ACC501

Which of the following is shares outstanding amount If Net 3,750

income is Rs. 45,000 and earning per share is Rs. 12?
If required rate of return is greater than coupon rate, the Premium
bond will be valued at:
The concepts of present value and future value are: Inversely related to each other
What will be the coupon value of a Rs. 1,000 face-value Rs. 1,100
bond with a 10% coupon rate?
What will be the annual payment on a 6-year Rs. 16,000 Rs. 5,892
loan that carries a 12% interest rate?
Which of the following is a series of constant cash flows Ordinary annuity
that occur at the end of each period for some fixed
number of periods?
Between the two identical bonds having different maturity lower-coupon; higher-coupon
periods, the price of the ________ bond will change less
than that of ________ bond.
Which of the following statement about bond ratings is Bond ratings are typically paid for by a
TRUE? company’s bondholders.
Which of the following(s) is/are the forms of repayment of Amortized Loans
principle and interest pattern(s)?
Equity multiplier can be written as which of the following? 1 + Debt-to-equity ratio
How much must be deposited at 12% each of the next 10 Rs. 912
years to have Rs. 16,000?
Which of the following refers to the difference between Mark up
the sale price and cost of inventory?
Which of the following ratio gives an idea as to how Return on Assets
efficient management is at using its assets to generate
earnings?
Which of the following is a characteristic of preferred These stocks have not stated liquidating
stock? value
If a firm uses cash to purchase inventory, its current ratio Remain unaffected
will:
A company issues bonds with a Rs. 1,000 face value. What 3 percent
is the coupon rate if the coupon payments of Rs. 60 are
paid every 6 months?
The coupon rate of a floating-rate bond is capped and Collar
upper and lower rates are called:
If required rate of return is lesser than coupon rate, the Par value
bond will be valued at:
A ___________ is an agent who arranges security Broker
transactions among investors.
Which of the following statement is TRUE regarding debt? Debt is an ownership interest in the
firm.
Which of the following statement about bond ratings is Bond ratings are typically paid for by a
TRUE? company’s bondholders.
If the dividend for a share is growing at a steady rate then All of the given options
which of the following formula(s) can be used to find the
dividend in two periods?
Which of the following is an example of positive covenant? Maintaining any collateral or security in
good condition
When corporations borrow, they generally promise to: I, III, and IV
I.    Make regular scheduled interest payments
II.   Give the right of voting to bondholders
III.  Repay the original amount borrowed (principal)
IV.  Give an ownership interest in the firm
When real rate is _____, all interest rates will tend to be High; Higher
_____.
Anwar wants to invest some money so that he will have Rs. 20,404
Rs. 50,000 for his child’s school education 15 years from
now. He can earn 8 percent compounded annually. How
much does he need to invest today?
JJ Inc. has a 4 percent return on total assets of Rs. 500,000 R400000
and a net profit margin of 5 percent. Total sales for JJ Inc.
would be :
How much must be deposited at 10% each of the next 15 Rs. 450
years to have Rs. 14297.62?
A ______ covenant limits or prohibits actions that Negative
company might take.
Financial policy is evaluated by which of the following? Debt-equity ratio
In which of the following procedure of voting for a straight Voting
company's directors, each shareholder is entitled to one
vote per share?
Which of the following entity manages the sinking fund? Bond trustee
What will be the coupon value of a Rs. 1,000 face-value Rs. 80
bond with a 8% coupon rate?
As the dividend is always same for a zero growth stock, so Ordinary perpetuity
the stock can also be viewed as:
Which of the following is NOT included in a bond A personal profile of the issuer
indenture?
Which one of the following typically applies to preferred Voting rights
stock but not to common stock?
Which of the following is NOT a determinant of term Internal rate of interest
structure?
Which of the following is the focus of profitability ratios? Net income
Treasury notes and bonds are examples of which of the Government bonds
following types of bonds?
All other things being equal, ______ time to maturity, Longer, Greater
______ the interest rate risk.
In which of the following type of annuity, cash flows occur Annuity due
at the beginning of each period?
Which one of the following statements is INCORRECT When the market’s required return of a
regarding Bond Price Theorems? bond is less than the coupon rate, the
bond’s market value will be greater than
its par value.
Which one of the following benchmarking method is Time-Trend Analysis
based on historical data?
Which one of the following is the CORRECT formula to PV = C / r
calculate present value of perpetuity?
Which of the following is the expected rate of return on a Yield to maturity
bond if bought at its current market price and held to
maturity
In which type of the market, previously issued securities Secondary Market
are traded among investors?
Teacher get: enough training in behavioural
development of students
Which of the following statement is NOT correct regarding By using firm’sa bond ratings
cost of preferred shares ?
Which of the following is the difference between the working capita
current assets and the current liabilities ?

