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Question Bank Financial Management & Data Analytics

1. Time value of money explains that: a unit of money received today is worth more than a unit received in future.

a unit of money received today is worth more than a unit received in future a unit of money received today is worth less than a unit received in future a unit of money received today and at some other time in future is equal none of the above

2. Time value of money facilitates comparison of cash flows occurring at different time periods by:

compounding all cash flows to a common point of time discounting all cash flows to a common point of time using either (1) or (2) neither (1) nor (2)

3. If the nominal rate of interest is 10 per cent per annum and frequency of compounding is 4 i.e. quarterly compounding, the effective rate of interest will be:

10.25% per annum 10.38% per annum 10% per annum none of the above

4. Relationship between annual effective rate of interest and annual nominal rate of interest is, if frequency of compounding is more than 1:

Effective Rate < Nominal rate Effective Rate > Nominal rate Effective Rate = Nominal rate none of the above

5. If annual effective rate of interest is 10.25% per annum and nominal rate of return is 10% per annum what is the frequency of compounding?

1 3 2 4

6. A student takes a loan of Rs. 50,000 from SBI. The rate of interest being charged by SBI is 10% per annum. What would be the amount of equal annual instalment if he wishes to pay it back in five instalments and first instalment, he will pay at the end of year 5?

Rs. 11,000 Rs. 19,310 Rs. 15,000 None of the above

7. How much amount should an investor invest now in order to receive five annuities starting from the end of this year of Rs. 10,000 if the rate of interest offered by bank is 10% per annum?

Rs. 40,000 Rs. 45,000 Rs. 37,910 none of the above

8. A bank offers 12% compound interests payable quarterly. If you deposit Rs.2,000 now, how much it will grow at the end of 5 years?

Rs. 3,050 Rs. 3,430 Rs. 3,612 Rs. 3,722

9. A company wants to repay a loan of Rs. 5,00,000, 10 years from today. What amount should it invest each year for 10 years if the funds can earn 8% per annum? The first investment will be made at the beginning of this year.

Rs. 50,000 Rs. 31,950 Rs. 40,000 Rs. 32,950

10. Risk of two securities having different expected return can be compared with:

standard deviation of securities variance of securities coefficient of variation mean

11. A portfolio consists of two securities and the expected return on two securities is 12% and 16% respectively. Calculate return of portfolio if first security accounts for 40% of portfolio.

14% 14.40% 16% 12%

12. If the rate of interest is 12%, what are the doubling periods as per the rule 72 and the rule of 69 respectively?6 Years and 6.1 Years

5 Years and 5.2 Years 5.8 Years and 5.3 Years 6 Years and 6.1 Years 6.5 Years and 6.6 Years

13. To create a minimum variance portfolio, in what proportion should the two securities be mixed if the following information is given S1 = 10%, S2 = 12%, P12 = 0.6?

0.72 and 0.28 0.70 and 0.30 0.60 and 0.40 0.50 and 0.40

14. A portfolio consisting of two risky securities can be made risk less i.e., Sp = 0, if:

the securities are perfectly positively correlated the securities are perfectly negatively correlated if the correlation ranges between 0 to 1 if the correlation ranges between -1 to +1

15. Efficient portfolios are those portfolios, which offer (for a given level of risk):

maximum return minimum return average return positive return

16. CAPM accounts for -

systematic risk unsystematic risk both of the above moderate risk

17. Assets Management company is formed:

To manage bank’s assets To manage mutual funds investments To construct infrastructure projects To run a stock exchange

18. Prime duty of a merchant banker is -

< input type="radio" name="q18" value="A"> Maintaining records of clients Giving loans to clients Working as a Capital Market Intermediary None of the above

19. Basic objective of a money market mutual fund is:

Guaranteed rate of return Investment in short-term securities Both (1) and (2) None of (1) and (2)

20. Short selling refers to:

Buying shares and then selling them on the same day Selling shares without owning them Selling some shares out of a large holding Continuously selling shares in lots

21. Which of the following is not regulated by SEBI?

Foreign Institutional Investors Foreign Direct Investment Mutual Funds Depositories

22. Which of the following is true for mutual funds in India?

Exit load is not allowed Entry load is allowed Entry load is not allowed Exit load allowed in some cases

