Q.

1) Name the company which acquired Asset Management Company named DBS Cholamandalam, to start its mutual fund business. A. B. C. D. L & T Finance (Correct Answer) Mahindra Finance Edelweiss Capital Bharti enterprize

Q.2) Recently Nifty calculation methodology is changed, from market capitalization weighted average method to .. A. B. C. D. Equally weighted average method Free floated weighted average method (Correct Answer) Price weighted method Volume weighted methodology

Q.3) What does a bull market mean ? A. B. C. D. A market charecterised by rising prices for securities (Correct Answer) Unpredictable Market A market charecterised by falling prices A stable market

Q.4) Name the financial institution that helps in converting a pool of illiquid asset into marketable securities. A. B. C. D. Non-Banking Finance company Special purpose vehicle (Correct Answer) Mutual Fund Clearing corporation of India

Q.5) Name the worlds 3rd largest petrochem company being taken over by Reliance Industries making it one of the biggest acquisition by a Desi company? A. B. C. D. Yemen Refinery Schoneweiss & Co. Lyondell Basell (Correct Answer) None of these

Q.6) Which of the following is not a correct statement in explaining financial leverage A. B. C. D. It is a result of use of fixed income securities It reflects change in EBIT w.r.t. change in sales (Correct Answer) It reflects change in EPS w.r.t. change in EBIT At a given level of financing DFL is measured by EBIT/EBT

Q.7) Name the financial instrument that commenced its trading in NSE on 29th August 2009 A. B. C. D. Currency future Stock index Interest rate futures (Correct Answer) Stock futures

Q.8) Value or wealth maximisation objectuve stands for: A. B. C. D. Maximising earning per share Maximising value of debt Maximising market value of equity shares (Correct Answer) Maximising Profits

Q.9) What are the illiquid stocks that do not follow SEBI rules called? A. B. C. D. A stocks B stocks C stocks Z stocks (Correct Answer)

Q.10) Grasim Cements is promoted by which company?

A. B. C. D.

Adani Group Reliance ADA group Jaypee Group Aditya Birla Group (Correct Answer)

Q.11) What is an arbitrage ?

Buying something at a lower price in one market & selling the same at a higher price in another market (Correct Answer) B. Tax-loss Selling C. Buying Stock option D. None of these A. Q.12) Under which head would the amount received from the sale of fixed assets be categorised in the cash flow statement of a company: A. B. C. D. Financing Activities Investing activities (Correct Answer) Operating activities None of these

Q.13) The difference between the total present value of a stream of cash flows at a given rate of discount and the initial capital outlay is known as: A. B. C. D. Internal rate of return Pay back period Net present value (Correct Answer) Net profit

Q.14) A bond selling at a premium should have A. B. C. D. A coupon rate lower than the YTM A coupon rate higher than the YTM (Correct Answer) A coupon rate equal to the YTM The current yield equal to the YTM

Q.15) Which bank introduced Net Safe Credit cards? A. B. C. D. ICICI HDFC (Correct Answer) Standard Chartered State Bank of India

Q.16) Which of the following would change the P/V ratio of a product:

A. B. C. D.

Increase in variable cost per unit (Correct Answer) Increase in sales volume Decrease in total fixed cost None of these

Q.17) Which of the following chains best represents the operating cycle of a business: A. B. C. D. Cash--stock--cash--debtors Cash--stock--debtors--cash (Correct Answer) Cashdebtorscash--stock Cashdebtorsstock--cash

Q.18) Which of the following market is not included in the 'Financial markets' ? A. B. C. D. New issues market Money Market Stock Market Commodity Market (Correct Answer)

Q.19) What is the correct description of the situation of a firm which coverts it's debentures into equity? A. B. C. D. Increase in debt-equity ratio and increase in the risk factor Increase in debt-equity ratio and decrease in the risk factor Decrease in debt-equity ratio and increase in the risk factor Decrease in debt-equity ratio and decrease in the risk factor (Correct Answer)

Q.20) Which company was recently barred from the MOU with Andhra Pradesh Government to construct the prestigious Hyderabad Metro Rail project company? A. B. C. D. Afcons Infrastructure Limited IVRCL Infrastructures and projects Ltd. Hindustan Steelworks construction Ltd. Maytas Infra Ltd. (Correct Answer)

Q.21) What is a bond?

A. B. C. D.

paper Money Certificate of Debt (Correct Answer) Credit money Private equity

Q.22) Exchange of principal and interest in one currency for the same in other currency
is known as......

