Objective Questions and Answers of MBA: Basic Accounting 13

Subject: Objective Questions and Answers of MBA: Basic Accounting 13

**Part 13: Objective questions and answers of Basic Accounting**

**Q1. The ______________ is a common term for the market consensus value of the required return on a stock.**

a) Dividend payout ratio

b) Intrinsic value

c) Market capitalization rate

d) Plowback rate

**Q2. What is the value of a $1,000 Face Value Bond that has twenty years remaining to**

**Maturity, 10 % Coupon (paid annually), and is priced to yield 6%?**

a) $ 980

b) $ 1,000

c) $1263

d) None

**Q3. Which of the following is a characteristic of a coupon bond?**

a) Pays interest on a regular basis (typically every six months)

b) Does not pay interest on a regular basis but pays a lump sum at maturity

c) Total payment must be made at the end of period

d) All of above statement are correct

**Q4. ______________ is responsible for financial inventory, management, financial planning etc.**

a) Shareholders

b) Treasurer

c) Controller

d) Board of Directors

**Q5. Which one of following is not Direct Claim Security?**

a) Bonds

b) Option

c) Shares

d) Stock

**Q6. The Future Value (FV) of $1000 in 5 years at 5% interest rate will be:**

a) $1,000.00

b) $1276.28

c) $999.99

d) $1,500.52

**Q7. You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:**

a) Will be greater than the intrinsic value of stock Y

b) Will be the same as the intrinsic value of stock Y

c) Will be less than the intrinsic value of stock Y

d) Cannot be calculated without knowing the market rate of return

**Q8. A capital budgeting technique that is NOT considered as discounted cash flow method is:**

a) Payback period

b) Internal rate of return

c) Net present value

d) Profitability index

**Q9. You wish to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of Rs2 in the upcoming year. The expected growth rate of dividends is 9% for stock C and nine percent for stock D. The intrinsic value of stock C**

**______________.**

a) Will be the same as the intrinsic value of stock D

b) Will be less than the intrinsic value of stock D

c) Cannot be calculated without knowing the rate of return on the market portfolio

d) None of the above is a correct statement

** **

**Q10. The ______________ is defined as the present value of all cash proceeds to the investor in the stock.**

a) Dividend payout ratio

b) Intrinsic value

c) Market capitalization rate

d) Plowback ratio

**Q11. ______________ are analysts who use information concerning current and prospective profitability of firms to assess the firm's fair market value.**

a) Credit analysts

b) Fundamental analysts

c) Systems analysts

d) Technical analysts

**Q12. There are ______________ types of financial statements analysis**

a) 1

b) 2

c) 3

d) 4

**Q13. Financing decision determines**

a) Current asset

b) Fix asset

c) Equity

d) Mix of finance

**Q14. Horizontal analysis is also called**

a) Ratio change analysis

b) Common size analysis

c) Trend analysis

d) Ratio analysis

**Q15. If gross profit is Rs 5,000 and the net profit is 25% of the gross profit the expenses must be**

a) Rs 3,750

b) Rs 1,250

c) Rs 4,150

d) Rs 6,250

**Q16. Which of the following affects the price of the bond?**

a) Market interest rate

b) Required rate of return

c) Interest rate risk

d) All of the given options

**Q17. Pension fund and insurance obligation is an example of**

a) Annuities

b) Perpetuity

c) Consol

d) Securities

**Q18. Assume that the interest rate is greater than zero. Which of the following cash-inflow streams totaling Rs.1, 500 would you prefer? The cash flows are listed in order for Year 1, Year 2, and Year 3 respectively.**

a) Rs.700; Rs.500 and Rs.300

b) Rs.300; Rs.500 and Rs.700

c) Rs.500; Rs.500 and Rs.500

d) Any of the above, since they each sum to Rs.1,500

**Q19. Which group of ratios shows the extent to which the firm is financed with debt?**

a) Liquidity ratios

b) Debt ratios

c) Coverage ratios

d) Profitability ratios

**Q20. If you have to judge a project from its NPV, you will select the one with the _______**

a) Lowest NPV

b) Highest NPV

c) NPV cannot judge the project

d) Information is not enough

**Part 13: Objective questions and answers of Basic Accounting**

Q1. Answer c

Q2. Answer d

Q3. Answer a

Q4. Answer b

Q5. Answer b

Q6. Answer b

Q7. Answer c

Q8. Answer a

Q9. Answer a

Q10. Answer b

Q11. Answer b

Q12. Answer c

Q13. Answer d

Q14. Answer c

Q15. Answer a

Q16. Answer d

Q17. Answer a

Q18. Answer a

Q19. Answer b

Q20. Answer b

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