Which of the following is shares outstanding amount If Net 3,750

income is Rs. 45,000 and earning per share is Rs. 12?
If required rate of return is greater than coupon rate, the bond Premium
will be valued at:
The concepts of present value and future value are: Inversely related to each other
What will be the coupon value of a Rs. 1,000 face-value bond Rs. 1,100
with a 10% coupon rate?
What will be the annual payment on a 6-year Rs. 16,000 loan Rs. 5,892
that carries a 12% interest rate?
Which of the following is a series of constant cash flows that Ordinary annuity
occur at the end of each period for some fixed number of
periods?
Between the two identical bonds having different maturity lower-coupon; higher-coupon
periods, the price of the ________ bond will change less than
that of ________ bond.
Which of the following statement about bond ratings is TRUE? Bond ratings are typically paid for
by a company’s bondholders.
Which of the following(s) is/are the forms of repayment of Amortized Loans
principle and interest pattern(s)?
Equity multiplier can be written as which of the following? 1 + Debt-to-equity ratio
How much must be deposited at 12% each of the next 10 years Rs. 912
to have Rs. 16,000?
Which of the following refers to the difference between the sale Mark up
price and cost of inventory?
Which of the following ratio gives an idea as to how efficient Return on Assets
management is at using its assets to generate earnings?
Which of the following is a characteristic of preferred stock? These stocks have not stated
liquidating value
If a firm uses cash to purchase inventory, its current ratio will: Remain unaffected
A company issues bonds with a Rs. 1,000 face value. What is the 3 percent
coupon rate if the coupon payments of Rs. 60 are paid every 6
months?
The coupon rate of a floating-rate bond is capped and upper Collar
and lower rates are called:
If required rate of return is lesser than coupon rate, the bond Par value
will be valued at:
A ___________ is an agent who arranges security transactions Broker
among investors.
Which of the following statement is TRUE regarding debt? Debt is an ownership interest in
the firm.
Which of the following statement about bond ratings is TRUE? Bond ratings are typically paid for
by a company’s bondholders.
If the dividend for a share is growing at a steady rate then which All of the given options
of the following formula(s) can be used to find the dividend in
two periods?
Which of the following is an example of positive covenant? Maintaining any collateral or
security in good condition
When corporations borrow, they generally promise to: I, III, and IV
I.    Make regular scheduled interest payments
II.   Give the right of voting to bondholders
III.  Repay the original amount borrowed (principal)
IV.  Give an ownership interest in the firm
When real rate is _____, all interest rates will tend to be _____. High; Higher
Anwar wants to invest some money so that he will have Rs. Rs. 20,404
50,000 for his child’s school education 15 years from now. He
can earn 8 percent compounded annually. How much does he
need to invest today?
JJ Inc. has a 4 percent return on total assets of Rs. 500,000 and a Rs. 250,000
net profit margin of 5 percent. Total sales for JJ Inc. would be :
How much must be deposited at 10% each of the next 15 years Rs. 450
to have Rs. 14297.62?
A ______ covenant limits or prohibits actions that company Negative
might take.
Financial policy is evaluated by which of the following? Debt-equity ratio
In which of the following procedure of voting for a company's Straight Voting
directors, each shareholder is entitled to one vote per share?
Which of the following entity manages the sinking fund? Bond trustee
What will be the coupon value of a Rs. 1,000 face-value bond Rs. 80
with a 8% coupon rate?
As the dividend is always same for a zero growth stock, so the Ordinary perpetuity
stock can also be viewed as:
Which of the following is NOT included in a bond indenture? A personal profile of the issuer
Which one of the following typically applies to preferred stock Voting rights
but not to common stock?
Which of the following is NOT a determinant of term structure? Internal rate of interest
Which of the following is the focus of profitability ratios? Net income
Treasury notes and bonds are examples of which of the Government bonds
following types of bonds?
All other things being equal, ______ time to maturity, ______ Longer, Greater
the interest rate risk.
In which of the following type of annuity, cash flows occur at Annuity due
the beginning of each period?
Which one of the following statements is INCORRECT regarding When the market’s required
Bond Price Theorems? return of a bond is less than the
coupon rate, the bond’s market
value will be greater than its par
value.
Which one of the following benchmarking method is based on Time-Trend Analysis
historical data?
Which one of the following is the CORRECT formula to calculate PV = C / r
present value of perpetuity?
Which of the following is the expected rate of return on a bond
if bought at its current market price and held to maturity
In which type of the market, previously issued securities are Secondary Market
traded among investors?
Teacher get: enough training in behavioural
development of students
Mr. Y and Mr. Z are planning to share their capital to run a Partnership
business. They are going to employ which of the following type
of business?
Which of the following ratios are particularly interesting to Liquidity
short-term creditors?
Double taxation of earning is the major disadvantage of which Corporate form
of the following form of business?

