Strategic Finance Combined

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS True/False Question

Accounting standards (AS - 13) is now mandatory.

Correct Answer True

Multiple Choice Multiple Answer Question Exit costs are classified into 3 categories namely :Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination pay Multiple Choice Multiple Answer Question A firm's current assets include :Correct Answer Marketable securities , Receivables , Inventory

Multiple Choice Multiple Answer Question In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of acquiring firm

Multiple Choice Multiple Answer Question A company is permitted to buy back its shares through stock exchange in the following situations :Correct Answer The company shall complete the verification of acceptances within 15 days of the payout , The identity of the company as a purchaser shall appear on the electronic screen when the order is placed , The buy back shall be made only on stock exchanges with electronic trading facility

True/False Question

A merger will make sense to the acquiring firm if its shareholders benefit.

Correct Answer True

Select The Blank Question ________ Assets in the balance sheet are normally excluded from the value of total assets. Correct Answer Intangible

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Multiple Choice Single Answer Question What is a very important factor in any kind of merger? Correct Answer Exchange ratio

Select The Blank Question A shareholder expects a higher rate of return as a firm's compensation for ________. Correct Answer Increased risk

True/False Question

Usually cost data is perfect for ABC Analysis & distribution.

Correct Answer False

Select The Blank Question Forward or backward integration is a characteristic of ________. Correct Answer Vertical Mergers

Multiple Choice Single Answer Question Segment assets are determined after :Correct Answer Deducting related allowances / provisions reported as direct offsets

Multiple Choice Single Answer Question Acceptable audit requirements cannot be overlooked even under the pressure of :Correct Answer Timeliness & turnaround

Multiple Choice Single Answer Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm?

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Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time of acquisition

True/False Question

A single organization model serves to keep all individual initiatives to be targeted into a co-cordinated plan. Correct Answer True

True/False Question

Assets held as stock - in - trade are also investments.

Correct Answer False

Multiple Choice Single Answer Question In an aggressive approach :Correct Answer There is a very large risk of shortage of funds

True/False Question

Organisational changes are similar to mission changes.

Correct Answer True

Multiple Choice Multiple Answer Question The internal staffing performance indicators are :Correct Answer Sales per employee , Recovery rate , Utilization %

Select The Blank Question The most popular kind of dividend policy is one that pays a ________. Correct Answer Regular, steady dividend

Match The Following

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Question

Correct Answer

Amount involved in buy back

Not to exceed 25 % of the total Not to exceed 25 % of the total paid up capital paid up capital Authorize buy back of securities Resolution permitting the buy back of shares Resolution permitting the buy Authorize buy back of securities back of shares Fully paid up Fully paid up

Articles of Association Board of Directors Shares to be bought back

Your Answer

Multiple Choice Single Answer Question A good accounting system does NOT have the characteristics such as :Correct Answer Does not cover decisions over the life cycle

Multiple Choice Single Answer Question Fixed price tender offers are accompanied by an abnormal announcement period return of :Correct Answer 8 - 10 %

Multiple Choice Multiple Answer Question The external staffing performance indicators include :Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head

Match The Following Question Trust receipt Terminal warehouse receipt Floating lien Chattel mortgage

Correct Answer

Your Answer

Specifically identified by serial number or other means Inventory is stored with a public or terminal warehousing company Loose arrangement as the lender may find it difficult to police Well suited for financial good inventories of capital goods

Specifically identified by serial number or other means Inventory is stored with a public or terminal warehousing company Well suited for financial good inventories of capital goods Affords a higher degree of control over the collateral

Select The Blank Question In today's fast moving world, the quickest way to get information on a firm is through ________. Correct Answer Internet

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Multiple Choice Single Answer Question Companies often need to value its own :Correct Answer Shares

Multiple Choice Multiple Answer Question Long term financing strategy is used by a firm to meet :Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of fluctuating working capital requirement

True/False Question

For determining exchange ratio, the model developed by Conn & Nielson is used.

Correct Answer True

Select The Blank Question usually credit lines are established for a period of ________. Correct Answer 1 year

Multiple Choice Multiple Answer Question Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not have any influence on accounting numbers

Select The Blank Question Investors can reduce the company related risk by diversification of their investments in ________. Correct Answer Shares of a large number of companies

True/False Question

Making decision on dividend is a very crucial area of financial management for a firm.

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Correct Answer True

Multiple Choice Single Answer Question The following is not a factor for reduction in the life of an asset by obsolescence :Correct Answer No study of market demand for a product / service

Multiple Choice Multiple Answer Question Due to diversification employees seek:Correct Answer Job security , Better opportunities within the firm , Higher compensation

Multiple Choice Single Answer Question Research into true human resources accounting began in :Correct Answer 1960`s

Select The Blank Question Segment assets are ________. Correct Answer Directly attributable to the segment

True/False Question

AS 13 statement does not deal with operating or finance leases.

Correct Answer True

Select The Blank Question The costs should be gathered & allocated within the organisation at the ________ structural layer. Correct Answer Lowest possible

Multiple Choice Single Answer

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Value implies that something has :-

Correct Answer Worth Your Answer

Worth

Multiple Choice Multiple Answer Question Examples of accounting methods used by firm are :Correct Answer FIFO , LIFO , Accrual Accounting

Multiple Choice Multiple Answer Question The main assumptions for stock repurchase models are as follows :Correct Answer The market is efficient , There is perfect competition in the securities market

Multiple Choice Multiple Answer Question As a general rule, an asset is :Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments , Capitalized expenses

True/False Question

It is easy to find a risk free security.

Correct Answer False

Multiple Choice Single Answer Question The earning power of the company approach includes :Correct Answer Mainly discounting of all future earnings

Select The Blank Question During the costing process, we look at ________. Correct Answer Resource consumption

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Select The Blank Question Mature companies with stable earnings generally pay out ________. Correct Answer A high proportion of earnings

traditionally avails are provided by

.

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Marks : 2

14.

government has made it mandatory to include in their annual reports information on customers, processes & human capital.

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Marks : 2

18.

a)

b)

Equity includes :-

Deferred Payment Liabilities Development Rebate Reserve Loans from other Corporates

c)

d)

Interest Payable

Strategic Finance II

21.

1. Fiscal advantage, the interest of financing with debt

1. Employees & trade unions increase their demands 2. Financing with a high percentage of debt

2. Is deductible from the profit 3. Firms must repay debts

3. Shows the illusion of financial problems 4. A highly leveraged firm 4. Not necessary to have discussions regarding the sell out of assets

5. Prevents firms from investing too much

6. Discussions about the sell out of assets must be made

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Marks : 2

24.

Capital gains are taxed at

.

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Marks : 2

45.

know the best about a firm's performance.

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Marks : 2

49.

