MCQOPTIONS
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MCQOPTIONS
This section includes 2436 Mcqs, each offering curated multiple-choice questions to sharpen your Commerce knowledge and support exam preparation. Choose a topic below to get started.
| 2351. |
Operating leverage measures ____________. |
| A. | business risk |
| B. | financial risk |
| C. | both risks |
| D. | production risk |
| Answer» B. financial risk | |
| 2352. |
Situation in which company replaces existing assets with new assets is classified as |
| A. | replacement projects |
| B. | new projects |
| C. | existing projects |
| D. | internal projects |
| Answer» B. new projects | |
| 2353. |
Most investors are risk averse which means____________. |
| A. | they will assume more risk only if they are compensated by higher expected return |
| B. | they will always invest in the investment with the lowest possible risk |
| C. | they will always invest in the investment with the lowest possible risk |
| D. | they avoid the stock market due to the high degree of risk |
| Answer» E. | |
| 2354. |
Net investment in operating capital is Rs 5000 and net operating profit after taxes is Rs 8000 then free cash flow would be |
| A. | Rs 13,000.00 |
| B. | -Rs 3,000.00 |
| C. | Rs 3,000.00 |
| D. | -Rs 13,000.00 |
| Answer» D. -Rs 13,000.00 | |
| 2355. |
Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________. |
| A. | Dependence hypothesis |
| B. | Traditional view |
| C. | Modern view |
| D. | Independence hypothesis |
| Answer» E. | |
| 2356. |
The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________. |
| A. | capital positioning |
| B. | capital structuring |
| C. | capital rationing |
| D. | capital budgeting |
| Answer» E. | |
| 2357. |
The coupon rate is another name for the__________. |
| A. | market interest rate |
| B. | current yield |
| C. | stated interest rate |
| D. | yield to maturity |
| Answer» D. yield to maturity | |
| 2358. |
If a preferred stock issue is cumulative, this means____________. |
| A. | dividends are paid at the end of the year |
| B. | dividends is legally binding on the corporation |
| C. | unpaid dividends will be paid in the future |
| D. | unpaid dividends are never repaid |
| Answer» D. unpaid dividends are never repaid | |
| 2359. |
If coupon rate is equal to going rate of interest then bond will be sold |
| A. | at par value |
| B. | below its par value |
| C. | more than its par value |
| D. | seasoned par value |
| Answer» B. below its par value | |
| 2360. |
Reinvestment risk of bonds is higher on |
| A. | short maturity bonds |
| B. | high maturity bonds |
| C. | high premium bonds |
| D. | high inflated bonds |
| Answer» B. high maturity bonds | |
| 2361. |
Price per share is Rs 25 and cash flow per share is Rs 6 then price to cash flow ratio would be |
| A. | 0.24 times |
| B. | 4.16 times |
| C. | 4.16% |
| D. | 24.00% |
| Answer» C. 4.16% | |
| 2362. |
Degree of total leverage can be applied in measuring change in _________. |
| A. | EBIT to a percentage change in quantity |
| B. | EPS to a percentage change in EBIT |
| C. | EPS to a percentage change in quantity |
| D. | Quantity to a percentage change in EBIT |
| Answer» D. Quantity to a percentage change in EBIT | |
| 2363. |
Financial securities that can be converted into cash at closing to their book value price are classified as |
| A. | inventories |
| B. | short-term investments |
| C. | cash equivalents |
| D. | long-term investments |
| Answer» D. long-term investments | |
| 2364. |
A company may raise capital from the primary market through _____________. |
| A. | Public issue |
| B. | Rights issue |
| C. | Bought out deals |
| D. | All of the above |
| Answer» E. | |
| 2365. |
The major problem with the Markowitz model is its_______________. |
| A. | lack of accuracy |
| B. | predictability flaws |
| C. | complexity |
| D. | inability to handle large number of inputs |
| Answer» D. inability to handle large number of inputs | |
| 2366. |