23. Which of the following is not available in India?

Index Options Index Futures Commodity Options Commodity Futures

24. Which of the following is the benefit of Depositories?

Reduction in the share transfer time to the buyer Reduced Risk of stolen, fake, forged shares No Stamp duty on transfer of shares in dematerialized form All of the above

25. Credit Rating of a debt security is:

Guarantee of Repayment Merely opinion Positive suggestion Negative suggestion

26. The first computerised online stock exchange in India was:

NSE OTCEI BSE MCX

27. Which of the following derivative is not traded on Indian Stock Market?

Index Options Stock Futures Index Futures Forward Rate Agreements

28. How many depositories are there in India?

2 3 0 1

29. Secondary Market in India is regulated by:

Reserve Bank of India Securities and Exchange Board of India Ministry of Finance Forward Market Commission

30. _________ funds do not have a fixed date of redemption.

Open ended funds Close ended funds Diversified funds Both A and B

31. In India, NIFTY and SENSEX are calculated on the basis of:

Market Capitalization Paid up Capital Free-float Capitalization Authorized Share Capital

32. The type of collateral (security) used for short-term loan is:

Real estate Plant & Machinery Stock of goods Equity share capital

33. Which of the following is a liability of a bank?

Treasury Bills Commercial papers Certificate of Deposits Junk Bonds

34. Commercial paper is a type of:

Fixed coupon Bond Unsecured short-term debt Equity share capital Government Bond

35. Which of the following is not a spontaneous source of short-term funds?

Trade credit Accrued expenses Provision for dividend All of the above

36. In India, Commercial Papers are issued as per the lines issued by -

Securities and Exchange Board of India Reserve Bank of India Forward Market Commission RBI

37. Commercial paper are generally issued at a price:

Equal to face value More than face value Less than face value Equal to redemption value

38. Which of the following is not applicable to commercial paper?

Face Value Issue Price Coupon Rate None of the above

39. Accounting Ratios are important tools used by –

Managers Researchers Investors All of the above

40. Net Profit Ratio Signifies:

Operational Profitability Liquidity Position Big-term Solvency Profit for Lenders

41. Working Capital Turnover measures, the relationship of Working Capital with:

Fixed Assets Sales Purchases Stock

42. Dividend Pay-out Ratio is:

PAT Capital DPS ÷ EPS Pref. Dividend ÷ PAT Pref. Dividend ÷ Equity Dividend

43. DuPont Analysis deals with:

Analysis of Current Assets Analysis of Profit Capital Budgeting Analysis of Fixed Assets

44. In Net Profit Ratio, the denominator is:

Net Purchases Net Sales Credit Sales Cost of goods sold

45. Inventory Turnover measures the relationship of inventory with:

Average Sales Cost of Goods Sold Total Purchases Total Assets

46. The term ‘EVA’ is used for:

Extra Value Analysis Economic Value Added Expected Value Analysis Engineering Value Analysis

47. Return on Investment may be improved by:

Increasing Turnover Reducing Expenses Increasing Capital Utilization All of the above

48. In Current Ratio, Current Assets are compared with:

Current Profit Current Liabilities Fixed Assets Equity Share Capital

49. ABC Ltd. has a Current Ratio of 1.5: 1 and Net Current Assets of Rs. 5,00,000. What are the Current Assets?

Rs. 5,00,000 Rs. 10,00,000 Rs. 15,00,000 Rs. 25,00,000

50. There is deterioration in the management of working capital of XYZ Ltd. What does it refer to?

That the Capital Employed has reduced That the Profitability has gone up That debtors collection period has increased That Sales has decreased

51. Which of the following does not help to increase Current Ratio?

Issue of Debentures to buy Stock Issue of Debentures to pay Creditors Sale of Investment to pay Creditors Avail Bank Overdraft to buy Machine

52. Debt to Total Assets Ratio can be improved by:

Borrowing More Issue of Debentures Issue of Equity Shares Redemption of Debt

53. Ratio of Net Income to Number of Equity Shares known as:

Price Earnings Ratio Net Profit Ratio Earnings per Share Dividend per Share

54. Trend Analysis helps comparing performance of a firm -

With other firms Over a period of firm With other industries With other companies

55. A Current Ratio of less than one means:

Current Liabilities < Current Assets Fixed Assets > Current Assets Current Assets < Current Liabilities Share Capital > Current Assets

56. A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs. 2,00,000 and Expenses of Rs. 1,00,000. What is the Net Profit Ratio?