When a firm invests in human resources by acquisition & training, it anticipates a

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Marks : 2

50.

a)

b)

Investment decisions are mainly concerned with :-

Liabilities Equity Assets

c)

d)

Leverage

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Marks : 2

53.

a)

b)

As per Pecking order theory, which is the costliest means of funding :-

Secured debt Unsecured debt Equity Shares

c)

d)

Preference Shares

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Single Answer Question Any addition or extension to an existing asset which retains a separate identify & is capable of being used after the existing asset is disposed of :Correct Answer Is depreciated independently Your Answer Is depreciated along with the existing asset

True/False

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Question In market value approach, interested parties never manipulate the stock markets. Correct Answer False Your Answer True

Multiple Choice Multiple Answer Question For accounting standard (AS) 27, Significant influence may be gained by :Correct Answer Share ownership , Statute , Agreement Your Answer Share ownership , Statute , Agreement

Multiple Choice Single Answer Question Accounts payable is also known as :Correct Answer Trade credit from suppliers Your Answer Trade credit from suppliers

Select The Blank Question Earning power of the company approach tries to value the ________. Correct Answer Current value of the assets Your Answer Current value of the assets

Match The Following

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Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Enormous conflicts of interest between Stakeholders and shareholders

Net income approach Cost of debt & equity do not change with a change in leverage ratio Cost of debt & equity do not change with a change in leverage ratio

Net operating income approach The overall capitalization rate remains constant for all levels of financial leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure

Multiple Choice Single Answer Question Where the management's estimate of the useful life of an asset of the enterprise is shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is approximately computed :Correct Answer By applying a higher rate Your Answer By applying a lower rate

Multiple Choice Single Answer

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Question What is a very important factor in any kind of merger? Correct Answer Exchange ratio Your Answer Post merger price

Select The Blank Question Segment expense includes ________. Correct Answer The relevant portion of enterprise revenue that can be allocated on a reasonable basis to a segment Your Answer General administrative expenses

Multiple Choice Single Answer Question The depreciable assets are assets which are expected to be used :Correct Answer During more than 1 accounting period Your Answer During more than 1 accounting period

True/False Question Arbitrage process implies that security cannot sell at different prices. Correct Answer True Your Answer True

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Multiple Choice Single Answer Question Which is an example out of the following to which special consideration apply for depreciation :Correct Answer Regenerative natural resources Your Answer Regenerative natural resources

True/False Question Baumul`s Model is similar to EOQ model in inventory management. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question Financial evaluation involves :Correct Answer Determining the earnings , Areas of risk , Best way to finance a merger Your Answer Determining the earnings , Areas of risk , Best way to finance a merger

Multiple Choice Single Answer Question The difference between current assets & current liabilities is known as :Correct Answer Net working capital Your Answer Net working capital

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Select The Blank Question Stock repurchases ________ the debt / equity ratio. Correct Answer Increases Your Answer Increases

Multiple Choice Single Answer Question Which of the following systems identifies each of the organizational elements of the traditional bureaucratic structure and applies the identifiable costs of that element accordingly? Correct Answer Organization element accounting Your Answer Organization element accounting

Multiple Choice Multiple Answer Question The major conditions to be fulfilled for buyback of shares as per the legal provisions include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1 Your Answer After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1 , Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up

True/False

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Question Determination of residual value of an asset is normally a difficult matter. Correct Answer True Your Answer True

Multiple Choice Single Answer Question Free Reserves is a component of :Correct Answer Equity Your Answer Equity

Multiple Choice Single Answer Question Short term sources of funds include :Correct Answer Current Liabilities Your Answer Capital

True/False Question To `gather costs', means capturing all relevant expenses that pertain to the selected model and processes. Correct Answer True Your Answer True

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Multiple Choice Single Answer Question When a company has resorted to buyback of its shares it cannot make a further issue of the same kind of securities within a period of how many months? Correct Answer 6 months Your Answer 6 months

Select The Blank Question At times managers invest in projects that improve the company's ________. Correct Answer Prestige or power Your Answer Value

Multiple Choice Multiple Answer Question It is the activity accountant's job to do the following for the existing organisational structure :Correct Answer To define the costs , To refine the costs , To document the costs Your Answer To define the costs , To document the costs , Support the costing of the activities

Multiple Choice Single Answer Question One of the important assumptions for capital structure theories is :Correct Answer Debt and equity are the 2 kinds of funds used by the firm Your Answer Debt and equity are the 2 kinds of funds used by the firm

Strategic Finance II

True/False Question Assets held as stock - in - trade are also investments. Correct Answer False Your Answer True

Select The Blank Question As per residual theory of dividends the focus is on ________. Correct Answer Growth Your Answer Payout of dividends even if the funds are unavailable

Multiple Choice Single Answer Question Profitability of a company depends upon :Correct Answer Cost of capital Your Answer Earning per share

Select The Blank Question HLL the largest FMCG company has a turnover of Rs. ________. Correct Answer 118 Bn Your Answer

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1000 crores

Multiple Choice Multiple Answer Question The characteristics of working capital are :Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous basis Your Answer It is continually required for a going concern , Quantum of working capital fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous basis

Multiple Choice Multiple Answer Question If a firm diversifies managerial teams formed can be shifted from unproductive activities to productive ones which leads to :Correct Answer Improved profitability , Continuity , Growth of the firm Your Answer Improved profitability , Continuity , Growth of the firm

Multiple Choice Single Answer Question In the tender offer, the purchaser approaches :Correct Answer The shareholder Your Answer The shareholder

Multiple Choice Multiple Answer

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Question To overcome the problems of matching data the actions can be taken as follows :Correct Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of assumptions as an audit trail Your Answer Keep extensive records of the process , Maintain detailed procedures , Keep records of assumptions as an audit trail

Select The Blank Question In the shareholding pattern of a company, the promoter's holding includes________. Correct Answer Foreign Promoters Your Answer Foreign Promoters

Multiple Choice Multiple Answer Question A current investment is an investment that is by nature :Correct Answer Readily realisable , Intended to be held for not more than 1year from the date on which investment is made Your Answer Readily realisable , Intended to be held for not more than 1year from the date on which investment is made

True/False Question Trade credit creates book debts which the firm is expected to collect in the near future. Correct Answer True

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Your Answer True

True/False Question The chance of bankruptcy is small when the leverage of a firm is small. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question The 3 groups of participants in a firm are :Correct Answer Suppliers of equity , Debt suppliers , Firm Managers Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Multiple Answer Question The financial managers of a company consume a great deal of their time in activities like :Correct Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Administrating Accounts receivables Your Answer Monitoring the investment in inventories , Negotiating favourable credit terms , Defining a proper strategy for product promotion

True/False

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Question Appraisal value of a firm can be acquired from an independent appraisal agency. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question The following categories of personnel are taken into account to calculate the actual manpower strength :Correct Answer Full time equivalents , Temporary staff , Part time personnel Your Answer Full time equivalents , Temporary staff , Casual workers

Multiple Choice Multiple Answer Question Accrued expenses represent :Correct Answer Costless financing , An interest free source of financing Your Answer Costless financing , An interest free source of financing , Truly discretionary financing

Select The Blank Question There is a ________ relationship between the number of employees & the use of operating supplies. Correct Answer Natural Your Answer Natural

Strategic Finance II

Match The Following Question Correct Answer Your Answer

Mechanisms Performs or provides energy to an activity Performs or provides energy to an activity

Inputs Information or material used to produce the output of an activity Information or material used to produce the output of an activity

Controls Information or material that constrains an activity Information or material that constrains an activity

Outputs Information or material produced by an activity Information or material produced by an activity

Multiple Choice Single Answer Question Value added analysis :Correct Answer Helps to identify potential activities that may be omitted immediately Your Answer Does not assist the planners & project teams

True/False Question

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Notes payable means the buyer signs a note that evidences a debt to the seller. Correct Answer True Your Answer True

Score Card

Registration Number: Name: Subject: Assignment Statu

200404214 Manpreet Malhotra Strategic Finance 21/03/2006

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s As On:

Result for this Assignment Assignment Date 20/03/2006

Number of Correct Questions 30

Number of Skipped Questions 10

Number of Wrong Questions 17

Total Questions attempted 57

Total Marks obtained 68 Out of 100.