Which of the following is the acronym for GAAP? Generally Accepted Accounting
Principles
The conflict of interest between stockholders and management Agency problem
is known as:
Which of the following is a long-term solvency ratio? times interest earned ratio
Finance is the art and science of handling ______________. Money
During the accounting period, sales revenue is Rs. 25,000 and Rs. 25,000
accounts receivable increases by Rs. 8,000. What will be the
amount of cash received from customers for the period?

Period costs include which of the following? Selling expense

A portion of profits, which a company retains itself for further Retained Earnings
expansion, is known as:
Which of the given area is NOT addressed by Business Finance? none
Which of the following refers to the cash flows that result from Operating Cash Flows
the firm’s day-to-day activities of producing and selling?
The firm’s assets are Rs. 650,000 and Owner’s equity is Rs. 350,000
300,000. What would be the worth of liabilities?
Who of the following make a broader use of accounting Financial Analysts
information?
The use of debt in the firm’s capital structure is called: “Financial Leverage
The most common application of term “Finance” involves All of the given options
raising money to acquire_________.
Which of the following is a long-term solvency ratio? Cash ratio
Business Finance addresses which of the following? All of the given options
Head of Treasury department reports to whom? CFO

Cash flow from assets involves which of the following All of the given options
component(s)?
Which of the following form of business organization is least Sole-proprietorship
regulated?
What is the operating cash flow (OCF) from the following 150
options if EBIT is 110, Depreciation is 90 and existing taxes are
50?
____________ shows the sources from which cash has been Income Statement
generated and how it has been spent during a period of time?
Which of the following best represents the term “Financing”? It means raising money to acquire
something.
Which of the following is a non-cash item? depriciation

Net working capital can be written as: Current assets – current liabilities
Which of the following refers to the cash flows that result from Operating Cash Flows
the firm’s day-to-day activities of producing and selling?
Which of the following equation is known as Cash Flow (CF) CF from Assets = CF to Creditors +
identity? CF to Stockholder
Which of the following ratios are particularly interesting to Liquidity Ratios
short-term creditors?
Decisions about “how to raise money” and “what to do with it” Business Finance
are part of which of the following?
Which of the following is a non-cash item? Depreciation

The difference between current assets and current liabilities is Working Capital
known as:
Business Finance deals with witch of the following function? How to raise money” and “what to
do with it”?

The mixture of debt and equity maintained by a firm is called: Capital structure
A standardized financial statement presenting all items in Percentages
_____________ is called a common size statement:
Which of the following issue is NOT covered by “Investment” Associated risks and rewards
area of finance?
Which of the following area of finance deals with stocks and Investments
bonds?
Which of the following is subcategory (ies) of finance Accounting department and
department? Treasury department
AST Company has a current ratio of 4:3. Current Liabilities Rs. 10,000
reported by the company are Rs. 30,000. What would be the
Net Working Capital for the company?
Which of the following statement shows assets, liabilities, and Balance Sheet
net worth as of a specific date?
The most common application of term “Finance” involves All of the given options
raising money to acquire_________
Which of the given statement is correct? More income will be available for
taxation due to debt financing
Finance is vital for which of the following business acnew tivity All of the given options
(activities)?
Head of Treasury department reports to whom? CFO
In which type of market, new securities are traded? Primary market
Which of the following financial statement shows both dollars Common-Size Statement
and percentages in the report?
Which of the following is subcategory (ies) of finance Accounting department and
department? Treasury department
Deferred Taxes are the example of _____________ in income noncash item
statement
Interest paid less net new borrowing is called__________: Cash flow to creditors
Direct labor expense is an example of: Product cost
Horizon Corporation paid Rs. 5.0 Million as dividend to its Financing activity
shareholders in the previous financial year. This transaction will
be reported on the cash flow statement as a (an):
The value of net working capital will be greater than zero when: Current Assets > Current Liabilities
Which one of the following is NOT a liquidity ratio? Cashcoverage  Ratio
Balance Sheet is based upon which of the following formula? Assets = Liabilities + Stockholder’s
equity
Which of the following is a cash flow from financing activity? Cash outflow to shareholders as
dividends
Cash flow from assets involves which of the following All of the given options
component(s)?
The difference between current assets and current liabilities is Working Capital
known as:
In which type of market, used securities are traded? Primary market
Which of the following can be termed as “Period cost”? Administrative expenses
Which of the following best represents the term “Financing”? It means raising money to acquire
current assets something.

The most important item that can be extracted from financial None of the
statements is the actual __________ of the firm.
Net working capital can be written as: Current assets – current liabilities
Which of the following costs are reported on the income Both product cost and period cost
statement as the cost of goods sold?
Which of the following area of finance deals with stocks and Investments
bonds?
Which of the following is disadvantage of sole proprietor Limited sources
business?  
Which of the following statement is considered as the Balance Sheet
accountant’s snapshot of firm’s accounting value as of a
particular date?
Finance is NOT essential for: Public policy
Which one of the following is NOT a liquidity ratio? Cash coverage Ratio
Which of the following is a long-term solvency ratio? Times interest earned ratio
Which of the following has “Limited liability” for business Corporation
debts?
A firm reports total liabilities of Rs. 300,000 and owner’s equity Rs. 800,000
of Rs. 500,000. What would be the total worth of the firm’s
assets?

