Accounting and Financial Management 26

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Objective Questions and Answers of MBA: Accounting and Financial Management 26

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 26

Part 26: Objective questions and answers of Accounting and Financial Management

 

Q1. Risk in capital budgeting is same as:

a) Uncertainty of cash flows

b) Probability of cash flows

c) Certainty of cash flows

d) Variability of cash flows

 

Q2. Cost of capital for bonds and debentures is calculated on:

a) Before tax basis

b) After tax basis

c) Risk-free rate of interest basis

d) None of the above

 

Q3. In order to find out cost of equity capital under capm, which of the following is not required:

a) Beta factor

b) Market rate of return

c) Market price of equity share

d) Risk-free rate of interest

 

Q4. Operating leverage is calculated as:

a) Contribution ÷ ebit

b) Ebit÷pbt

c) Ebit ÷interest

d) Ebit ÷tax

 

Q5. Higher fl is related the use of:

a) Higher equity

b) Higher debt

c) Lower debt

d) None of the above

 

Q6. Which of the following is true for net income approach?

a) Higher equity is better

b) Higher debt is better

c) Debt ratio is irrelevant

d) None of the above

 

Q7. The traditional approach to value of the firm m that:

a) There is no optimal capital structure

b) Value can be increased by judicious use of leverage

c) Cost of capital and capital structure are m dent

d) Risk of the firm is independent of capital structure

 

Q8. Mm model of dividend irrelevance uses arbitrage between

a) Dividend and bonus

b) Dividend and capital issue

c) Profit and investment

d) None of the above

 

Q9. Which of the following is not a type of dividend payment?

a) Bonus issue

b) Right issue

c) Share split

d) Both (b) and (c)

 

Q10. Which of the following is not true of cash budget?

a) Cash budget indicates timings of short-term borrowing

b) Cash budget is based on accrual concept

c) Cash budget is based on cash flow concept

d) Repayment of principal amount of law is shown in cash budget

 

Q11. If the sales of the firm are. 60, 00,000 and the average debtors are. 15, 00,000 then the receivables turnover is

a) 4 times

b) 25%

c) 400%

d) 0.25 times

 

Q12. Inventory is generally valued as lower of

a) Market price and replacement cost

b) Cost and net realizable value

c) Cost and sales value

d) Sales value and profit

 

Q13. Which of the following is not applicable to commercial paper?

a) Face value

b) Issue price

c) Coupon rate

d) None of the above

 

Q14. Risk-return trade off implies

a) Minimization of risk

b) Maximization of risk

c) Ignorance of risk

d) Optimization of risk

 

Q15. In current ratio, current assets are compared with:

a) Current profit

b) Current liabilities

c) Fixed assets

d) Equity share capital

 

Q16. A sound capital budgeting technique is based on:

a) Cash flows

b) Accounting profit

c) Interest rate on borrowings

d) Last dividend paid

 

Q17. A proposal is not a capital budgeting proposal if it:

a) Is related to fixed assets

b) Brings long-term benefits

c) Brings short-term benefits only

d) Has very large investment

 

Q18. If the money discount rate is 19% and inflation rate is 12%, then the real discount rate is:

a) 7%

b) 5%

c) 5.70%

d) 6.25%

 

Q19. Which element of the basic npv equation is adjusted by the radr?

a) Denominator

b) Numerator

c) Both

d) None

 

Q20. In case the firm is all-equity financed, wacc would be equal to

a) Cost of debt

b) Cost of equity

c) Neither (a) nor

d) (d) both (a) and (b)

 

Part 26: Objective questions and answers of Accounting and Financial Management

 

Q1. Answer d

 

Q2. Answer b

 

Q3. Answer c

 

Q4. Answer a

 

Q5. Answer b

 

Q6. Answer b

 

Q7. Answer b

 

Q8. Answer b

 

Q9. Answer c

 

Q10. Answer b

 

Q11. Answer a

 

Q12. Answer b

 

Q13. Answer d

 

Q14. Answer d

 

Q15. Answer b

 

Q16. Answer a

 

Q17. Answer c

 

Q18. Answer d

 

Q19. Answer a

 

Q20. Answer b

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