Result Pass

Click here to view the list of attempted question and answers.

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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Multiple Choice Single Answer Question A firm can manage with small inventory if the supply is :Correct Answer Prompt & adequate Your Answer Prompt & adequate

True/False Question A transport corporation has a substantial working capital requirement. Correct Answer False Your Answer True

Multiple Choice Multiple Answer Question Implicit claims are non written promises and rights such as :Correct Answer Right to provide service to customers , Job security for the employees Your Answer Right to provide service to customers , Crucial project information to customers , Job security for the employees

Select The Blank Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of financial leverage. Correct Answer

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Constant Your Answer Constant

Select The Blank Question When a firm invests in human resources by acquisition & training, it anticipates a ________ Correct Answer Future generation of profits & services Your Answer Future generation of profits & services

Multiple Choice Multiple Answer Question While accounting for human assets, the following data is to be considered :Correct Answer Full time equivalent staff , Revenues , Expenses Your Answer Full time equivalent staff , Revenues , Expenses

Match The Following Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Firms have preferences by choosing a way to finance their projects

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Net income approach Cost of debt & equity do not change with a change in leverage ratio weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure

Net operating income approach The overall capitalization rate remains constant for all levels of financial leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure Cost of debt & equity do not change with a change in leverage ratio

Select The Blank Question The processes to be identified & focused should to be on the basis of not adhering to benchmarks, bottlenecks, quality not met, time problems etc. This is called as ________. Correct Answer Process analysis Your Answer Activity analysis

Multiple Choice Single Answer Question The following is not a method of payment to the acquired firm:Correct Answer Fixed deposits of the acquiring firm

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Your Answer Tender offers

Select The Blank Question ________ is never a part of the output. Correct Answer Mechanisms Your Answer Controls

True/False Question Short term financing is meant for funding working capital of a company. Correct Answer True Your Answer True

Multiple Choice Single Answer Question One of the bases for determining the residual value of similar assets is :Correct Answer Realizable value Your Answer Realizable value

Select The Blank

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Question In case of direct placement of commercial papers it may be issued for maturities ________ from the date of issue. Correct Answer Between 15 days to 1 year Your Answer Less than 6 months

Match The Following Question Correct Answer Your Answer

Earning per share Acquisition is considered to be a function of the impact of the merger on the EPS Divide net worth by the number of equity shares outstanding

Book value Divide net worth by the number of equity shares outstanding Evaluate the impact of the merger on EPS & price - earning ratio

Appraisal value Provides a list of the reasonableness of results obtained through methods base upon the going concern concept Indicate the consensus of the investors

Market value Indicate the consensus of the investors Provides a list of the reasonableness of results obtained through methods base upon the going concern concept

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Multiple Choice Single Answer Question Book value is relevant to determine the firm's value because of the following reasons except:Correct Answer It cannot be used as a starting point to be compared & complimented by other analysis Your Answer It cannot be used as a starting point to be compared & complimented by other analysis

True/False Question Receivables constitutes a substantial portion of current assets of several firms. Correct Answer True Your Answer True

True/False Question Odd lots purchase is not a method of buy back of shares. Correct Answer False Your Answer True

Multiple Choice Multiple Answer

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Question A company is prohibited to buy back its own shares in the following circumstances :Correct Answer Through any subsidiary company , Through any investment company , If a company defaults in repayment of deposits or interest due thereon Your Answer Through any subsidiary company , Through any investment company , If a company defaults in repayment of deposits or interest due thereon

True/False Question An activity model is a tool to assist in understanding & defining the organisation. Correct Answer True Your Answer True

Multiple Choice Single Answer Question A quantity discount is offered :Correct Answer On large shipments Your Answer On large shipments

True/False Question According to NI Approach, decrease in leverage decreases the overall cost of capital and increases the firm's value.

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Correct Answer False Your Answer True

Multiple Choice Single Answer Question Human Assets accounting stands for :Correct Answer Measurement & reporting of the cost and value of people as organisational resources Your Answer Measurement & reporting of the cost and value of people as organisational resources

Multiple Choice Multiple Answer Question Shareholders returns consists of 2 components :Correct Answer Dividend , Capital gains Your Answer Interest , Dividend

Multiple Choice Single Answer Question In value of assets method the following is also to be included as they are also of value to the company :Correct Answer Non trading assets Your Answer

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current assets

True/False Question Usually only a single method is used for valuation of shares. Correct Answer False Your Answer False

Multiple Choice Single Answer Question Where the management's estimate of the useful life of an asset of the enterprise is shorter than that envisaged under the provisions of the relevant statute, the depreciation provision is approximately computed :Correct Answer By applying a higher rate Your Answer By applying a lower rate

Multiple Choice Multiple Answer Question For M & As, the acquiring firm needs industry data on :Correct Answer Market growth , Nature of competition , Degree of regulation Your Answer Market growth , Marketing capabilities , Degree of regulation

Select The Blank

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Question Increase in cost of capital means decrease in ________. Correct Answer Profitability Your Answer Profitability

Multiple Choice Multiple Answer Question Investments having no physical existence includes :Correct Answer Shares , Debentures , Bonds Your Answer Shares , Debentures , Bonds

Select The Blank Question Long term cash forecasting is generally for a period of ________ years. Correct Answer 3 to 5 years Your Answer 5 - 8 years

Select The Blank Question The number of bidding centers shall not be less than ________ for buy back through book building. Correct Answer 30

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Your Answer 50

Multiple Choice Single Answer Question The following of the depreciable asset may undergo subsequent changes arising due to price adjustments :Correct Answer Historical cost Your Answer Historical cost

Multiple Choice Multiple Answer Question The 3 groups of participants in a firm are :Correct Answer Suppliers of equity , Debt suppliers , Firm Managers Your Answer Suppliers of equity , Firm Managers , Government Agencies

Multiple Choice Single Answer Question A company that comes to the rescue of a firm that is being targeted for a takeover is called :Correct Answer White knight Your Answer Controlling block

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Select The Blank Question ________ is not a example of segment asset. Correct Answer Customer advances Your Answer Customer advances

True/False Question Risk appetite decides the rate of capitalization. Correct Answer True Your Answer False