An inflation rate includes in bond's interest rates is one which is inflation rate |
| A. | at bond issuance |
| B. | expected in future |
| C. | expected at time of maturity |
| D. | expected at deferred call |
| Answer» C. expected at time of maturity | |
| 2367. |
Stock market theory which states that stocks are in equilibrium and impossible for investors to beat market is classified as an |
| A. | inefficient market hypothesis |
| B. | efficient market hypothesis |
| C. | efficient stock hypothesis |
| D. | inefficient stock hypothesis |
| Answer» C. efficient stock hypothesis | |
| 2368. |
Range of probability distribution with 99.74% lies within |
| A. | (+ 3σ and -3σ) |
| B. | (+ 4σ and -4σ) |
| C. | (+ 1σ and -1σ) |
| D. | (+ 2σ and -2σ) |
| Answer» B. (+ 4≈ì√â and -4≈ì√â) | |
| 2369. |
Stocks which has lower book for market ratio are considered as |
| A. | optimistic |
| B. | more risky |
| C. | less risky |
| D. | pessimistic |
| Answer» D. pessimistic | |
| 2370. |
In binomial approach of option pricing model, fourth step is to create |
| A. | equalize domain of payoff |
| B. | equalize ending price |
| C. | riskless investment |
| D. | high risky investment |
| Answer» D. high risky investment | |
| 2371. |
Document in a corporation which consists of amount of stock, name and addresses of directors is classified as |
| A. | liability plan |
| B. | stock planning |
| C. | corporation paperwork |
| D. | charter |
| Answer» E. | |
| 2372. |
Investment is the _______________. |
| A. | net additions made to the nation’s capital stocks |
| B. | person’s commitment to buy a flat or house |
| C. | employment of funds on assets to earn returns |
| D. | employment of funds on goods and services that are used in production process |
| Answer» D. employment of funds on goods and services that are used in production process | |
| 2373. |
Payment divided by par value is classified as |
| A. | divisible payment |
| B. | coupon payment |
| C. | par payment |
| D. | per period payment |
| Answer» C. par payment | |
| 2374. |
Difference between bond's yield and any other security yield having same maturities is considered as |
| A. | maturity spread |
| B. | bond spread |
| C. | yield spread |
| D. | interest spread |
| Answer» C. yield spread | |
| 2375. |
Bond which is issued in market and few days are passed of its issuance is classified as |
| A. | instable bond |
| B. | outstanding bond |
| C. | standing bond |
| D. | stable bond |
| Answer» C. standing bond | |
| 2376. |
Bond risk premium is 3% and bond yield is 10.2% then cost of common stock will be |
| A. | 3.40% |
| B. | 13.20% |
| C. | 7.20% |
| D. | 30.60% |
| Answer» C. 7.20% | |
| 2377. |
Cash flow which starts negative then positive than again positive cash flow is classified as |
| A. | normal costs |
| B. | non-normal costs |
| C. | non-normal cash flow |
| D. | normal cash flow |
| Answer» D. normal cash flow | |
| 2378. |
Portfolio risk is best measured by the______________. |
| A. | expected value |
| B. | portfolio beta |
| C. | weighted average of individual risk |
| D. | standard deviation |
| Answer» D. standard deviation | |
| 2379. |
Shareholder wealth in a firm is represented by___________. |
| A. | the number of people employed in the firm |
| B. | the book value of the firm's assets less the book value of its liabilities |
| C. | the amount of salary paid to its employees |
| D. | the market price per share of the firms common stock |
| Answer» E. | |
| 2380. |
The gross working capital is a _____ concern concept. |
| A. | Going concern |
| B. | money measurement |
| C. | revenue concept |
| D. | cost concept |
| Answer» B. money measurement | |
| 2381. |
In order to determine the expected return of a portfolio, all of the following must be known except______________. |
| A. | probabilities of expected returns of individual assets |
| B. | weight of each individual asset to total portfolio value |
| C. | expected return of each individual asset |
| D. | all of the above must be known in order to determine the expected return of a portfolio |