The mixture of debt and equity maintained by a firm is called: Capital structure

Which of the given area is NOT addressed by Business Finance? None of the given options
Which of the following is the cash flow from investing activity? Cash inflow through sales of fixed
assets
Mr. A has just recently started a business by investing a capital Sole-proprietorship
of Rs. 500,000. He will be the only owner of the business and
also enjoy all the profits of the business. Which type of business
is being employed by Mr. A?
Standard Corporation sold fully depreciated equipment for Rs. Investing activity
5,000. This transaction will be reported on the cash flow
statement as a(n):
Balance sheet for a company reports current assets of Rs. 1.39 times
700,000 and current liabilities of Rs. 460,000. What would be
the Current Ratio for the company if there is an inventory level
of Rs. 120,000?
Which of the following is an example of capital spending? Purchase of Fixed Assets
Who of the following make a broader use of accounting Financial Analysts
information?
Which of the following issue is NOT covered by “Investment” Associated risks and rewards
area of finance?
In case of international business which of the given factor(s) All of the given options
must be considered?
Product costs include which of the following? Manufacturing overhead
In which type of business, all owners share in gains and losses Sole-proprietorship
and all have unlimited liability for all business debts?
In which form of business organizations, owners have limited Joint stock company
liability?
Which of the following is (are) true for making financial All of the given options
management decisions?
Standard Corporation sold fully depreciated equipment for Rs. Investing activity
5,000. This transaction will be reported on the cash flow
statement as a(n):
Balance Sheet is based upon which of the following formula? Assets = Liabilities + Stockholder’s
equity
If net income is Rs. 30,000 and total share outstanding is Rs Rs. 3,000
10,000, the Earnings per share (EPS) will be?
Financial Institutions
Income is reported when it is earned, even though no cash flow Realization principle
may have occurred is called:
Business risk depends on which of the following risk of the systematic risk
firm’s assets ?
A firm’s capital structure may include which of the following ? Common stock
Preferred stock
bonds
ALL
Which of the following is referred as a statistical measure of the Standarad deviation
variability of a distribution around its mean ?
If you have Rs. 30 in asset A and Rs. 120 in another asset B, the 20, 80
weights for assets A and B will be ____ and ____ respectively.
What will happen to cash cycle if payable period is lengthened ? Cash cycle is decreased
A firm’s equity is worth 4 million and its debt is worth 2 million. 33
What is the percentage of firm’s financing that is debt ?
Which of the following statement is NOT correct regarding cost By using firm’sa bond ratings
of preferred shares ?
Which of the following refers to the use of borrowed money to financial leverage
increase the return on equity of an investment purchase ?
The increase in debt financing raises the required return on financial risk
equity because the risk born by the investors increases which is
called:
Mr. Nadeem has bought 100 shares of a corporation one year 27.27
ago at Rs. 22 per share. Over the last year, he received a
dividend of Rs. 2.50 per share. At the end of the year, the stock
sells for Rs. 28. As per given information, what will be the
capital gains yield ?
The value of the firm’s cash flows (or the value of the firm) is Max, min
____________ when the WACC is ____________.
Which of the following term refers to the situation when unlever
investors loan out the money ?
Which of the following is known as the group of assets such as Portfolio
stocks and bonds held by an investor ?
Which of the following is the return that firm’s creditors Cost of deb
demand on new borrowings ?
Which of the following is NOT an example of systematic risk ? Strike call in company
A firm’s equity is worth 4 million and its debt is worth 2 million. 67
What is the percentage of firm’s financing that is equity ?
The cost of common equity for a firm is: Required rate of return on the
company stock
Which of the following term refers to the use of personal Homemade leverage is:
borrowing to alter the degree of financial leverage ?
Which of the following activities does not increase cash ? Increasing current assets other
than cash
Which of the following is the time between receipt of inventory none
and payment for it ?
Systematic Risk is also known as : r market risk
Which of the following is the overall return the firm must earn WACC
on its existing assets to maintain the value of the stock?
Which of the following is referred as the ratio of the standard Coefficient of variation
deviation of a distribution to the mean of that distribution ?
What will be the affect of capital structure on the value of the WACC) are not affected by capital
firm and WACC when there are no taxes and bankruptcy costs ? structure
According to which of the following theory, the firm's capital M& M preposition
structure is determined by a trade-off of the value of tax shields
against the costs of bankruptcy.
What will be the risk premium for a stock that has an expected 9%
return rate of 14% and a risk-free rate of 5% ?
The total market value of a company’s stocks is calculated as Rs. 28.57
250 million and the total market value of the company’s debt
are calculated as Rs. 100 million. What percent of the firm’s
financing is debt ?
Which of the following risk is associated with the unique Business risk
circumstances of a particular company ?
Total portfolio risk is equal to : Systematic risk plus diversifiable
risk
The total market value of a company’s stocks is calculated as Rs. 62.50%
250 million and the total market value of the company’s debt
are calculated as Rs. 150 million. What percent of the firm’s
financing is equity ?
Which of the following M&M propositions states that it is 1st proposition
completely irrelevant how a firm chooses to arrange its finances
?
Under what situation, we can safely say that one capital If it results in a higher weighted
structure is better than the other ? average cost of capital
Standard deviations for Investment A and Investment B are 15% Investment B is more volatile than
and 32% respectively. This indicates that : investment
A
Uses of cash always involve ________ a liability (or equity) Increasing  decreasing
account or ________ an asset account.
Which of the following type of risk can be eliminated by Unsystemati risk
diversification ?
___________ paid by corporation is tax deductible but Divdent intrest
___________ paid are not tax deductible.
Operating cycle = ________________ Inventory period + account payble
period
According to 2nd M&M proposition, cost of equity does NOT The firms cost of debt
depend upon which of the following ?
Cash cycle = ________________ Inventory period + accounts
receivablew period
What would be the standard deviation of returns for an 0.08660
investment that has a variance of 0.0075 ?
Sources of cash always involve ________ a liability (or equity) Increasing decreasing
account or ________ an asset account.
Standard Company purchased a vehicle for Rs. 450,000. Based Rs 112500
on historical averages, this vehicle is worth 25% of the purchase
price now and it is being sold at this price. What is the vehicle’s
market value ?
The book value of a system is Rs. 35,500 at the end of year 4 of 20327
its life. What will be the total after-tax cash flow from sale if we
sell this system for Rs. 20,000 at this time? (Tax rate is 35%)
Your gain (or loss) on an investment that you buy is called your : Return on investement
Which of the following is the time period between the operating cycle
acquisition of inventory and the collection of cash from
receivables ?
What will happen to cash cycle if inventory and receivable
periods get longer ?
Which of the following is(are) the basic area(s) of Finance? aLL
Which of the following item provides the important function of Depreciation
shielding part of income from taxes?
Which of the following cash flow activities are reported in the Operating activities
Cash Flow Statement and Income Statement?