Multiple Choice Single Answer Question usually the `controlling block' tends to be between :Correct Answer 20 & 40 percent Your Answer 10 & 30 percent

True/False Question Sometimes the mechanisms may appear to be inputs for an activity. Correct Answer True

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Your Answer True

Select The Blank Question AS 23 - Accounting for investments in associates in consolidated financial statements comes into effect in respect of accounting periods commencing on or after ________. Correct Answer 01.04.2002 Your Answer 01.04.2001

Multiple Choice Multiple Answer Question The direct costs tier normally only includes the following :Correct Answer The personnel payroll , Supplies , Individual rental equipment Your Answer The personnel payroll , Supplies , Individual rental equipment

Multiple Choice Multiple Answer Question The following categories of personnel are taken into account to calculate the actual manpower strength :Correct Answer Full time equivalents , Temporary staff , Part time personnel Your Answer Full time equivalents , Part time personnel , Casual workers

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Multiple Choice Multiple Answer Question Debt reduces :Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of decisions Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of decisions

Multiple Choice Multiple Answer Question A firm using a conservative policy for determining the requirements of current assets :Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales

True/False Question Valuation of current investments on overall basis is not considered appropriate. Correct Answer True Your Answer False

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Select The Blank Question The advantage of ________ is that the company is not required to wait for the payment by the bill issuer. Correct Answer Bill discounting Your Answer Bill of exchange

Multiple Choice Single Answer Question A single business segment does not include products & services :Correct Answer With significantly differing risks & returns Your Answer With similar risks & returns

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

True/False Question Accounting standards (AS - 13) is now mandatory. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question Exit costs are classified into 3 categories namely :-

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Correct Answer Lost efficiency prior to separation , Job vacancy cost during the new search , Termination pay Your Answer Job vacancy cost during the new search , Termination pay , Recruiting new employee as a replacement of the left employee

Multiple Choice Multiple Answer Question A firm's current assets include :Correct Answer Marketable securities , Receivables , Inventory Your Answer Marketable securities , Receivables , Inventory

Multiple Choice Multiple Answer Question In a merger decision, the value of a firm depends upon:Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of acquiring firm Your Answer Earnings , Manpower of the acquiring firm , Financial characteristics of acquiring firm

Multiple Choice Multiple Answer Question A company is permitted to buy back its shares through stock exchange in the following situations :Correct Answer The company shall complete the verification of acceptances within 15 days of the payout , The identity of the company as a purchaser shall appear on the electronic screen when the order is placed , The buy back shall be made only on stock exchanges with electronic trading facility Your Answer The company shall complete the verification of acceptances within 15 days of the payout , The identity of the company as a purchaser shall appear on the electronic screen when the order is placed , It is not mandatory to specify the maximum price at

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which the buy back will be made

True/False Question A merger will make sense to the acquiring firm if its shareholders benefit. Correct Answer True Your Answer True

Select The Blank Question ________ Assets in the balance sheet are normally excluded from the value of total assets. Correct Answer Intangible Your Answer Intangible

Multiple Choice Single Answer Question What is a very important factor in any kind of merger? Correct Answer Exchange ratio Your Answer Pre merger price

Select The Blank Question A shareholder expects a higher rate of return as a firm's compensation for ________. Correct Answer Increased risk Your Answer

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Investment in projects to improve prestige or power

True/False Question Usually cost data is perfect for ABC Analysis & distribution. Correct Answer False Your Answer True

Select The Blank Question Forward or backward integration is a characteristic of ________. Correct Answer Vertical Mergers Your Answer Vertical Mergers

Multiple Choice Single Answer Question Segment assets are determined after :Correct Answer Deducting related allowances / provisions reported as direct offsets Your Answer Deducting income tax assets

Multiple Choice Single Answer Question Acceptable audit requirements cannot be overlooked even under the pressure of :Correct Answer Timeliness & turnaround Your Answer

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Mergers & acquisitions

Multiple Choice Single Answer Question Which of the following is NOT a disadvantage of deferred payment plan to the acquiring firm? Correct Answer There is built - in cushion to the acquiring firm as total payment is not made at the time of acquisition Your Answer Freedom of operation to the management of the newly acquired firm

True/False Question A single organisation model serves to keep all individual initiatives to be targeted into a co-ordinated plan. Correct Answer True Your Answer True

True/False Question Assets held as stock - in - trade are also investments. Correct Answer False Your Answer True

Multiple Choice Single Answer Question In an aggressive approach :Correct Answer

Strategic Finance II There is a very large risk of shortage of funds Your Answer There is a very large risk of shortage of funds

True/False Question Organisational changes are similar to mission changes. Correct Answer True Your Answer False

Multiple Choice Multiple Answer Question The internal staffing performance indicators are :Correct Answer Sales per employee , Recovery rate , Utilization % Your Answer Sales per employee , Recovery rate , Utilization %

Select The Blank Question The most popular kind of dividend policy is one that pays a ________. Correct Answer Regular, steady dividend Your Answer Regular, steady dividend

Match The Following Question Correct Answer Your Answer

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Amount involved in buy back Not to exceed 25 % of the total paid up capital Not to exceed 25 % of the total paid up capital

Articles of Association Authorize buy back of securities Resolution permitting the buy back of shares

Board of Directors Resolution permitting the buy back of shares Authorize buy back of securities

Shares to be bought back Fully paid up Fully paid up

Multiple Choice Single Answer Question A good accounting system does NOT have the characteristics such as :Correct Answer Does not cover decisions over the life cycle Your Answer Takes into account time as an important parameter

Multiple Choice Single Answer Question Fixed price tender offers are accompanied by an abnormal announcement period return of :Correct Answer 8 - 10 % Your Answer 6-8%

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Multiple Choice Multiple Answer Question The external staffing performance indicators include :Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head Your Answer Compensation per Re. Profit , Personnel services head count , Recovery rate

Match The Following Question Correct Answer Your Answer

Trust receipt Specifically identified by serial number or other means Specifically identified by serial number or other means

Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company Inventory is stored with a public or terminal warehousing company

Floating lien Loose arrangement as the lender may find it difficult to police Well suited for financial good inventories of capital goods

Chattel mortgage Well suited for financial good inventories of capital goods Affords a higher degree of control over the collateral

Select The Blank Question In today's fast moving world, the quickest way to get information on a firm is through ________.

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Correct Answer Internet Your Answer Internet

Multiple Choice Single Answer Question Companies often need to value its own :Correct Answer Shares Your Answer Shares

Multiple Choice Multiple Answer Question Long term financing strategy is used by a firm to meet :Correct Answer Fixed assets requirements , Permanent working capital requirements , Portion of fluctuating working capital requirement Your Answer Fixed assets requirements , Permanent working capital requirements

True/False Question For determining exchange ratio, the model developed by Conn & Nielson is used. Correct Answer True Your Answer True

Select The Blank Question usually credit lines are established for a period of ________.

