Accounting and Financial Management 14

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Objective Questions and Answers of MBA: Accounting and Financial Management 14

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 14

Part 14: Objective questions and answers of Accounting and Financial Management


Q1. The biggest problem facing a manager is:

a) The cost of financing

b) Competitive pressures

c) The farther out the time horizon moves, the greater the uncertainty

d) Changing economic conditions


Q2. The internal rate of return method:

a) Does not consider inflows after the cutoff period

b) Calculates the interest rate that equates outflows with subsequent inflows

c) Determines the time required to recoup the initial investment

d) Determines whether future benefits justify current expenditures


Q3. All of the following are true of the coefficient of variation except:

a) It eliminates the size difficulty resulting from standard deviation

b) It is computed by dividing the standard deviation by the expected value

c) It measures the volatility of returns relative to the market

d) The larger the coefficient of variation, the greater the risk


Q4. The extent of correlation among projects is represented by:

a) The coefficient of correlation

b) The coefficient of variation

c) The standard correlation coefficient

d) The variance


Q5. Which of the following characteristics of financial intermediaries is incorrect?

a) They are the interface between suppliers and demanders of funds

b) They increase the cost of funds to corporation and governments

c) They help make the flow of funds efficient and competitive

d) They include banks, mutual funds, and credit unions


Q6. The main function of syndicate members is:

a) Acting as the agent of the firm

b) Selling shares to the public

c) Determining the spread

d) Wholesaling shares to brokers and dealers


Q7. One of the main reasons an initial public offering (ipo) may do well in the aftermarket is:

a) Stabilization by the underwriters

b) Stabilization by the firm

c) Public misconceptions of the firm's value

d) The security was underpriced


Q8. The par value of a bond is:

a) The initial or face value of the bond

b) The yield to maturity

c) The stated interest payment

d) The value of the bond as traded on security markets.


Q9. Leasing offers all of the following advantages except:

a) Leases are an expense item that cannot be capitalized

b) The provisions of a lease may be less restrictive than a bond indenture

c) There may be no down payment requirement

d) Creditor claims may be restricted on real property


Q10. The most important voting issue for common shareholders is:

a) Election of the board of directors

b) Dividend policy

c) Proxy assignment

d) Adoption of the annual report


Q11. In terms of decreasing return to the investor, the proper ranking would be:

a) Common stock, long-term government debt, preferred stock

b) Long-term government debt, common stock, preferred stock

c) Preferred stock, common stock, secured debt

d) Common stock, secured debt, treasury bills


Q12. A corporation will typically pay moderate dividends in:

a) Development-stage i

b) Growth-stage ii

c) Expansion-stage iii

d) Maturity-stage iv


Q13. Dividends are quoted –––––––––, but paid ––––––––– :

a) Quarterly, annually

b) Annually, quarterly

c) Annually, semi-annually

d) Annually, monthly


Q14. The conversion price is equal to:

a) The conversion ratio/face value of the bond

b) The conversion ratio times the face value of the bond

c) The common share price/conversion ratio

d) Face value of the bond/conversion ratio


Q15. The takeover tender offer could have at least one of the following occur:

a) Turn to a white knight

b) Sell the crown jewels

c) Adopt a shareholders rights plan

d) All of the above


Q16. In a stock-for-stock exchange, shareholders of the acquired firm are most concerned with:

a) Earnings

b) Dividends

c) Book value exchanged

d) Market value exchanged


Q17. When an independent local producer uses a firm's technology in return for a royalty fee, the arrangement is called:

a) A joint venture

b) A licensing agreement

c) An export arrangement

d) A foreign subsidiary


Q18. Translation or accounting exposure primarily affects:

a) Foreign assets and liabilities

b) Domestic assets and liabilities

c) Reported earnings

d) The repatriation of earnings.


Q19. The three primary sources of capital to the firm are:

a) Net income, retained earnings, and bank loans

b) Bondholders, preferred shareholders, and common shareholders

c) Operating profits, extraordinary gains, dividends

d) Amortization cash flow, net income, and retained earnings


Q20. All of the following areas of cash flows are analyzed except:

a) Operations activities

b) Uses of funds

c) Investing activities

d) Financing activities


Part 14: Objective questions and answers of Accounting and Financial Management


Q1. Answer c


Q2. Answer b


Q3. Answer c


Q4. Answer a


Q5. Answer b


Q6. Answer d


Q7. Answer d


Q8. Answer a


Q9. Answer a


Q10. Answer a


Q11. Answer d


Q12. Answer c


Q13. Answer b


Q14. Answer c


Q15. Answer d


Q16. Answer d


Q17. Answer b


Q18. Answer a


Q19. Answer b


Q20. Answer b

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