In corporate form of business, which of the following is the Maximize shareholder wealth
primary objective of shareholders?
Which of the following forms of business organizations is Corporation
created as a distinct legal entity owned by one or more
individuals or entities?
Current assets are less than current liabilities when: Less than 0
In basic areas of finance, which of the following area/s deals Financial Institution
with banks and insurance companies?
Which of the following is the process of planning and managing Capital bufgeting
a firm’s long-term investments?
The accounting definition of income is: R- Expense
Which of the following is (are)the characteristic(s) of sole All
proprietor business?  

Which of the following refers to a conflict of interest between Agency problem

principal and agent?
Which of the following has the unlimited life of business? Corporation
Which of the following item(s) is(are) not included while Expense related to firms fianancing
calculating Operating Cash Flows?
A portion of profits, which a company distributes among its Dividends
shareholders, is known as:
Which of the given is treated as financial asset? Corporate bond

Which of the following is the most significant financial Easy to raise money
advantage of corporate form?

Net Income after taxation differs from Net Cash Flow from Included in statement but not in
operations because: cash flow
Which of the given is correct? Financial asset is document
representing a claim to income

Which of the following is the primary issue while investing in Long term ---needs to pay its blls
financial assets?

___________ refers to the cash flow that results from the firm’s Operating Cash Flow
day-to-day activities of producing and selling:
Agency problems can be controlled by which of the way? Monitor what

Cash generated from a firm’s normal business activities is Operating cash flow
called________________:
Which of the following equation best represents Net Working CA - CL
Capital?
In which of the given business form, business income is taxed Corporate form
twice?

In which of the following form of business “All Business income Corporate form
is not considered as personal income”?

Finance is vital for which of the following business activity ALL

(activities)?
Which one of the following financial statement shows the income statement
sources from which cash has been generated and how it has
been spent during a period of time?
Which of the given is (are) major difference(s) between net Depriciation
income and cash flow of the company?

Which of the following ratios is NOT from the set of Asset Capital intensity ratio
Management Ratios?
Aslam wants to invest some money so that he will have Rs. 19318
60,000 for his child’s school education 10 years from now. He
can earn 12 percent compounded annually. How much does he
need to invest today?
Which of the following is NOT an external use of financial Credit standing new customer
statements information?
Which of the following is NOT an internal use of financial none
statements information?
What is the effective annual rate of 7 percent compounded 7.23
monthly?

If you have Rs. 850 and you plan to save it for 4 years with an 1244
interest rate of 10%, what will be the future value of your
savings?