20% 50% 10% 40%

57. XYZ Ltd. has earned 8% Return on Total Assets of Rs. 50,00,000 and has a Net Profit Ratio of 5%. Find out the Sales of the firm.

Rs. 4,00,000 Rs. 2,50,000 Rs. 80,00,000 Rs. 83,33,333

58. Suppliers and Creditors of a firm are interested in:

Profitability Position Liquidity Position < Market Share Position Debt Position

59. Which of the following is a measure of Debt Service capacity of a firm?

Current Ratio Acid Test Ratio Interest Coverage Ratio Debtors Turnover

60. Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behavior could be:

Increase in Costs of Goods Sold Increase in Expense Increase in Dividend Decrease in Sales

61. Which of the following statements is correct?

A Higher Receivable Turnover is not desirable Interest Coverage Ratio depends upon Tax Rate Increase in Net Profit Ratio means increase in Sales Lower Debt-Equity Ratio means lower Financial Risk

62. Debt to Total Assets of a firm is 2. The Debt to Equity would be:

0.80 0.25 1.00 0.75

63. Which of the following helps analysing return to equity Shareholders?

Return on Assets Earnings Per Share Net Profit Ratio Return on Investment

64. Return on Assets and Return on Investment Ratios belong to:

Liquidity Ratios Profitability Ratios Solvency Ratios Turnover

65. XYZ Ltd. has a Debt Equity Ratio of 1. 5 as compared to 1.3 Industry average. It means that the firm has:

Higher Liquidity Higher Financial Risk Higher Profitability Higher Capital Employed

66. Ratio Analysis can be used to study liquidity, turnover, profitability, etc. of a firm. What does Debt-Equity Ratio help to study?

Solvency Liquidity Profitability Turnover

67. In Inventory Turnover calculation, what is taken in the numerator?

Sales Cost of Goods Sold Opening Stock Closing Stock

68. Statement of cash flows are included in:

Ind AS - 3 Ind AS - 6 Ind AS - 7 Ind AS - 113

69. Cost of capital refers to:

Flotation Cost Dividend Required Rate of Return None of the above

70. Which of the following sources of funds has an implicit cost of capital?

Equity Share Capital Preference Share Capital Debentures Retained earnings

71. Which of the following has the highest cost of capital?

Equity shares Loans Bonds Preference shares

72. Cost of capital for Government securities is also known as:

Risk-free Rate of Interest Maximum Rate of Return Rate of Interest on Fixed Deposits None of the above

73. Cost of capital for bonds and debentures is calculated on:

Before Tax basis After Tax basis Risk-free Rate of Interest basis Compound interest

74. Weighted Average Cost of Capital (WACC) is generally denoted by:

k a k w k 0 k c

75. Which of the following cost of capital require tax adjustment?

Cost of Equity Shares Cost of Preference Shares Cost of Debentures Cost of Retained Earnings

76. Which is the most expensive source of funds?

New Equity Shares New Preference Shares New Debts Retained Earnings

77. Marginal cost of capital is the cost of:

Additional Sales Additional Funds Additional Interests Additional Revenue

78. In case the firm is all-equity financed, the WACC would be equal to:

Cost of Debt Cost of Equity Neither (1) nor (2) Both (1 ) and (2)

79. In order to calculate Weighted Average Cost of capitals (WACC) weights may be based on:

Market Values Target Values Book Values All of the above

80. Firm’s cost of capital is the average cost of:

All sources All borrowings Share capital Share, Bonds and Debentures

81. An implicit cost of increasing proportion of debt is:

Tax should would not be available on new debt P/E Ratio would increase Equity shareholders would demand higher return Rate of Return of the company would decrease

82. Cost of redeemable preference share capital is:

Rate of Dividend After Tax Rate of Dividend Discount Rate that equates PV of inflows and out-flows relating to capital None of the above

83. Which of the following is true?

Retained earnings are cost free External Equity is cheaper than Internal Equity Retained Earnings are cheaper than External Equity Retained Earnings are costlier than External Equity