A. B. C. D.

Exchange Rate Cross Currency Rate Currency Swap (Correct Answer) Currency rate

Q.23) The free cash flows of any project are calculated a follows: A. Profit after tax less investment in capital expenditure and working capital B. Cash flows after taxes C. Cash flow before taxes less incremental investment in working capital D. Cash flows after tax less (Capital expenditue + incremental working capital investment)
(Correct Answer)

Q.24) Economic value added (EVA) is measured by the following : (Where CE is capital employed and NOPAT is Net operating profit after tax) A. B. C. D. EBIT (WACC X CE) NOPAT (WACC X CE) (Correct Answer) NOPAT + (WACC X CE) EBIT (WACC X EBIT )

Q.25) Vertical Merger takes place when the firms are involved in: A. B. C. D. Similar business activities Similar stages of production In the value chain Different stages of production In the value chain (Correct Answer) None of the above

Q.26) Who is the current Governor of R.B.I. ? A. Bimal Jalan

B. C.B. Bhave C. D. Subbarao (Correct Answer) D. C. Rangarajan

Q.27) Beta coefficient used in calculating cost of equity, measures .... A. B. C. D. Systematic Risk (Correct Answer) Unsystematic Risk Total Risk Average Return

Q.28) What % growth rate did Indian economy report for the quarter ended September 2009?

A. B. C. D.

5.5 % 7.9 % (Correct Answer) 6.7 % 10.2 %

Q.29) The theory that relates spot rate , forward rate of currency and interest rate differential between two country is

A. B. C. D.

Purchase power Parity Relative purchase power parity Law of one price Interest rate parity (Correct Answer)

Q.30) Who is the largest Indian player in the 2 wheeler market for 8 years in a row ? A. B. C. D. Hero Honda (Correct Answer) Bajaj Auto TVS Suzuki Ltd. Scooters India Ltd

Q.31) Horizontal financial analysis means:

A. B. C. D.

Inter-firm comparison Analysis of data for one year Evaluating series of financial data over a period of time (Correct Answer) Expressing the components of balance sheet as a % of total assets

Q.32) Quick ratio is also known as .. A. B. C. D. Current Ratio Acid Test Ratio (Correct Answer) Liquity Ratio Inventory Ratio

Q.33) What is the term used for depreciating companys intangible assets ? A. B. C. D. Depreciation Amortization (Correct Answer) Write off Appreciation

Q.34) Which of the following ratios is used for assessing long term solvency of a company? A. B. C. D. Stock turnover ratio Net profit ratio Operating ratio Debt equity ratio (Correct Answer)

Q.35) Name the financial intermediary which helps in clearing and settlement of Forex trading. A. B. C. D. SWIFT NSCCL IMF CHIPS (Correct Answer)

Q.36) Which of the following statements is incorrect with respect to variable and fixed cost ?

A. B. C. D.

Higher the volume of production higher is the total variable cost Higher the volume of production,lower is the fixed cost per unit As the volume of production increases the total cost increases at a decreasing rate Lower the volume of production ,lower is the fixed cost per unit (Correct Answer)

Q.37) In an option A. B. C. D. Option writer has an obligation and option buyer has the right (Correct Answer) Option writer has a right and option buyer has obligation Option writer is obligated to pay premium to buyer Put means buy and call means sell.

Q.38) Name the steel maker with which Arcelor-Mittal announced a co-promotional agreement as an entry route to Indian Steel market. A. B. C. D. Tata Steel Uttam Galva Steels Ltd (Correct Answer) Jindal Steel Essar Steel

Q.39) Which of the following information is not required to help a potential investor for an investment decision? A. B. C. D. Risk Return Production (Correct Answer) Dividend Yield

Q.40) Which of the following statements explains operating risk of a business? A. It depends on the amount of fixed cost bearing capital B. It represents variability in earning per share It depends on the amount of fixed cost in the C. cost structure (Correct Answer) D. It is same as financial risk of a business

1.Monitors inside a public firm are

A. the SEC B. auditors C. executive management D. the board of directors(Your Answer) E. none of the above

2.

The firms highest level financial manager is usually the A. Chief Financial Officer (CFO)(Your Answer) B. Financial Director C. Controller D. Treasurer E. Chief Executive Officer(CEO)

3.

What type of retirement plan do most companies offer to their employees? A. a defined benefit plan B. a defined contribution plan(Your Answer) C. a lifetime position D. a lump sum payment amount E. none of the above

4.

The process of monitoring managers and aligning their interests and incentives with shareholders is called A. audit committee B. employee stock options C. agency problem D. corporate governance(Your Answer)

E. none of the above

5.

Finance managers goal or objective is A. to increase wealth B. to report the value and status of assets C. to maximize shareholder wealth(Your Answer) D. to maximize profits

6.

All of the followinf are subareas osf finance listed in the textbook except A. derivative finance(Your Answer) B. international finance C. financial institutions D. investments E. all of the above are listed and are subareas of finance

7.

If we're discussing business investment (business projects) such as construction of a new assembly line we are most likely describing A. short-term assets B. intangible assets C. current assets D. real assets(Your Answer) E. financial assets

8.