Which of the following is measured by profit margin? Operating eff

What is the effective annual rate of 8 percent compounded 8.29

monthly?
Which one of the following is NOT a Long-term solvency ratio? Cash ratio
What amount a borrower would pay at the end of fourth year 5625
with a 4-year, 12%, interest-only loan of Rs. 8,000?
What will be the annual payment on a 7-year Rs. 18,000 loan 4197
that carries a 14% interest rate?
Which of the following process can be defined as the process of Comunding
generating earnings from previous earnings?

Which of the following ratios are particularly more relevant for liquidity
short-term creditors?

If you plan to save Rs. 6,000 with a bank at an interest rate of 7260
7%, what will be the worth of your amount after 3 years if bank
offers simple interest?
In 4 years you are to receive Rs. 6,000. If the interest rate were fall
to suddenly increase, the present value of that future amount
to you would:
Time value of money is an important finance concept because: all
If a firm has a ROA of 8 percent, sales of Rs. 100,000, and total 6
assets of Rs. 75,000. What is the profit margin?
If you plan to save Rs. 5,000 with a bank at an interest rate of 5400
8%, what will be the worth of your amount after 4 years if bank
offers simple interest?
Mr. Ali is expected to receive a sum of Rs. 5,000 per year 50000
forever from an investment, the opportunity cost for this
investment is 10%. What will be the present value?
A company’s Debt-to-total assets ratio is 0.65. What is its debt- 1.86
to-equity ratio?
A firm has paid out Rs. 150,000 as dividends from its net income 40
of Rs. 250,000. What is the retention ratio for the firm?
A given rate is quoted as 9 percent APR, but the EAR is 9.38 monthly
percent. What is the compounding period?
If a firm’s debt ratio is 45%, this means _______ of the firm’s 55
assets are financed by equity financing.

What would be the present value of Rs. 10,000 to be received 6302

after 6 years at a discount rate of 8 percent?
SNT Inc. has net income of Rs. 300,000. How much is kept as 180000
retained earnings if the firm has a dividend payout ratio of 40%?
You own a bond that promises to pay the holder Rs. 150 1875
annually forever. You plan to sell the bond three years from
now. If similar investments yield 8 percent at that time, how
much will the bond be worth?
The income statement of a company shows earnings before 2
interest & tax (EBIT) of Rs. 5,000 and interest 4,000. What
would be the cash coverage ratio if depreciation is Rs. 3,000?
Which of the following ratios are intended to address the firm’s Long term solvency
financial leverage?
Quick Ratio is also known as: acid-test
Which of the following is measured by retention ratio? opera6ting
If a company’s debt ratio is 0.63 Times, it means 37
______________ of company’s assets are financed by equity
financing:
An account was opened with an investment of Rs. 3,000 ten 1100
years ago. The ending balance in the account is Rs. 4,100. If
interest was compounded, how much compounded interest
was earned?
Rule of 72 for finding the number of periods is fairly applicable 2 to 8
to which of the following range of discount rates?

Which of the following set of ratios is used to assess a profitability

business's ability to generate earnings as compared to its
expenses and other relevant costs incurred during a specific
period of time?
In how many years, an amount will be doubled at a discount 6
rate of 8 percent?

Which of the following is a special case of annuity, where the perpetuity

stream of cash flows continues forever?
What would be the number of shares outstanding, If Net 3750
income is Rs. 45,000 and earnings per share is Rs. 12?
XYZ Company has a ROE of 12 percent and a dividend payout
ratio of 40 percent. What is the firm’s maximum sustainable
rate of growth?
A company having a current ratio of 1 will have __________ net 0
working capital.
AST Company’s debt-to-total assets ratio is 0.45. What is its 0818
debt-to-equity ratio?
Which one of the following benchmarking method is based on Ratio analysis
historical data?
Which one of the following is the CORRECT formula of discount 1+r
factor?
A borrower is able to pay Rs. 40,000 in 5 years. Given a discount 22697
rate of 12 percent, what amount of money the lender should
lend?
Ali wants to invest some money so that he will have Rs. 30,000
for purchase of a bike 5 years from now. He can earn 9 percent
compounded annually. How much does he need to invest
today?
Which of the following statement is CORRECT regarding
compound interest?
Which of the following set of ratios relates the market price of
the firm's common stock to selected financial statement items?

External financing deals with the funds increased by either Borrowwing money
selling stock or ____________:
_________ is occasionally called “return on net worth”: ROE
Which of the following ratio is a way to measure a company's
performance?
Which of the following terms refers to the use of debt
financing?
If a firm uses cash to purchase inventory, its quick ratio will: increase
Mr. Zohaib opened an account with an investment of Rs.7,000 3000
five years ago. The current balance in the account is Rs.10,000.
If interest was compounded, how much compounded interest
was earned?        
Calculating the present value of a future cash flow to determine discounted cash flow (DCF)
its worth today is commonly known as: valuation
Which one of the following formula is used to calculate the = C× { ( ) }  
present value of an annuity?