84. Capital Budgeting is a part of:

Investment Decision Working Capital Management Marketing Management Capital Structure

85. Capital Budgeting deals with:

Long-term Decisions Short-term Decisions Both (1) and (2) Neither (1) nor (2)

86. Which of the following is not used in Capital Budgeting?

Time Value of Money Sensitivity Analysis Net Assets Method Cash Flows

87. Capital Budgeting Decisions are:

Reversible Irreversible Unimportant All of the above

88. Which of the following is not incorporated in Capital Budgeting?

Tax-Effect Time Value of Money Required Rate of Return Rate of Cash Discount

89. Which of the following is not a capital budgeting decision?

Expansion Programme Merger Replacement of an Asset Inventory Level

90. A sound Capital Budgeting technique is based on:

Cash Flows Accounting Profit Interest Rate on Borrowings Last Dividend Paid

91. Which of the following is not a relevant cost in Capital Budgeting?

Sunk Cost Opportunity Cost Allocated Overheads Both (1) and (3) above

92. Capital Budgeting Decisions are based on:

Incremental Profit Incremental Cash Flows Incremental Assets Incremental Capital

93. Which of the following does not affect cash flows proposal?

Salvage Value Depreciation Amount Tax Rate Change Method of Project Financing

94. Cash Inflows from a project include:

Tax Shield of Depreciation After-tax Operating Profits Raising of Funds Both (1) and (2)

95. Which of the following is not true with reference to capital budgeting?

Capital budgeting is related to asset replacement decisions Cost of capital is equal to minimum required return Existing investment in a project is not treated as sunk cost Timing of cash flows is relevant

96. Which of the following is not followed in capital budgeting?

Cash flows Principle Interest Exclusion Principle Accrual Principle Post-tax Principle

97. Depreciation is incorporated in cash flows because it:

Is unavoidable cost Is a cash flow Reduces Tax liability Involves an outflow

98. Which of the following is not true for capital budgeting?

Sunk costs are ignored Opportunity costs are excluded Incremental cash flows are considered Relevant cash flows are considered

99. Which of the following is not applied in capital budgeting?

Cash flows be calculated in incremental terms All costs and benefits are measured on cash basis All accrued costs and revenues be incorporated All benefits are measured on after-tax basis

100. Evaluation of Capital Budgeting proposals is based on Cash Flows because:

Cash Flows are easy to calculate Cash Flows are suggested by SEBI Cash is more important than profit Cash Flows are suggested by RBI

101. Which of the following is not included in incremental cash flows?

Opportunity Costs Sunk Costs Change in Working Capital Inflation effect

102. A proposal is not a Capital Budgeting proposal if it:

is related to Fixed Assets brings long-term benefits brings short-term benefits only has very large investment

103. In Capital Budgeting, Sunk cost is excluded because it is:

of small amount not incremental not reversible All of the above

104. Savings in respect of a cost is treated in capital budgeting as:

An Inflow An Outflow Opening balance Closing balance

105. ____________ ignores the time value of money.

Internal Rate of Return (IRR) Average Rate of Return (ARR) Net Present Value (NPV) Profitability Index (PI)

106. The discounted cash flows techniques are:

Net Present Value (NPV) Internal Rate of Return (IRR) Profitability Index (PI) All of the above

107. Working capital is calculated as _____.

Core current assets less core current liabilities Current assets less current liabilities Core current assets less current liabilities Liquid assets less current liabilities

108. The basic current liabilities are _____.

accounts payable and bills payable bank overdraft outstanding expenses All of the above

109. There are two concepts of working capital – gross and ____.

Zero Net Cumulative Distinctive

110. Working capital is also known as___ capital.

Current asset Operating Projecting Operation capital

111. ______ working Capital refers to the firm’s investment in current assets.

Zero Net Gross Distinctive

112. In finance, “working capital” means the same thing as _______ assets.

Current Fixed Total All of the above

113. ______ working capital refers to the difference between current assets and current liabilities.

Zero Net Gross Distinctive

114. A _______ net working capital will arise when current assets exceed current liabilities.

Summative Negative Excessive Positive

115. A ______ net working capital occurs when current liabilities are in excess of current assets.

Positive Negative Excessive Zero

116. X Ltd. distributes its products to more than 500 retailers. The company’s collection period is 30 days and keeps its inventory for 20 days. The operating cycle would be:

40 Days 43 Days 45 Days 50 Days

117. ________ refers to the funds, which an organisation must possess to finance its day to day operations.