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Correct Answer 1 year Your Answer 3 years

Multiple Choice Multiple Answer Question Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not have any influence on accounting numbers Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial risk do not have any influence on accounting numbers , There is a serious relationship between economic value and profit

Select The Blank Question Investors can reduce the company related risk by diversification of their investments in ________. Correct Answer Shares of a large number of companies Your Answer Mutual funds

True/False Question Making decision on dividend is a very crucial area of financial management for a firm. Correct Answer True Your Answer True

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Multiple Choice Single Answer Question The following is not a factor for reduction in the life of an asset by obsolescence :Correct Answer No study of market demand for a product / service Your Answer Legal restrictions

Multiple Choice Multiple Answer Question Due to diversification employees seek:Correct Answer Job security , Better opportunities within the firm , Higher compensation Your Answer Job security , Better opportunities within the firm , More perks & benefits , Higher compensation

Multiple Choice Single Answer Question Research into true human resources accounting began in :Correct Answer 1960`s Your Answer 1994

Select The Blank Question Segment assets are ________. Correct Answer Directly attributable to the segment Your Answer Directly attributable to the segment

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True/False Question AS 13 statement does not deal with operating or finance leases. Correct Answer True Your Answer True

Select The Blank Question The costs should be gathered & allocated within the organisation at the ________ structural layer. Correct Answer Lowest possible Your Answer Lowest possible

Multiple Choice Single Answer Question Value implies that something has :Correct Answer Worth Your Answer Worth

Multiple Choice Multiple Answer Question Examples of accounting methods used by firm are :Correct Answer FIFO , LIFO , Accrual Accounting Your Answer FIFO , LIFO , Accrual Accounting

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Multiple Choice Multiple Answer Question The main assumptions for stock repurchase models are as follows :Correct Answer The market is efficient , There is perfect competition in the securities market Your Answer The market is efficient , Offers are minimum limit offers. , Investors are not very keen to maximize the value of their investment

Multiple Choice Multiple Answer Question As a general rule, an asset is :Correct Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments , Capitalized expenses Your Answer A good or a right that a firm owns in a determined moment , Prepayment adjustments , Capitalized expenses

True/False Question It is easy to find a risk free security. Correct Answer False Your Answer False

Multiple Choice Single Answer Question The earning power of the company approach includes :Correct Answer Mainly discounting of all future earnings Your Answer

Strategic Finance II Mainly discounting of all future earnings

Select The Blank Question During the costing process, we look at ________. Correct Answer Resource consumption Your Answer Resource consumption

Select The Blank Question Mature companies with stable earnings generally pay out ________. Correct Answer A high proportion of earnings Your Answer A high proportion of earnings

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Multiple Answer Question The internal staffing performance indicators are :Correct Answer Sales per employee , Recovery rate , Utilization % Your Answer Utilization % , Sales per employee , Recovery rate

Multiple Choice Single Answer Question

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Strategic Finance II

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Human Assets accounting stands for :Correct Answer Measurement & reporting of the cost and value of people as organisational resources Your Answer Measurement & reporting of the cost and value of people as organisational resources

True/False Question Baumul`s Model is similar to EOQ model in inventory management. Correct Answer True Your Answer True

True/False Question Money becomes less valuable when received at a latter stage instead of in present time. Correct Answer True Your Answer True

Multiple Choice Single Answer Question In an aggressive approach :Correct Answer There is a very large risk of shortage of funds Your Answer There is a very large risk of shortage of funds

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True/False Question Book value is based on the balance sheet value of owner's equity. Correct Answer True Your Answer True

True/False Question If a company has resorted to buyback its shares, it cannot make a further issue of the same kind of securities within a period of 1 year. Correct Answer False Your Answer False

Multiple Choice Multiple Answer Question The major conditions to be fulfilled for buyback of shares as per the legal provisions include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1 Your Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1

Multiple Choice Multiple Answer Question The main theories behind share repurchases are :-

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Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling hypothesis Your Answer Dividend or personal taxation hypothesis , Information or signalling hypothesis , Wealth transfer among employees and managers

True/False Question The buyback shall be made only on stock exchanges with electronic trading facility. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question For M & As, the acquiring firm needs industry data on :Correct Answer Market growth , Nature of competition , Degree of regulation Your Answer Market growth , Marketing capabilities , Degree of regulation

Select The Blank Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of financial leverage. Correct Answer Constant Your Answer Constant

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Multiple Choice Multiple Answer Question Valuation methods are highly specific to the following for doing the valuation :Correct Answer To the person , To the firm , To the Consultant Your Answer To the firm , To the Consultant , To the employees of the company

Select The Blank Question At times managers invest in projects that improve the company's ________. Correct Answer Prestige or power Your Answer Prestige or power

Multiple Choice Single Answer Question A high payout policy means :Correct Answer More current dividends Your Answer More current dividends

Select The Blank Question ________ know the best about a firm's performance. Correct Answer Firm Managers Your Answer Firm Managers

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Multiple Choice Single Answer Question Equity includes :Correct Answer Development Rebate Reserve Your Answer Interest Payable

Multiple Choice Single Answer Question Short term sources of funds include :Correct Answer Current Liabilities Your Answer Current Liabilities

Multiple Choice Multiple Answer Question Shortage costs are mainly in the form of :Correct Answer Disruption in production schedule , Loss of sales , Loss of customer goodwill Your Answer Financing a lower level of fixed assets , Disruption in production schedule , Loss of sales

Select The Blank Question In today's fast moving world, the quickest way to get information on a firm is through ________. Correct Answer Internet Your Answer

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Internet

Select The Blank Question Buy back through book building the process should be made through ________. Correct Answer An electronically linked transparent facility Your Answer An electronically linked transparent facility

True/False Question work in progress means the inventories are semi manufactured products. Correct Answer True Your Answer True

Select The Blank Question Cost of ________ is more than other sources for raising short - term finance. Correct Answer Bank finance Your Answer Bank finance

Multiple Choice Single Answer Question Segment reporting comes under :Correct Answer AS 17

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Your Answer AS 23

Multiple Choice Multiple Answer Question The 3 groups of participants in a firm are :Correct Answer Suppliers of equity , Debt suppliers , Firm Managers Your Answer Suppliers of equity , Debt suppliers , Firm Managers

Multiple Choice Single Answer Question The development aspect of training in firms focus on :Correct Answer Promotion to higher job levels Your Answer Acquisition of necessary skills essential for a job

Select The Blank Question Long term cash forecasting is generally for a period of ________ years. Correct Answer 3 to 5 years Your Answer 5 - 8 years

Multiple Choice Single Answer Question Segment information needs to be presented :Correct Answer

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Only on the basis of the consolidated financial statements Your Answer As general purpose financial statement

Select The Blank Question HLL the largest FMCG company has a turnover of Rs. ________. Correct Answer 118 Bn Your Answer 118 Bn

Multiple Choice Multiple Answer Question The budgetary records are useful for:Correct Answer Providing a rationale for division of costs , Replacing missing data , Validating accounting costs Your Answer Validating accounting costs , Allocating indirect costs into different cost centres , Providing a rationale for division of costs