| Answer» E. | |
| 2382. |
Factoring is a form of financing. |
| A. | payable |
| B. | receivables |
| C. | borrowings |
| D. | debts |
| Answer» C. borrowings | |
| 2383. |
Greater chance of lower actual return than expected return and greater variation is indicated by |
| A. | smaller standard deviation |
| B. | larger standard deviation |
| C. | smaller variance |
| D. | larger variance |
| Answer» C. smaller variance | |
| 2384. |
A range of probability distribution with 95.46% lies within |
| A. | (+ 1σ and -1σ) |
| B. | (+ 2σ and -2σ) |
| C. | (+ 3σ and -3σ) |
| D. | (+ 4σ and -4σ) |
| Answer» C. (+ 3≈ì√â and -3≈ì√â) | |
| 2385. |
A risk which is classified as its contribution to risk of portfolio is classified as |
| A. | classified risk |
| B. | contributed risk |
| C. | irrelevant risk |
| D. | relevant risk |
| Answer» E. | |
| 2386. |
In asset portfolio, number of stocks are increased to |
| A. | reduce return |
| B. | reduce average |
| C. | reduce risk |
| D. | increase prices |
| Answer» D. increase prices | |
| 2387. |
Portfolio which consists of perfectly positive correlated assets having no effect of |
| A. | negativity |
| B. | positivity |
| C. | correlation |
| D. | diversification |
| Answer» E. | |
| 2388. |
Chance of occurrence of any event is classified as |
| A. | probability |
| B. | risk |
| C. | chance |
| D. | event happening |
| Answer» B. risk | |
| 2389. |
Tendency of moving together of two variables is classified as |
| A. | correlation |
| B. | move tendency |
| C. | variables tendency |
| D. | double tendency |
| Answer» B. move tendency | |
| 2390. |
An estimation by marginal investor, a higher expected return is earned on |
| A. | more risky securities |
| B. | less risky securities |
| C. | less premium |
| D. | high premium |
| Answer» B. less risky securities | |
| 2391. |
In internal rate of returns, discount rate which forces net present values to become zero is classified as |
| A. | positive rate of return |
| B. | negative rate of return |
| C. | external rate of return |
| D. | internal rate of return |
| Answer» E. | |
| 2392. |
A point where profile of net present value crosses horizontal axis at plotted graph indicates project |
| A. | costs |
| B. | cash flows |
| C. | internal rate of return |
| D. | external rate of return |
| Answer» D. external rate of return | |
| 2393. |
A project whose cash flows are more than capital invested for rate of return then net present value will be |
| A. | positive |
| B. | independent |
| C. | negative |
| D. | zero |
| Answer» B. independent | |
| 2394. |
An uncovered cost at start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating |
| A. | original period |
| B. | investment period |
| C. | payback period |
| D. | forecasted period |
| Answer» D. forecasted period | |
| 2395. |
If retention rate is 0.68 then payout rate will be |
| A. | 1.47 |
| B. | 1.68 |
| C. | 0.32 |
| D. | 0.68 |
| Answer» D. 0.68 | |
| 2396. |
Capital budgeting decisions are analyzed with help of weighted average and for this purpose |
| A. | component cost is used |
| B. | common stock value is used |
| C. | cost of capital is used |
| D. | asset valuation is used |
| Answer» D. asset valuation is used | |
| 2397. |
In capital budgeting, number of non-normal cash flows have internal rate of returns are |
| A. | one |
| B. | multiple |
| C. | accepted |
| D. | non-accepted |
| Answer» C. accepted | |
| 2398. |
Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be |
| A. | negative |
| B. | zero |
| C. | positive |
| D. | independent |
| Answer» C. positive | |
| 2399. |
Number of years forecasted to recover an original investment is classified as |
| A. | payback period |
| B. | forecasted period |
| C. | original period |
| D. | investment period |
| Answer» B. forecasted period | |
| 2400. |
An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax |
| A. | term structure |
| B. | market premium |
| C. | risk premium |
| D. | cost of debt |
| Answer» E. | |