Retained earnings Fixed capital Working Capital All of the above

118. Investment in current assets should be _____.

just adequate more less maximum

119. _______ varies inversely with profitability.

Risk Assets Liquidity Revenue

120. Capital intensive firms rely on ______.

debt retained earnings short term debts equity

121. On the basis of _____, working capital is classified as gross working capital and net working capital.

concept time future work

122. ______ cycle analyzes the accounts receivable, inventory, and accounts payable cycles in terms of a number of days?

Business Current asset Operation Operating

123. _______ method is not used for calculating working capital cycle.

Trial and error method Regression analysis method Percentage of sales method Operating cycle approach

124. On the basis of _____, working capital may be classified as: 1) Permanent or fixed working capital. 2) Temporary or variable working capital.

concept time future work

125. Operating cycle is also called as _____.

Business cycle Working capital cycle Working cycle Current asset cycle

126. Spontaneous financing consists of ______.

a line of credit short-term loans accounts receivable accounts payable

127. Conversion of marketable securities into cash entails a fixed cost of Rs.1,000 per transaction. What will be the optimal conversion size as per Baumol model of cash management?

Rs. 315,628 Rs. 316,228 Rs. 317,678 Rs. 318,426

128. Average collection period is 2 months, cash sales and average receivables are Rs.5,00,000 and Rs.6,50,000 respectively. The sales amount would be:

Rs. 40,00,000 Rs. 42,00,000 Rs. 44,00,000 Rs. 48,50,000

129. If the current ratio is 2.4:1 and working capital is Rs.25,20,000, find the amount of current assets and current liabilities.

Current Assets Rs. 43,20,000 and Current Liabilities Rs.18,00,000 Current Assets Rs. 44,00,000 and Current Liabilities Rs.18,50,000 Current Assets Rs. 45,50,000 and Current Liabilities Rs. 19,00,000 Current Assets Rs. 46,60,000 and Current Liabilities Rs. 19,30,000

130. Operating leverage helps in analysis of:

Business Risk Financing Risk Production Risk Credit Risk

131. Which of the following is studied with the help of financial leverage?

Marketing Risk Interest Rate Risk Foreign Exchange Risk Financing risk

132. Combined Leverage is obtained from OL and FL by their:

Addition Subtraction Multiplication Any of these

133. High degree of financial leverage means:

High debt proportion Lower debt proportion Equal debt and equity No debt

134. Operating leverage arises because of:

Fixed Cost of Production Fixed Interest Cost Variable Cost Step Cost

135. Financial Leverage arises because of:

Fixed cost of production Variable Cost Interest Cost Step Cost

136. Operating Leverage is calculated as:

Contribution ÷ EBIT EBIT ÷ PBT EBIT ÷ Interest EBIT ÷ Tax

137. Financial Leverage is calculated as:

EBIT ÷ Contribution EBIT ÷ PBT EBIT ÷ Sales EBIT ÷ Variable Cost

138. Which combination is generally good for firms?

High Operating leverage, High Financial leverage Low Operating leverage, Low Financial leverage High Operating leverage, Low Financial leverage Moderate Operating leverage, Moderate Financial leverage

139. Combined leverage can be used to measure the relationship between:

EBIT and EPS PAT and EPS Sales and EPS Sales and EBIT

140. Financial Leverage is zero if:

EBIT = Interest EBIT = Zero EBIT = Fixed Cost EBIT = Pref. Dividend

141. Business risk can be measured by:

Financial leverage Operating leverage Combined leverage All of the above

142. Financial Leverage measures relationship between:

EBIT and PBT EBIT and EPS Sales and PBT Sales and EPS

143. Use of Preference Share Capital in Capital structure:

Increases Operating leverage Increases Financial leverage Decreases Operating leverage Decreases Financial leverage

144. Relationship between change in sales and change in EPS is measured by:

Financial leverage Combined leverage Operating leverage All of the above

145. Numerical data may be expressed as:

In the form of text In the form of numbers In the form of images All of the above