Multiple Choice Multiple Answer Question Indicators of the value of an investment are obtained by :Correct Answer Reference to its market value , The investee`s assets , The expected cash flows from the investment Your Answer Reference to its market value , The expected cash flows from the investment , Current investment valuation

Strategic Finance II Multiple Choice Multiple Answer Question The support elements consists of important functions such as :Correct Answer Payroll , Accounting , Automatic data processing Your Answer Payroll , Accounting , Automatic data processing

Multiple Choice Single Answer Question Most companies focus only on :Correct Answer Return on investment Your Answer Return on investment

Multiple Choice Single Answer Question Cost benefit analysis is the simplest form of comparison between :Correct Answer Ideas to determine which is faster, better or cheaper Your Answer Ideas to determine which is faster, better or cheaper

Multiple Choice Single Answer Question Accounts payable is also known as :Correct Answer Trade credit from suppliers Your Answer Trade credit from suppliers

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Strategic Finance II

Select The Blank Question the commercial paper may be issued in the multiples of ________. Correct Answer 5 lakhs Your Answer 1 lac

True/False Question According to NOI Approach, any capital structure is optimum. Correct Answer True Your Answer False

Match The Following Question Correct Answer Your Answer

Terminal warehouse receipt Inventory is stored with a public or terminal warehousing company Inventory is stored with a public or terminal warehousing company

Floating lien Loose arrangement as the lender may find it difficult to police Loose arrangement as the lender may find it difficult to police

Chattel mortgage Well suited for financial good inventories of capital goods Well suited for financial good inventories of capital goods

Trust receipt

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Specifically identified by serial number or other means Specifically identified by serial number or other means

Multiple Choice Single Answer Question Acceptable audit requirements cannot be overlooked even under the pressure of :Correct Answer Timeliness & turnaround Your Answer Timeliness & turnaround

True/False Question The intellectual assets of a company are often worth 3 or 4 times the tangible book value. Correct Answer True Your Answer True

Select The Blank Question ________ government has made it mandatory to include in their annual reports information on customers, processes & human capital. Correct Answer Danish (Denmark) Your Answer Danish (Denmark)

Match The Following

Strategic Finance II Question Correct Answer Your Answer

Amount involved in buy back Not to exceed 25 % of the total paid up capital Fully paid up

Articles of Association Authorize buy back of securities Authorize buy back of securities

Board of Directors Resolution permitting the buy back of shares Resolution permitting the buy back of shares

Shares to be bought back Fully paid up Not to exceed 25 % of the total paid up capital

Multiple Choice Multiple Answer Question Shareholders returns consists of 2 components :Correct Answer Dividend , Capital gains Your Answer Dividend , Capital gains

Multiple Choice Multiple Answer Question A firm with a judicious mixture of debt and equity will have :Correct Answer Lowest cost of capital , High value of firm , Good market reputation

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Your Answer Lowest cost of capital , High value of firm , Good market reputation

True/False Question According to NI Approach, decrease in leverage decreases the overall cost of capital and increases the firm's value. Correct Answer False Your Answer True

True/False Question The activity model is normally created by an activity Accountant. Correct Answer False Your Answer True

10.

a)

b)

The HHI index reflects :-

Inequality & degree of concentration Transparency Disclosure through public announcement

c)

d)

Interest of small shareholders

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In case of direct placement of commercial papers it may be issued for maturities from the date of issue.

Bw one to two yrs,More than 2 yrs,less than 6 months,bw 15 days to one year. 18. Changes in the investee`s equity includes those :-

Arising from the

a) revaluation of fixed assets

b)

From foreign exchange translation differences

c)

From the adjustment of differences arising on amalgamation

d)

Investor's proportionate interest

24. Only firms with a large amount of financial slack can afford tender offers.

True False

40. In the disclosures in financial statements, there are significant restrictions on :-

Strategic Finance II

The right of ownership Realisability of investments The remittance of income & proceeds of disposal Other disclosures 44. To determine the firm's value, what is difficult to placing a value on?

Quantitative variables Qualitative factors Quantitative factors Qualitative variables

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Strategic Finance II

1. Segment revenue

1. Enterprise assets 2. Segment result

2. Enterprise revenue 3. Segment assets

3. Enterprise liabilities 4. Segment liabilities

4. Cash flows

5. Enterprise net profit or loss

6. Liquidity

50. When the working capital is less than its peak level :-

52. Liquidation value is also known as

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

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True/False Question Odd lots purchase is not a method of buy back of shares. Correct Answer False Your Answer False

Select The Blank Question As per NOI Approach - the overall capitalization rate remains ________ for all levels of financial leverage. Correct Answer Constant Your Answer Constant

Multiple Choice Single Answer Question The following method of valuation is used for listed companies that have an active market for their shares :Correct Answer Market value approach Your Answer Market value approach

Multiple Choice Single Answer Question The main assumption in comparative analysis is the possibility of :Correct Answer Combination or co-location of similar functions Your Answer Combination or co-location of similar functions

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Multiple Choice Multiple Answer Question The budgetary records are useful for:Correct Answer Validating accounting costs , Providing a rationale for division of costs , Replacing missing data Your Answer Validating accounting costs , Providing a rationale for division of costs , Replacing missing data

Select The Blank Question usually credit lines are established for a period of ________. Correct Answer 1 year Your Answer 1 year

Multiple Choice Single Answer Question As per the study conducted by RBI, Current assets constitute :Correct Answer More than 50 % of the total assets Your Answer More than 50 % of the total assets

Select The Blank Question Cost of ________ is more than other sources for raising short - term finance. Correct Answer

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Bank finance Your Answer Bank finance

Match The Following Question Correct Answer Your Answer

Diversification Growth through the combination of firms in unrelated fields of business Different or unrelated business activity

Horizontal mergers 2 Firms operate & compete in a similar kind of business 2 Firms operate & compete in a similar kind of business

Vertical mergers Firms in different stages of production Firms in different stages of production

Conglomerate mergers Different or unrelated business activity Growth through the combination of firms in unrelated fields of business

Multiple Choice Single Answer Question in case of temporary working capital, the investment in current assets varies with :Correct Answer Seasonal requirements Your Answer Seasonal requirements

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Multiple Choice Multiple Answer Question Organisations have various records and reports from past actions such as :Correct Answer Logs to record workflow , Specific costs , External and internal audit reports Your Answer Logs to record workflow , Specific costs , External and internal audit reports

True/False Question The carrying amount for current investments is the lower of cost & fair value. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question A company is prohibited to buy back its own shares in the following circumstances :Correct Answer Through any subsidiary company , Through any investment company , If a company defaults in repayment of deposits or interest due thereon Your Answer Through any subsidiary company , Through any investment company , If a company defaults in repayment of deposits or interest due thereon

True/False Question Explicit cost and implicit cost are the two parts of cost of debt. Correct Answer

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True Your Answer True

Select The Blank Question Forward or backward integration is a characteristic of ________. Correct Answer Vertical Mergers Your Answer Vertical Mergers

Multiple Choice Single Answer Question As per Dorsman (1995) - financing with a high percentage of debt prevents firms from :Correct Answer Investing too much Your Answer Investing too much

