Accounting and Financial Management 5

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Objective Questions and Answers of MBA: Accounting and Financial Management 5

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 5

Part 5: Objective questions and answers of Accounting and Financial Management

 

Q1. Under a pre-emptive right provision:

a) Holders of common stock must be given the first option to purchase new shares

b) Common shareholders have a pre-emptive right to dividends

c) Preferred shareholders have the first option on new common shares

d) Dilution of existing positions is encouraged

 

Q2. Wealthier shareholders tend to prefer:

a) A high dividend payout ratio

b) Short term capital gains

c) Floating rate dividends

d) Capital appreciation

 

Q3. The conversion ratio indicates:

a) The number of shares of common to which the security may be converted

b) The conversion price of the security

c) The number of bonds the common share may be converted to

d) The number of bonds the preferred share may be converted to

 

Q4. Which of the following is not a non-financial motive for merging?

a) The desire to expand management capabilities

b) The need to expand marketing capabilities

c) The desire for easier access to capital markets

d) The acquisition of new products

 

Q5. The arrangement preferred by most business firms and foreign government is:

a) The joint venture

b) The export arrangement

c) The licensing agreement

d) The fully owned foreign subsidiary

 

Q6. To minimize transaction exposure, firms may pursue which of the following activities:

a) Forward exchange market hedging

b) Money market hedging

c) Currency futures market hedging

d) All of the above are correct.

 

Q7. Financial markets:

a) Exist as a vast global network of individuals and financial institutions

b) Include a broad group representing lenders, borrowers, owners, institutional investors, corporations, government units and others

c) Circulate information quickly that affects prices of securities

d) All of the above

 

Q8. All of the following are examples of tax deductible expenses, except:

a) Dividends on common shares

b) Interest payments

c) Amortization charges

d) Sales and administrative expenses

 

Q9. The allocation of capital is determined by:

a) Expected rates of return

b) The Bank of Canada

c) The initial sale of securities in the primary market

d) The size of the federal debt

 

Q10. Asset utilization ratios measure:

a) The speed at which the firm is turning over its assets

b) The ability of the firm to earn on adequate return on sales, total assets, and invested capital

c) The firm's ability to pay off short term obligations as they are due

d) The debt position of the firm in light of its assets and earning power

 

Q11. A preferred issue carrying a call provision will carry:

a) A higher yield than non-callable preferred

b) A lower yield than non-callable preferred

c) The same yield as non-callable preferred

d) The same yield as callable debt

 

Q12. In chronological order, which of the following is correct?

a) Ex-dividend date, holder of record date, payment date

b) Holder of record date, ex-dividend date, holder of record date

c) Payment date, ex-dividend date, holder of record date

d) Holder of record date, payment date, ex-dividend date

 

Q13. A warrant may best be defined as:

a) An option to sell a specified number of shares at a stated price

b) An option to buy a stated number of shares at a stated price

c) A convertible security

d) A bond derivative

 

Q14. If a firm acquires another firm with a higher P/E ratio:

a) Post merger earnings per share will be diluted

b) A cash acquisition is questionable

c) A stock-for-stock exchange should be pursued

d) None of the above are correct

 

Q15. The spot rate is:

a) Unrelated to the foreign exchange rate

b) The rate of exchange for future delivery

c) The rate of exchange for immediate delivery

d) The "black market" exchange rate

 

Q16. The ultimate measure of performance is:

a) The amount of the firm's earnings

b) How the earnings are valued by the investor

c) The firm's profit margin

d) Return on the firm's total assets

 

Q17. The income statement measures:

a) What the firm owns and how those assets are financed

b) The profitability of the firm at a given point in time

c) The profitability of the firm over a period of time

d) How changes in the balance sheet are financed over time

 

Q18. Which of the following is not the responsibility of financial management?

a) Allocation of funds to current and capital assets

b) Obtaining the best mix of financing alternatives

c) Preparation of the firm's accounting statements

d) Development of an appropriate dividend policy

 

Q19. All of the following are true of shareholders' equity except:

a) It represents the combined total of the firm's current and long term assets

b) It represents the total contribution and ownership interest of preferred and common shareholders

c) The three basic components are preferred stock, common stock, and retained earnings

d) It represents the difference between the firm's assets and liabilities

 

Q20. Among the liquidity ratios, one would include:

a) Receivables turnover and inventory turnover

b) Current ratio and quick ratio

c) Capital asset turnover and total asset turnover

d) Receivables turnover and total asset turnover

 

Part 5: Objective questions and answers of Accounting and Financial Management

 

Q1. Answer a

 

Q2. Answer d

 

Q3. Answer a

 

Q4. Answer c

 

Q5. Answer a

 

Q6. Answer d

 

Q7. Answer d

 

Q8. Answer a

 

Q9. Answer a

 

Q10. Answer a

 

Q11. Answer a

 

Q12. Answer a

 

Q13. Answer b

 

Q14. Answer c

 

Q15. Answer c

 

Q16. Answer b

 

Q17. Answer c

 

Q18. Answer c

 

Q19. Answer a

 

Q20. Answer b

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