146. The descriptive data may be deciphered as:

May be deciphered in the form of qualitative information May be deciphered in the form of quantitative information May be deciphered in the form of information from informal sources All of the above

147. Data represented in the form of picture is termed as:

Graphic data Qualitative data Quantitative data All of the above

148. Which of the following is/are the reason for digitization?

Helps in work processing Requires less physical storage space Digitized records may be accessed by more than one person simultaneously All of the above

149. To make the data turn into user friendly information, it should go one/more of following core steps:

Collection of data Organising the data Data processing All of the above

150. Any data expressed as a number is a ____________ data.

graphical descriptive numerical None of the above

151. Classifying equities into small-cap, mid-cap, and large-cap categories are the examples of _________.

Scale Nominal Ordinal Ratio

152. Which of the following is a phase for a process of digitization?

Justification of the proposed digitization project Assessment Planning All of the above

153 . Data science plays an important role in:

Risk analytics Customer data management Consumer analytics All of the above

154. The primary benefit of data distribution is:

the estimation of the probability of any certain observation within a sample space the estimation of the probability of any certain observation within a non-sample space the estimation of the probability of any certain observation within a population the estimation of the probability of any certain observation without a non-sample space

155. Binomial distribution applies to attributes:

that are categorised into two mutually exclusive and exhaustive classes that are categorised into three mutually exclusive and exhaustive classes that are categorised into less than two mutually exclusive and exhaustive classes that are categorised into four mutually exclusive and exhaustive classes

156. The geometric distribution is a discrete distribution that assesses:

the probability of the occurrence of the first success the probability of the occurrence of the second success the probability of the occurrence of the third success the probability of the occurrence of the less success

157. The probability density function describes:

the characteristics of a random variable the characteristics of a non-random variable the characteristics of a random constant the characteristics of a non-random constant

158. When independent variables with standard normal distribution are squared and added, the _________ distribution occurs.

Normal Chi square Exponential Lognormal

159. The procedure that organises data into a meaningful order to make it simpler to comprehend, analyse, and visualise, is called _____________

Data validation Data sorting Data aggregation Data analysis

160. Following is a widely used graph for data Visualisation:

Bar chart Pie chart Histogram All of the above

161. Following are the objectives of data visualisation:

Making a better data analysis Faster decision making Analysing complicated data All of the above

162. Following are the scope of DPA:

Defining significant meaning (relevant information) required by each audience member in every scenario. Obtaining the proper data (focus area, historic reach, extensiveness, level of detail, etc.) Determining the needed frequency of data refreshes (the currency of the data) All of the above

163. Maps may be used for displaying:

Pincode Country name State abbreviation All of the above

164. A scatter plot displays several unique data points:

on a single graph On two different graphs On four different graphs None of the above

165. A ___________ chart depicts tasks that must be accomplished before others may begin, as well as the allocation of resources.

Bubble Gantt Scatter Density

166. ____________ is a set of skills that aims to identify, find, modify, format, and present data in a manner that ideally conveys meaning and provides insight.

Data Presentation Architecture Data Presentation Hierarchy Data Visualization Architecture None of the above

167. Which of the following is a data discovery platform that enables users to make quicker, more informed choices by speeding analytics, uncovering new business insights, and enhancing the precision of outcomes?

Microsoft Excel Microsoft Power BI QlikView Tableau

168. Which of the following is/are the benefit/benefits of data analytics?

Improves decision making process Increase in efficiency of operations Improved service to stakeholders All of the above

169. Which of the following is/are the technique/s of data mining?

Association rules Neural network Decision tree All of the above

170. XML is the abbreviated form of:

Extensible mark-up language Extended mark-up language Extendable mark-up language Extensive mark-up language

171. XBRL is the abbreviated form of:

eXtensible Business Reporting Language eXtensive Business Reporting Language eXtended Business Reporting Language eXtensive Business Reporting Language

172. Which of the following is/are the types of cloud computing?

Private cloud Public cloud Hybrid cloud All of the above

173. On the basis of the type of “signal” or “feedback” provided to the learning system, which of the following is not a type of machine learning?

Supervised learning Unsupervised learning Semi supervised learning Robotic Process learning

174. In recent years, business intelligence has expanded to incorporate more procedures and activities designed to enhance performance. These procedures consist of:

Data mining Reporting Querying All of the above