c) More interest may be generated in the market

d) The dollar value of rights traded on exchanges is very high


Q2. The directors of a small, closely held corporation may be reluctant to pay dividends at all because:

a) The dividends will be taxed at a higher rate

b) They fear diluting the cash position of the firms

c) They haven't the means to do a complete funds flow analysis

d) They fear a shareholder proxy battle


Q3. Derivatives are contracts that:

a) Allow the holder to buy/sell a given commodity

b) Are sold only in established financial markets

c) Usually expose the holder to increased risk

d) Completely remove risk in financial and economic transactions


Q4. A convertible security has:

a) An upside limitation, but no floor value

b) No upside limitation, but a floor value

c) More sensitivity to interest rate movements than regular bonds of equal maturity

d) A single, fixed yield under all scenario


Q5. Perhaps the greatest management motive for a merger is:

a) The synergistic effect

b) New product acquisition

c) The portfolio effect

d) Tax loss carry-forwards


Q6. The relationship between the values of the two currencies is known as:

a) The currency rate

b) The conversion rate

c) The forward rate

d) The foreign exchange rate


Q7. Which of the following is not a primary source of international business financing?

a) The export development bank

b) The eurobond market

c) International equity markets

d) Domestic bond and equity markets


Q8. The main focus of finance for the last 40 years has been:

a) Mergers and acquisitions

b) Conglomerate firms

c) Inflation

d) Risk-return relationships


Q9. The aftertax cost of a tax deductible expense is:

a) Cost times the tax rate

b) Cost times (1-tax rate)

c) The cost of the expense

d) The cost divided by the tax rate


Q10. All of the following are debt utilization ratios except:

a) Debt to total assets

b) Times interest earned

c) Fixed charge coverage

d) Debt to sales


Q11. In general, the cost of producing a product is based on material, labor, and:

a) Profit margin

b) Cost of goods sold

c) Overhead costs

d) Shipping costs


Q12. The more aggressive firm:

a) Substitutes higher fixed costs for variable costs

b) Substitutes lower fixed costs for variable costs

c) Has lower potential profit above the break-even point

d) Is normally more effectively managed


Q13. Degree of combined leverage:

a) Should be minimized by the financial manager

b) Affects only balance sheet items

c) Decreases the firm's operating profit

d) Shows the impact of sales or volume changes on bottom line eps


Q14. Under normal conditions:

a) Long term rates are lower than short term rates

b) The yield curve is downward sloping, or inverted

c) Intermediate rates are higher than long or short term rates

d) Short term rates are lower than long term rates


Q15. Under normal conditions, the longer the maturity of the security:

a) The higher the yield

b) The lower the yield

c) The greater the possibility of the yield curve changing

d) The lower the level of interest rate risk


Q16. Banks will most likely provide funds for all of the following activities:

a) Financing of seasonal needs

b) Product line expansion

c) Long term growth

d) Marketing campaign


Q17. A eurodollar loan may be defined as:

a) A loan by canadian banks to european corporations

b) A loan from a foreign bank denominated in dollars

c) The borrowing of foreign currencies and conversion into dollars

d) A foreign currency loan repaid in dollars


Q18. An effective rate of return captures:

a) The time period

b) Present values

c) Compounding effects

d) Tax consequences


Q19. The time value of money plays an important role in which of the following:

a) Understanding the effective rate on a business loan

b) Understanding the composition of a mortgage payment

c) Determining the true rate of return on an investment

d) All of the above


Q20. The price-earnings ratio is affected by:

a) The earnings and sales growth of the firm

b) The volatility of the firm's performance

c) The debt-equity structure of the firm

d) All of the above are correct


Part 12: Objective questions and answers of Accounting and Financial Management


Q1. Answer d


Q2. Answer b


Q3. Answer a


Q4. Answer b


Q5. Answer a


Q6. Answer d


Q7. Answer d


Q8. Answer d


Q9. Answer b


Q10. Answer d


Q11. Answer c


Q12. Answer a


Q13. Answer d


Q14. Answer d


Q15. Answer a


Q16. Answer d


Q17. Answer b


Q18. Answer c


Q19. Answer d


Q20. Answer d

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