Which of the following term refers to establish of a standard to Benchmarking

follow for comparison?

The preferred stock of a company currently sells for Rs. 25 per

share. The annual dividend of Rs. 2.50 is fixed. Assuming a
constant dividend forever, what is the rate of return on this
stock?
Which of the following measure reveals how much profit a
company generates with the money shareholders have
invested?

In 3 years you are to receive Rs. 5,000. If the interest rate were fall
to suddenly decrease, the present value of that future amount
to you would:

The process of determining the present value of a payment or a . Discounting

stream of payments that is to be received in the future is known
as:

According to Du Pont Identity, ROE is affected by which of the All

following?

Which of the following represents an annuity?

In how many years, an amount will be doubled at a discount
rate of 9 percent?
The amount left after paying dividend to shareholders is added
to ___________:
Suppose the initial investment for a project is Rs. 16 million and 2.6
the cash flows are Rs. 4 million in the first year and Rs. 9 million
in the second and Rs. 5 million in the third. The project will have
a payback period of:
A model which makes an assumption about the future growth DGM
of dividends is known as:
Which of the following represents the linear relation between PI>NPV +
Net Present Value (NPV) and Profitability Index (PI)?
Which of the following is the amount of time required for an payback Period
investment to generate cash flows sufficient to recover its initial
cost?
In the formula "ke >= (D1/Po) + g", what does (D1/Po) Expected dividend yeild form
represent? common stock
Which of the following bond allows the holder to force the Put bonds
issuer to buy the bond back at a stated price?
Internal Rate of Return (IRR) is sometimes referred to as: RRR
An investment should be accepted if the Net Present Value  And -
(NPV) is __________ and rejected if it is ________.
What will be the real rate if the nominal rate is 14% and the 7.55
inflation rate is 6%?
SNT Corporation has policy of paying a Rs. 6 per share dividend 40
every year. If this policy is to continue indefinitely, what will be
the value of a share of stock at a 15% required rate of return?
Which of the following rate makes the Net Present Value (NPV) IRR
equal to zero?
Which of the following formula is used to calculate the price of D/r
a zero growth stock?
IRR and NPV rules always lead to identical decisions as long as: Both
The projected cash flows from a project are: 3
Year 1: Rs. 100
Year 2: Rs. 300
Year 3: Rs. 400
Year 4: Rs. 800
The Project cost is Rs. 800. What would be the payback period
for the project?

