Accounting and Financial Management 6

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Objective Questions and Answers of MBA: Accounting and Financial Management 6

Subject: Objective Questions and Answers of MBA: Accounting and Financial Management 6

Part 6: Objective questions and answers of Accounting and Financial Management

 

Q1. To the bondholder, the most important ratio is:

a) Profit margin

b) Quick ratio

c) Times interest earned

d) Debt to total assets

 

Q2. The conservative firm will utilize:

a) A high degree of operating leverage

b) A low degree of operating leverage

c) High fixed costs

d) A higher profit margin

 

Q3. To enhance overall operating results, a firm should prudently use which of the following:

a) Operating leverage

b) Financial leverage

c) Combined leverage

d) Conservative leverage

 

Q4. In monitoring collection policy, the firm should look at all of the following, except:

a) Average collection period

b) Ratio of bad debts to credit sales

c) Aging of accounts receivable

d) Terms of credit

 

Q5. Characteristics of pledging accounts receivable include all of the following, except:

a) The sale of receivables to a finance company

b) The lender stipulates which accounts are of sufficient quality

c) 60-80% of the value of the acceptable collateral may be borrowed

d) The interest rate is normally well in excess of prime

 

Q6. A series of payments required to accumulate a given amount is known as:

a) Future value-annuity

b) Present value-annuity

c) Annuity equalling a future amount

d) Annuity equalling a present amount

 

Q7. The beta coefficient measures:

a) The return relative to the risk-free rate

b) The return relative to the market return

c) The historical volatility relative to the market’s volatility

d) The required return on a financial asset

 

Q8. Under the net present value method:

a) The interest rate is determined that equates inflows and outflows

b) The time value of money is not taken into account

c) Inflows are discounted back to determine if they exceed outflows

d) The basic discount rate is the internal rate of return

 

Q9. All methods used in evaluating risk in capital budgeting have one thing in common:

a) They use the coefficient of variation to determine the discount rate

b) Risk classes are used to determine discount rates

c) They use computer-based statistical analysis

d) They recognize the differences in risk levels and adjust for them

 

Q10. Nonresident holdings of canadian securities are most significant in the:

a) Bond market

b) Money market

c) Stock market

d) Mortgage market

 

Q11. All of the following are characteristics of private placements except:

a) There are no securities commission filing requirements

b) There is less flexibility for the firm

c) Initial costs may be lower than with a public issue

d) The interest rate is usually higher due to lower liquidity

 

Q12. Bonds are rated based on all of the following criteria except:

a) Ability to make interest payments

b) Consistency of performance

c) Debt-equity ratio

d) Nominal yield

 

Q13. Dividends may be considered relevant because:

a) They increase the investor’s overall return

b) A higher return will be earned than with retained earnings

c) They are preferred by investors in higher tax brackets

d) They resolve uncertainty in the minds of investors

 

Q14. The purchaser or holder of a call option has:

a) The obligation to sell the underlying security

b) The obligation to buy the underlying security

c) The right but not the obligation to sell the underlying security

d) The right but not the obligation to buy the underlying security

 

Q15. All of the following are characteristics of the 1990s mergers and divestitures except:

a) Mergers between entertainment firms was popular

b) Mergers between financial services firms was also common

c) The federal government was active in divesting crown corporations

d) High interest rates made mergers more costly than in the 1970s and 1980s

 

Q16. On the books of the acquiring firm, a merger may be treated as:

a) A cash purchase or a pooling of interests

b) A stock-for-stock exchange

c) A purchase of assets

d) A pooling of interests or a purchase of assets

 

Q17. Foreign exchange risk may be best defined as:

a) The chance of value change in foreign exchange rates

b) The chance that the demand for your currency will drop

c) The chance that exchange rates will be fixed

d) The political risk posed by foreign governments

 

Q18. The mix of debt and equity in a firm is referred to as the firm’s:

a) Primary capital

b) Capital composition

c) Cost of capital

d) Capital structure

 

Q19. Debt utilization ratios measure:

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

b) The ability of the firm to earn an 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

 

Q20. In order to determine cash receipts, the financial manager must know:

a) Projected sales and the collection pattern

b) Projected sales and the profit margin

c) Gross profit and the collection pattern

d) Gross profit and taxes

 

Part 6: Objective questions and answers of Accounting and Financial Management

 

Q1. Answer d

 

Q2. Answer b

 

Q3. Answer c

 

Q4. Answer d

 

Q5. Answer a

 

Q6. Answer c

 

Q7. Answer c

 

Q8. Answer c

 

Q9. Answer d

 

Q10. Answer a

 

Q11. Answer b

 

Q12. Answer d

 

Q13. Answer d

 

Q14. Answer d

 

Q15. Answer d

 

Q16. Answer d

 

Q17. Answer a

 

Q18. Answer d

 

Q19. Answer d

 

Q20. Answer a

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