The often difficult effort to get managers to align their interests with shareholders is A. corporate governance B. corporation problem C. managerial restraints D. the agency problem(Your Answer)

E. none of the above

9.

These types of analysts examine a firm's financial strength for debt holders A. corporate analysts B. diagnostic analysts C. equity analysts D. credit analysts(Your Answer) E. none of the above

10.

A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's net income? A. 210,000 B. 240,000(Your Answer) C. 280,000 D. 315,000 E. none of the above

11.

A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's operating margin? A. 15.8% B. 22.5% C. 33.3%(Your Answer) D. 62.5% E. none of the above

12.

A firm has net sales of $1,500,000, Cost of Goods Sold is $700,000, depreciation expense of $100,000, selling and administrative expenses of $200,000, interest expense of $100,000, and an average tax rate of 40%. What is the firm's gross profit margin?

A. 15.8% B. 22.5% C. 53.3%(Your Answer) D. 62.5% E. none of the above

13.

In a standard cash flow statement dividends paid are included in cash flows from A. operations B. investing C. financing(Your Answer) D. foreign exchange E. all of the above

14.

A decrease in a current liability account is considered a(n) A. investment opportunity B. bad thing and should be avoided at all cost C. use of cash(Your Answer) D. source of cash E. none of the above

15.

the balance sheet identity states A. equity = assets - liabilities(Your Answer) B. equity = assets + liabilities C. assets = liabilities - equity D. liabilities = assets + equity E. none of the above

16.

Power's Mold Removal's year-end 2009 balance sheet lists current assets of $325,000, fixed assets of $550,000, current liabilities of $290,000, and long-term debt of $260,000.

Calculate Power's total stockholders' equity. A. 615,000 B. 550,000 C. 350,000 D. 325,000(Your Answer) E. 35,000

17.

Chapman's Home Inspection, Inc.'s 2009 income statement lists the following income and expenses: EBIT = $750,000, Interest expense of $115,000, and taxes of $190,000. Chapman's has no preferred stock outstanding and 200,000 shares of common stock outstanding. Calculate the 2009 earnings per share. A. .45 B. .75 C. 1.25 D. 2.23(Your Answer) E. 3.55

18.

Financial Leverage is best described as A. the ratio of short-term to long-term debt B. a firm's ability to stretch the impact of its capital C. the extent to which a firm chooses to finance its venture of assets by issuing debt securities(Your Answer)

D. the most aggressive strategy to maximized shareholder's wealth E. none of the above

19.

A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's net income is A. 210,000 B. 350,000 C. 720,000(Your Answer)

D. 800,000 E. none of the above

20.

A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's operating margin is A. 22%(Your Answer) B. 30% C. 33.3% D. 50% E. none of the above

21.

A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%.The firm's gross profit margin is A. 20% B. 30% C. 33.3% D. 40%(Your Answer) E. none of the above

22.

A firm has net sales of $5,000,000, cost of goods sold is $3,000,000, depreciation expense of $300,000, selling and administrative expenses of $600,000, interest expense of $200,000, and an average tax rate of 20%. The firm's taxable income is A. 1,200,000 B. 1,000,000 C. 900,000 D. 200,000

E. cannot be determined(Your Answer)

23.

A firm has a gross profit of $1,000,000, selling and administrative expenses of $500,000, depreciation of $100,000 and interest expense of $200,000. What is its operating profit? A. 200,000 B. 250,000 C. 325,000 D. 400,000(Your Answer) E. none of the above

24.

In a standard cash flow statement, cash flows are separated into all of the following efforts except A. operations B. investing C. financing D. marketing(Your Answer)

25.

An increase in a current liability account is considered a(n) A. investment opportunity B. bad thing and should be avoided at all cost C. use of cash D. source of cash(Your Answer) E. none of the above

26.

An industrial park and office complex is available for sale in Berea. Cash flows from rent amount to $1,000,000 per year, every year for the next ten years. Financing arrangements are made to borrow at 8.25%. Calculate the value of the property. A. 4,310,210.50 B. 6,635,070.66(Your Answer) C. 8,352,251.25

D. 14,659,683.80 E. none of the above

27.

A five year, zero coupon bond with a $1,000 face value sells at auction for $774.26. Calculate the bonds yield to maturity A. 5.55% B. 5.41% C. 5.36% D. 5.25%(Your Answer) E. none of the above

28.

Keybank is offering a savings product that pays 6.37% and compounds daily. Calculate the effective rate of return (EAY) A. 6.370% B. 6.577%(Your Answer) C. 6.592% D. 6.760% E. none of the above

29.

The value of any asset is A. whatever the current market price is B. the discounted value of all expected cash flows(Your Answer) C. a function of supply and demand D. decided by the New York Stock Exchange model E. none of the above

30.