Multiple Choice Single Answer Question Estimation for determining the useful life of an asset is required :Correct Answer On some reasonable basis Your Answer On some reasonable basis

True/False Question

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In market value approach, interested parties never manipulate the stock markets. Correct Answer False Your Answer False

Multiple Choice Single Answer Question Which of the following company is reaping high market valuation due to showing human resources as an asset in its balance sheet information? Correct Answer Infosys Your Answer BHEL

Multiple Choice Single Answer Question Decrease in leverage results in increasing the :Correct Answer Overall cost of capital Your Answer Overall cost of capital

Multiple Choice Single Answer Question Suppliers of equity are interested in :Correct Answer High share prices Your Answer High share prices

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Match The Following Question Correct Answer Your Answer

Free cash flow theory Enormous conflicts of interest between Stakeholders and shareholders Enormous conflicts of interest between Stakeholders and shareholders

Net income approach Cost of debt & equity do not change with a change in leverage ratio Cost of debt & equity do not change with a change in leverage ratio

Net operating income approach The overall capitalization rate remains constant for all levels of financial leverages The overall capitalization rate remains constant for all levels of financial leverages

Modigliani - Miller Theory weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure weighted average cost of capital does not change with a change in the proportion of debt to equity in the capital structure

Select The Blank Question The date on which the announcement is made of new dividend is called ________. Correct Answer Declaration date Your Answer Ex - dividend date

Multiple Choice Multiple Answer

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Question The net income approach is based on following 3 assumptions :Correct Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt doesn't change the risk perception of investors Your Answer There are no taxes , Cost of debt is less than equity capitalization rate , Use of debt doesn't change the risk perception of investors

Multiple Choice Single Answer Question A single business segment does not include products & services :Correct Answer With significantly differing risks & returns Your Answer With significantly differing risks & returns

True/False Question For determining exchange ratio, the model developed by Conn & Nielson is used. Correct Answer True Your Answer True

Multiple Choice Single Answer Question Debt suppliers main concern is :Correct Answer Interest & debt repayment Your Answer Interest & debt repayment

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Multiple Choice Single Answer Question Value added analysis is a method to determine, if elements within a process flow provide the :Correct Answer Values Your Answer Values

Select The Blank Question Investors can reduce the company related risk by diversification of their investments in ________. Correct Answer Shares of a large number of companies Your Answer Shares of a large number of companies

Multiple Choice Multiple Answer Question The 3 main types of accounting records followed by an organisation are :Correct Answer Organisational accounting , Budgetary accounting , Cost accounting Your Answer Organisational accounting , Budgetary accounting , Cost accounting

Multiple Choice Multiple Answer Question The following disclosures in financial statements in relation to investments are appropriate :-

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Correct Answer The accounting policies for the determination of carrying amount of investments , Profits & losses on disposal of current investments , The amounts included in P & L Statement Your Answer The accounting policies for the determination of carrying amount of investments , Profits & losses on disposal of current investments , The amounts included in P & L Statement

Select The Blank Question In the shareholding pattern of a company, the promoter's holding includes________. Correct Answer Foreign Promoters Your Answer Foreign Promoters

Multiple Choice Multiple Answer Question For M & As, the acquiring firm needs industry data on :Correct Answer Market growth , Nature of competition , Degree of regulation Your Answer Market growth , Marketing capabilities , Nature of competition

Multiple Choice Multiple Answer Question The financial framework of a merger decision covers 3 interrelated aspects i.e. :Correct Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as a capital budgeting decision Your Answer Determining the firm's value , Financing techniques in mergers , Analysis of merger as a capital budgeting decision

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Multiple Choice Single Answer Question According to Net Income Approach, the average cost of capital declines as the leverage ratio :Correct Answer Increases Your Answer Increases

True/False Question A long term investment is an investment other than a current investment. Correct Answer True Your Answer True

True/False Question The capital Asset pricing model describes the pricing of assets as well as derivatives. Correct Answer True Your Answer True

Multiple Choice Multiple Answer Question Personnel services expenses is made up of:Correct Answer

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Personnel salaries , Cost of facilities , Training & development budgets Your Answer Cost of facilities , Training & development budgets

Multiple Choice Multiple Answer Question Investments having no physical existence includes :Correct Answer Shares , Debentures , Bonds Your Answer Shares , Debentures , Bonds

Select The Blank Question the commercial paper may be issued in the multiples of ________. Correct Answer 5 lakhs Your Answer 5 lakhs

Multiple Choice Single Answer Question Modigliani - Miller Theoram is based on :Correct Answer Perfect Capital Markets Your Answer Perfect Capital Markets

Select The Blank Question The most popular kind of dividend policy is one that pays a ________.

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Correct Answer Regular, steady dividend Your Answer Regular, steady dividend

Multiple Choice Multiple Answer Question AS 13 Does not deal with :Correct Answer The bases for recognition of interest, dividends & rentals earned on investments , Operating or finance leases , Investment in mutual funds Your Answer The bases for recognition of interest, dividends & rentals earned on investments , Operating or finance leases , Investment in mutual funds

True/False Question According to NOI Approach, any capital structure is optimum. Correct Answer True Your Answer False

Multiple Choice Single Answer Question One of the important assumptions for capital structure theories is :Correct Answer Debt and equity are the 2 kinds of funds used by the firm Your Answer The payout ratio is never 100 %

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Multiple Choice Single Answer Question Arbitrage means :Correct Answer Securities cannot sell at different prices Your Answer Securities cannot sell at different prices

True/False Question Short term financing is meant for funding working capital of a company. Correct Answer True Your Answer True

6.

a)

b)

The FEA Tools encompass a vast array of information & policy into :-

Many evaluations One evaluation One procedure

c)

Many procedures

d)

7.

optimum cash balance under certainty i.e. Baumul`s model allows the cash flow to fluctuate.

True False

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Match The Following Question Correct Answer Your Answer

AS 4 Contingencies & events occurring after the balance sheet date Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments

AS 23 Accounting for investments in associates in consolidated financial statements Accounting for investments in associates in consolidated financial statements

AS 21 Consolidated financial statements Consolidated financial statements

Select The Blank Question There is a ________ relationship between the number of employees & the use of operating supplies. Correct Answer Natural Your Answer Natural

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True/False Question Planning helps an acquiring firm to identify the units it should drop & it should add. Correct Answer True Your Answer True

Select The Blank Question Non value added activities helps ________. Correct Answer To analyse the activities more carefully Your Answer To take a better decision

True/False Question Usually only a single method is used for valuation of shares. Correct Answer False Your Answer False

Select The Blank Question In the reproduction value method of valuation, the value of assets is taken to be on the basis of ________ Correct Answer Replacement cost

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Your Answer Replacement cost

Multiple Choice Multiple Answer Question The major conditions to be fulfilled for buyback of shares as per the legal provisions include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1 Your Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer Question The Public announcement of share buy back has to be made at least :Correct Answer 7 Days prior to the commencement of buy back Your Answer 7 Days prior to the commencement of buy back

Select The Blank Question Combination of 2 or more companies into existing company is called ________. Correct Answer Absorption Your Answer Absorption

Select The Blank

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Question ________ is not a example of segment liability. Correct Answer Goodwill Your Answer Accrued liabilities

17.

a)

b)

According to Merton Miller & Franco Modigliani, the only important determinant of a company's market value is :-

Decision regarding firm's payout of dividend Retention of dividend for internal financing Its investment policy

c)

Investment opportunities available

d)

24.

a)

b)

Fixed price tender offers are accompanied by an abnormal announcement period return of :-

2-3% 6-8% 8 - 10 %

c)

10 - 15 %

d)

30.

