Financial management2: MBA :UGC Online Test

Combined leverage is the percentage change in relationship between sales and _______
Operating income
Operating leverage
Earnings per share
Breakeven point
The_________ is the percentage change in earning per share those results from a percentage change in operating income.
Degree of combined leverage
Degree of financial leverage
Breakeven point
Degree of operating leverage
If interest expenses for a firm rise, we know that firm has taken on more _______.
Financial leverage
Operating leverage
Fixed assets
None of the above
The _____ is the percentage change in operating income that results from a percentage change in sales.
Degree of financial leverage
Breakeven point
Degree of operating leverage
Degree of combined leverage
Which of the following types of firms may operate with high operating leverage?
A doctor’s office
An auto manufacturing facility
A mental health clinic
None of the above
In the breakeven formula, price-variable cost is called the ______.
Breakeven point
Leverage
Contribution margin
None of the above
In breakeven analysis, if fixed cost rise, then the breakeven point will _______
Fall
Rise
Stay the same
None of the above
______ Is the point at which firm profit is equal to zero.
Breakeven
Operating breakeven
Financial leverage
Combined breakeven
An example of a semi-variable cost is:
Rent
Raw material
Depreciation
Sales commissions
A highly leveraged firm is _______ risky than its peers.
Less
More
The same
None of the above
_______ have a claim to the residual income of the firm.
Bondholders
Preferred stockholder
Common stockholder
None of the above
_______ Voting elects a member of the board of directors of a firm with a 51% vote
Cumulative
Preferred
Majority
None of the above
Which of the following types of voting includes minority shareholders?
Cumulative
Preferred
Majority
None of the above
If a corporate charter says that current stockholders must be given the first option to purchase new stock, then that is a ________ rights offering.
Pre-emptive
Rights-on
No-rights
Pre-emptive right
When a rights offering is announced, the stock initially trades:
Ex-rights
Rights-on
No-rights
Pre-emptive right
_____ makes a firm unattractive in case of a takeover bid.
Rights offering
Greenmail
Poison pill
Black knight
_______ represent non us company’s public traded equity in U.S market.
Stock certificates
Preferred stocks
Bond indentures
American Depository Receipts
Securities that have a mandatory dividend are:
Bonds
Preferred stock
Common stock
None of the above
One provision of preferred stock is that they can participate in the firm’s yield during good years. That provision is __________
The call provision
Cumulative dividends
Participation provision
Conversion provision
Which of the following have ownership interest in the firm?
Common stockholders
Preferred stockholders
Bondholders
All of the above
Which of the following is an advantage of a convertible bond?
Downside may be forced on the bondholders at a large premium over par value
Conversion may be forced on the bondholder by call provisions on the convertible bond
There is downside risk for the investor
None of the above
What type of MNC produces a product domestically and ships it to a foreign market?
Joint venture
Fully owned foreign subsidiary
Exporter
Importer
Firms aim to hold cash balances since _____ cash is a non-interest earning asset.
Low
Average
High
None of the above
All of these factors are used in credit policy administration except:
Credit standards
Terms of trade
Rupee amount of receivables
Collection policy
The use of safety stock by a firm will:
Reduce inventory costs
Increase inventory costs
Have no effect on inventory cost
None of the above
The 5 C’s of credit include:
Conditions
Collateral
Character
All of the above
Contribution margin is equal to
Sales-VC
Sales- fixed cost
Fixed cost & profit
Both 1 & 2 are correct
Most utilized marketable security by most firms is the:
Treasury bond
Agency security
Certificate of deposits
Treasury bill
Electronic funds transfer has _____ the use of float.
Reduced
Increased
Had no effect
None of the above
Difference between the cash balance on the firm’s books and the balance shown on the bank’s books is called:
The compensating balance
Float
A safety cushion
None of the above
Which one of the following motives for holding cash is required by the bank before loaning money?
Compensating balance motive
Transaction motive
Precautionary motive
None of the above
The transaction motive for holding cash is for:
A safety cushion
Daily operating requirements
Compensating balance requirement
None of the above
Automobile industry and the heavy manufacturing industry. Probably have expected returns with a _______ Correlation.
Positive
Perfect positive
Negative
Slightly negative
A step-up in the conversion price refer
The ability of the company to step up the maturity of the bond to an earlier date.
A shorter time to call
The provision that decreases the conversion ratio the longer the bond
None of the above
Which of the following is NOT a potential benefit of merger?
Synergy
Portfolio effect
Dilution of EPS
Tax loss carry forward
When using a probability tree approach, we discount the various cash flows to their present value at
The firm’s weighted-average cost of capital
The project required rate of return
The risk-free rate
The after-tax cost of the firm’s long-term debt
The presence of managerial, or real, options. Give blank the worth of an investment project.
Increases
Decreases
Does not affect
Increase or decrease
The typical merger premium is:
20%
20-40%
40-60%
None of the above
Merging with an unrelated company is called a _______ Merger.
Conglomerate
Horizontal
Vertical
None of the above
A business combination where the resulting firm maintains the identity of the acquiring firm is called a:
Conglomerate
Merger
Consolidation
None of the above
When the merger is mostly finance through debt, then it is called
Hostile takeover
Negotiated merger
Two-step buyout
Leveraged buyout
The financial motives for merger include all of the following except:
The portfolio effect
Improved access to the capital markets
Tax loss carry forward
Synergy
Elimination of overlapping functions and the meshing of two firm’s strong areas creates the managerial incentive for merger than is called:
Pooling of interest
Purchase of assets
Synergy
None of the above
Which of the following kinds of mergers lead to diversification benefits?
Vertical
Conglomerate
Horizontal
None of the above
If an individual stock’s beta is higher than 1.0, that stock is:
Exactly as risky as the market.
Riskier than the market.
Less risky than the market.
None of the above.
When stocks are held in a portfolio instead of individually, which measure of risk is appropriate?
Standard deviation
Beta
Coefficient of variation
None of the above
Generally, the larger the standard deviation of an investment’s expected outcomes, the ______ the standard deviation.
Higher
Lower
Less volatile
None of the above
Coefficient of variation measures:
Portfolio risk
The risk of an individual security
The risk of two securities, with different expected returns, compared to each other.
None of the above
The standard deviation measures:
Portfolio risk
The risk of an individual security
The risk of two securities, with different expected returns, compared to each other.
None of the above
The component of the risk-adjusted discount rate that compensates. The investor for holding risky asset is the:
Risk-free rate
Cost of capital
Risk premium
None of the above
Description:

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