Umberto Fidele holds a special bond that will pay him $100 per year evert year for the next five years. If Umberto uses a discount rate of 7.5% what is the present value of the bond? A. 413.52

B. 409.37 C. 406.22 D. 404.59(Your Answer) E. none of the above

31.

Ms. Patel deposits $200 per month every month for the next 20 years. She uses an account that expects to pay 7.63% compounded monthly. What will be the balance in Ms. Patel's account in 20 years? A. 112,531.80(Your Answer) B. 113,321.52 C. 114,206.25 D. 115,500.22 E. none of the above

32.

You will receive $5,000 per year every year for the next for years beginning at the end of this year. If you use 6% as your discount rate, calculate the present value of this annuity. A. 21,061.82(Your Answer) B. 22,303.21 C. 25,250.21 D. 28,326.49 E. none of the above

33.

You will receive $5,000 per year every year for the next for years beginning at the end of this year. If you use 6% as your discount rate, calculate the present value of this annuity. This is an example of a(n) A. back load annuity B. front load annuity C. annuity due D. ordinary annuity(Your Answer)

E. none of the above

34.

An investor deposits $5,750 in a certificate of deposti which pays 7.35% and compounds weekly. What will be the balance in seven years? A. 9,588.10 B. 9,593.25 C. 9,607.25 D. 9,615.12(Your Answer) E. none of the above

35.

This ratio measures liquidity A. debt/equity ratio B. utilization ratios C. times interest earned D. current ratio(Your Answer)

E. none of the above 36. Penowski Corp. reported COGS for 2009 for $23,000,000. The balance sheet showed $5.6 Million in inventory. Using a 365 day year, how many days did Penowski's inventory stay on the premises. A. 4.1 days B. 60 days C. 77 days D. 89 days(Your Answer) E. none of the above

37.

A provision in a bond contract that gives the issuer the right to pay-off the bond prior to normal maturity is a A. call provision(Your Answer) B. conversion feature

C. restrictive covenant D. put provision E. none of the above

38.

A corporate bond has an original maturity of ten years, face value of $1,000,000, coupon rate of 4.25%, annual payments, and seven years to maturity. Current yields on similar risk are 6.25%. Value this bond. A. 889.34(Your Answer) B. 744.32 C. 688.32 D. 112.64

39.

Viewed from a firm;s operating statement the priority of payments is A. taxes, bond holders, stock holders B. bondholders, taxes, stockholders(Your Answer) C. stockholders, bondholders, taxes D. none of the above

40.

Firm specific risk is often referred to as A. diversifiable risk(Your Answer) B. non-diversifiable risk C. systematic risk D. non-systematic risk

41.

An investor purchases a stock on March 4, 2009 for $1,000 and sells it one year later at a price of $1,450. During the period, the investor receives one dividend payment of $35. The investor A. experiences a realized gain of $1,450 B. experiences an unrealized gain of $1,485 C. experiences a realized gain of $450 and income of $35(Your Answer)

D. experiences an unrealized gain of $450 and earned income of $35

42.

Jonathan Printing Inc. purchases an industrial paper shredder for $10,000. It is expected to generate cash flows of $2,000 every year for the next 10 years. What is the expected dollar return per year and percent return (yield) on this investment? A. dollar return of $10,000 - yield of 20% B. dollar return of $2,000 - yield of 20%(Your Answer) C. dollar return of $2,000 - yield of 100% D. dollar return of $2,000 - yield of 200%

43.

A client invests $500 at the end of each month for 25 years beginning one month from today. The account is expected to earn 7.25% interest compounded monthly. What will the balance be in 25 years? A. 400,220.25 B. 408,325.33 C. 418,350.25 D. 421,442.32(Your Answer)

44.

A client invests $500 at the end of each month for 25 years beginning one month from today. The account is expected to earn 7.25% interest compounded monthly. What will the balance be in 25 years? If inflation is expected to be 5% over the next 25 years, using the real rate of interest, (nominal minus inflation) recalculate the balance, which reflect the FVA's purchasing power in 2008 dollars. A. 190,352.25 B. 198.997.25 C. 201,101.48(Your Answer) D. 213,325.25

45.
2005 2006 2007 2008 2009

BTR and BTS generated the following investment returns over the last five years: BTR 35% 13% 3% 9% 115% BTC 27% 28% 25% 5% 2%

Calculate the expected return for 2009 (arithmetic mean average) for BTR A. 15%(Your Answer) B. 13.25% C. 12.08% D. 9.36%

46.

BTR and BTS generated the following investment returns over the last five years:

BTR 2005 2006 2007 2008 2009 35% 13% 3% 9% 115%

BTC 27% 28% 25% 5% 2%

Calculate the sample standard deviation for BTR A. 15% B. 13.25% C. 12.08%(Your Answer) D. 9.36%