ABC Corporation has two shareholders; Mr. Aamir with 50 120

shares and Mr. Imran with 70 shares. Both want to be elected
as one of the four directors but Mr. Imran doesn’t want Mr.
Aamir to be director. How much votes would Mr. Aamir be able
to cast as per cumulative voting procedure?
In which type of the market, securities are originally sold to the secondary
investors?
The relationship between real and nominal returns is described Fisher effect
by the:
Sumi Inc. has just paid a dividend of Rs. 7 per share. The 8.93
dividend of this company grows at a steady rate of 5% per year.
What will be the dividend in 5 years?
What will be the real rate if the nominal rate is 12% and the 4.67
inflation rate is 7%?
Mr. Aslam owns 100 shares of a company and there are four 100
directors to be elected. How much votes Mr. Aslam would have
as per cumulative voting procedure?
Which of the following bond can be swapped for a fixed number Convertible bonds
of shares at any time before maturity at the holder’s option?
Which of the following is NOT an important feature of treasury taxable
notes and bonds?
As the dividend is always same for a zero growth stock, so the Ordinary preptutiy
stock can also be viewed as:
Expectation of a ______ inflation rate will push long term Higher , higher
interest rates ______ than short term rates reflected by an
upward term structure.
Which of the following statement is TRUE regarding Average gr
Accounting Return?
Investors demand a higher yield as compensation to the risk of IRRSP
possible default. This extra premium is called:
Which of the following is a measure of accounting profit relative AAR
to the book value?
An investment generates cash flows of Rs. 10,000 for next 7 5642
years. What would be the Net Present Value (NPV) if there is an
initial investment of Rs. 40,000 and discount rate is 12%?
Which of the following is NOT a shortcoming of Payback Rule? Simple and easy to calculate
What will be the price per share if there is a current dividend of 71.25
Rs. 4.75, required rate of return of 12% and growth rate of 5%?
If a firm is allowed to miss a coupon payment on a bond in a Floating rate
year in which it reports an operating loss, the bond is most
likely a(n) _______ bond.
Which of the following is the most common capital budgeting NPV
technique?
An investment will be ___________ if the IRR doesn’t exceeds R, A
the required return and ___________ otherwise.
Which of the following type of bond pays no coupon at all and ZCB
are offered at a price that is much lower than its stated value?
One would be indifferent between taking and not taking the NPV = 0
investment when:
Which of the following is NOT a quality of IRR? Easily communicated
Which of the following term refers to the difference between NPV
the present value of cash inflows and the present value of cash
outflows?
Standard deviations for Investment A and Investment B are 25% A is more volatile than B
and 12% respectively. This indicates that :
Which of the following is (are) a non-cash item(s) ? Depreciation
Suppose you have just passed your Intermediate and now oppotunity cost
planning to get admission in some college for graduation. You
have three choices of colleges A, B, and C. You bought the
prospectuses for all these three colleges and finally got
admission in College B. The cost incurred on the prospectuses of
other two colleges A and C will be considered as:
Mr. Nadeem has bought 100 shares of a corporation one year 27.27
ago at Rs. 22 per share. Over the last year, he received a
dividend of Rs. 2.50 per share. At the end of the year, the stock
sells for Rs. 28. As per given information, what will be the
capital gains yield ?
What will be the cash inflow if we have sales of Rs. 300,000 and 230000
accounts receivable are increased by Rs. 70,000 ?
In MACRS property classes, 7-year class includes which of the ALL
following ?
Which of the following set of cash flows represent the change in ALL
the firm’s total cash flow that occurs as direct result of
accepting the project ?
A set of possible values that a random variable can assume and Probability dist
their associated probabilities of occurrence are referred as :
In which type of projects, the unequal lives of the projects do Mutually exclusive
affect the analysis ?
Mr. Nadeem has bought 100 shares of a corporation one year 11.36
ago at Rs. 22 per share. Over the last year, he received a
dividend of Rs. 2.50 per share. As per given information what
will be the dividend yield ?
While performing the feasibility analysis for a project, an 545000
operating cash flow of Rs. 500,000 has been calculated. Net
working capital has declined by Rs. 45,000. There was no capital
spending during the year. What will be the total cash flow for
the project ?
Which of the following comes under the head of discounted NPV
cash flow criteria for capital budgeting decisions?
Which of the following comes under the head of accounting AAR
criteria for capital budgeting decision?
Which of the following is NOT included in discounted cash flow Payback period
criteria for capital budgeting decision?
Which of the following measures the present value of an NPV
investment per dollar invested?
Mr. Naveed has bought 100 shares of a corporation one year
ago at Rs. 23 per share. Over the last year, he received a
dividend of Rs. 1.50 per share. At the end of the year, the stock
sells for Rs. 31. As per given information, what will be his total
percentage return ?
A project whose acceptance does not prevent or require the
acceptance of one or more alternative projects is referred to as
a(n):
A project whose acceptance prevents the acceptance of one or
more alternative projects is referred to as a(n):
Suppose market value exceeds book value by Rs. 250,000. What
will be the after-tax proceeds if there is a tax rate of 34
percent ?
Suppose market value exceeds book value by Rs. 200,000. What
will be the after-tax proceeds if there is a tax rate of 35
percent ?
Cash flows from activities is drive from the items of: ALL of the above
Which of the following is the amount of cash we would get if we intrinsic
actually sell an asset?
A business owned by a single person is known as: sole
Which of the following is the goal of financial management? Max. the working capital of the
firm
Which of the following is NOT a form of business organization? Cooperative society
Which of the following is NOT the advantage of “Sole None of the
proprietorship”?
Which one of the following financial statement measures Income statement
performance over a specific period of time?
When a corporation wishes to borrow from public on a long- Debt securities or bonds
term basis, it does so by issuing or selling:
The price of a Rs. 1,000-face value bond is Rs. 910. What will be Greater than 9
the yield to maturity if there is a coupon payment of Rs. 90 for 6
years?

Which one of the following terms refers to the risk arises for Interest Rate Risk
bond owners from fluctuating interest rates?

What will be the value of a Rs. 1,000 face-value bond with an Less than its face value
8% coupon rate at 8% required rate of return?

Ford Motors is producing a new van with four-wheel drive.

Identify on which of the following basis they will segment their
markets for this new model?
You just won a prize, you can either receive Rs. 1000 today or Either because both options
Rs. 1,050 in one year. Which option do you prefer and why if are of equal value
you can earn 5 percent on your money?

Which of the following security represents the ownership Equity

interest in the firm?
When the market's required rate of return for a particular bond premium
is much less than its coupon rate, the bond is selling at:

Which of the following relationships holds TRUE if a bond sells Bond Price < Par Value and YTM
at a discount? > coupon rate

All else equal, the market value of a corporate bond is always

inversely related to its:
What would be the present value of Rs. 12,000 to be received 85555
after 5 years at a discount rate of 7 percent?
Keeping other things constant, how will an increase in interest
rate affect the bond value?
When corporations borrow, they generally promise to: I and iii
I.    Make regular scheduled interest payments
II.   Give the right of voting to bondholders
III.  Repay the original amount borrowed (principal)
IV.  Give an ownership interest in the firm

Between the two identical bonds having different coupon, the None of them
price of the ________ bond will change less than that of
________ bond.

The principal amount of a bond at issue is called: