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