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Financial Management 2 Flashcards | StudBud
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Financial Management 2
Financial Management 2
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Questions
30
Answers
1
Which is not the examples of investment in capital expenditure?
Purchase of production line
Alteration to the fixed assets
Replacement of fixed assets
Maintenance of fixed assets
2
The decisions of investing in long term assets on the basis of cost-benefit analysis are known as:
Financial Decisions
Leverage Decisions
Working capital decisions
Capital budgeting decisions
3
The balance sheet valuation is a?
Dynamic approach
Nominal approach
Futuristic approach
Historical approach.
4
The total present value of all the cash flows, excluding the initial investment over period of time is called as:
Capital investment
Net Present Value
Gross present value
Gross future value
5
The smallest unit of capital is known as?
Share
Deposit
Debenture
Bond
6
The minimum expected rate of return that is needed for an investor to purchase the security at given risk is called?
Inflation premium
Required rate of return
Risk free rate of return
Risk premium
7
The method that converts the amount of present cash into an amount of cash of equivalent value in future is called?
Budgeting method
Discounting method
Compounding method
Discontinuing method
8
Which kind of leverage can be determined with the help of break-even analysis?
Operating leverage
Composite leverage
Financial leverage
Working capital leverage
9
A series of payments of fixed amount made at equal intervals within a specified number of years is called as:
Compounding
Discounting
Recovery factor
Annuity
10
The long term and non-cancellable lease where the ownership may be transfer to lessee is?
Financial lease
Sale and lease back
Operating lease
Leveraged leasing
11
The percentage change in taxable profit as a result of percentage change in operating profit is known as?
Degree of operating leverage
Degree of working leverage
Degree of combined leverage
Degree of financial leverage
12
The financial manager selects one or more sources of finance after proper taking into consideration of:
Cost of capital
Risk
All of these
Control
13
The risk in terms of variability in security’s total return due to some exogenous factors is known as:
Unsystematic risk
Default risk
Non diversifiable risk
Systematic risk
14
What kind of risk associated with a particular firm’s operating conditions is?
Interest Risk
Liquidity Risk
Business Risk
Financial Risk
15
The Market of initial public offerings where any new share is issued known as:
Primary market
New market
Money market
Secondary market
16
What is the nature of capital expenditure decisions in general?
Long-term
Reversible
Unexpected
Routine
17
The problems arising due to conflict of interest among equity shareholders, debentures holders and management is?
Agency problems
Bankruptcy Problems
Public Problems
Shareholder problems
18
The process of buying a security/asset by taking advantage of a difference in prices in two or more markets is known as:
Arbitrage
Cheating
Insider trading
Bargaining
19
What is the relationship generally existed between risk and return?
Negative correlation
No correlation
Zero correlation
Positive correlation
20
The comparison of various financial ratios of the same firm over a period of time is called as?
Time series analysis
Cross sectional analysis
Technical analysis
Statistical analysis
21
Which of the formula shows the relationship between Present value and future value of a cash flow:
FV = PV FVF(k%, n)
PV = FV \div FVF(k%, n)
FV = PV \times PVF(k%, n)
PV = FV \times FVF(k%, n)
22
The payback period method gives much emphasis on:
Whole life earnings
Time factor
Profitability
Liquidity
23
The process of owning and acquiring economic resources to generate income in future is called as:
Dividend decision
Leveraging decision
Financing decision
Investment decision
24
What is the concept that value of a dollar to receive in future is less than the value of a dollar today?
Appreciation in value
Recovery factor concept
Time value of money
Compounding factor concept
25
A security with no interest but trades at a discount and is redeemed for its full face value at maturity is called?
zero coupon bonds
perpetual debentures
straight bonds
convertible debentures
26
The investment made in fixed assets is known as:
Capital expenditure
Revenue expenditure
Rental expenditure
Fixed expenditure
27
The possibility of losing money in a business venture or investment is called:
Liquidity Risk
Default Risk
Call Risk
Financial Risk
28
The variability in return on security due to changes in the level of market interest rate is called as:
Investment Risk
Financial Risk
Liquidity Risk
Interest Risk
29
The appreciation in the value of security or asset is called as:
Never return
Total return
Capital return
Annual return
30
What is Yield to maturity?
The difference between current yield and annual depreciation
The difference between current yield and annual appreciation
Combination of current yield & annual appreciation or depreciation
Annual appreciation or depreciation over the current yield