Opportunity costs and real costs decrease the market value of a firm.

True

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False

43.

HLL is

% of subsidiary of Unilever PLC.

.75,0.5,0.25,0.516 The statute governing an enterprise may provide the basis for computation of the depreciation.

47.

True False 1. Line of credit

1. The cash flow ability of the borrower to pay the loan is usually of paramount

2. Revolving credit agreements

importance 2. Does not constitute any legal commitments on the part of the

3. Transaction loan

bank 3. The clean up period is more than 6

4. Unsecured loans

months 4. While the commitment is in force the bank must extend credit whenever the borrower wishes to borrow 5. Form of debt not backed by the pledge of specific assets 6. Borrower does not have to pay a commitment fees

51.

A single organisation model serves to keep all individual initiatives to be targeted into a co-ordinated plan.

True

Strategic Finance II

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False

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Match The Following Question Correct Answer Your Answer

AS 21 Consolidated financial statements Consolidated financial statements

AS 4 Contingencies & events occurring after the balance sheet date Contingencies & events occurring after the balance sheet date

AS 13 Accounting for investments Accounting for investments

AS 23 Accounting for investments in associates in consolidated financial statements Accounting for investments in associates in consolidated financial statements

Select The Blank Question There is a ________ relationship between the number of employees & the use of operating supplies. Correct Answer Natural Your Answer Natural

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Multiple Choice Multiple Answer Question The main characteristics of CAPM are :Correct Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives , Expected security return = Riskless return + beta x (expected market risk premium) Your Answer It is an equilibrium Model , It describes the pricing of assets as well as derivatives , Expected security return = Riskless return + beta x (expected market risk premium)

Multiple Choice Multiple Answer Question A firm using a conservative policy for determining the requirements of current assets :Correct Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales Your Answer Has fewer production stoppages , Ensures quick deliveries to customers , Stimulates sales

Multiple Choice Single Answer Question As per Pecking order theory, which is the costliest means of funding :Correct Answer Equity Shares Your Answer Equity Shares

Multiple Choice Single Answer Question Free Reserves is a component of :Correct Answer

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Equity Your Answer Equity

Select The Blank Question ________ are those operating assets that are employed by a segment in its operating activities. Correct Answer Segment assets Your Answer Segment assets

Multiple Choice Multiple Answer Question The overhead expenses include :Correct Answer Utilities , Maintenance , Security Your Answer Utilities , Maintenance , Security

Multiple Choice Multiple Answer Question Examples of accrued expenses are :Correct Answer Wages , Income tax , Property tax Your Answer Wages , Income tax , Property tax

Multiple Choice Single Answer Question One of the bases for determining the residual value of similar assets is :-

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Correct Answer Realizable value Your Answer Realizable value

Select The Blank Question The number of bidding centers shall not be less than ________ for buy back through book building. Correct Answer 30 Your Answer 30

Multiple Choice Single Answer Question Conservative policy for determining the requirements of current assets is also known as :Correct Answer Flexible policy Your Answer Flexible policy

True/False Question Management of working capital refers to the management of total assets and liabilities of a company. Correct Answer False Your Answer False

Multiple Choice Single Answer

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Question usually the `controlling block' tends to be between :Correct Answer 20 & 40 percent Your Answer 20 & 40 percent

Multiple Choice Single Answer Question The difference between current assets & current liabilities is known as :Correct Answer Net working capital Your Answer Net working capital

Select The Blank Question Conglomerate mergers are also called ________. Correct Answer Concentric mergers Your Answer Concentric mergers

Multiple Choice Multiple Answer Question The main theories behind share repurchases are :Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling hypothesis Your Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information or signalling hypothesis

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Multiple Choice Single Answer Question In value of assets method the following is also to be included as they are also of value to the company :Correct Answer Non trading assets Your Answer Non trading assets

Multiple Choice Multiple Answer Question Every business requires funds on a continual basis for expenses incurred on for :Correct Answer Purchase of raw material , Manufacturing costs , Administration Your Answer Purchase of raw material , Manufacturing costs , Administration

True/False Question The scope of the data required relates to the scope of the activity model & processes under review. Correct Answer True Your Answer True

Multiple Choice Single Answer Question Investment decisions are mainly concerned with :Correct Answer Assets Your Answer

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Assets

Match The Following Question Correct Answer Your Answer

Unsecured loans Form of debt not backed by the pledge of specific assets Form of debt not backed by the pledge of specific assets

Line of credit Does not constitute any legal commitments on the part of the bank Does not constitute any legal commitments on the part of the bank

Revolving credit agreements While the commitment is in force the bank must extend credit whenever the borrower wishes to borrow While the commitment is in force the bank must extend credit whenever the borrower wishes to borrow

Transaction loan The cash flow ability of the borrower to pay the loan is usually of paramount importance The cash flow ability of the borrower to pay the loan is usually of paramount importance

Multiple Choice Single Answer Question Short term sources of funds include :Correct Answer Current Liabilities Your Answer Reserves

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Multiple Choice Single Answer Question Profitability of a company depends upon :Correct Answer Cost of capital Your Answer Earning per share

True/False Question DCF is not a method used to calculate market value of a firm. Correct Answer False Your Answer False

Multiple Choice Multiple Answer Question Shortcomings of accounting numbers consist of the following :Correct Answer Firms use different kind of accounting methods , Business risk and financial risk do not have any influence on accounting numbers Your Answer Dividend policy has lot of influence on accounting numbers , Business risk and financial risk do not have any influence on accounting numbers

Multiple Choice Multiple Answer Question Debt reduces :Correct Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of decisions

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Your Answer Agency cost of free cash flow , Commitment to pay in time to all lenders , Freedom of decisions

True/False Question Planning helps an acquiring firm to identify the units it should drop & it should add. Correct Answer True Your Answer True

Select The Blank Question Non value added activities helps ________. Correct Answer To analyse the activities more carefully Your Answer To take a better decision

True/False Question Usually only a single method is used for valuation of shares. Correct Answer False Your Answer False

Select The Blank Question In the reproduction value method of valuation, the value of assets is taken to be on the basis of ________

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Correct Answer Replacement cost Your Answer Replacement cost

Multiple Choice Multiple Answer Question The major conditions to be fulfilled for buyback of shares as per the legal provisions include :Correct Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1 Your Answer Articles of association should authorize buyback of shares , The shares which are sought to be bought back should be fully paid up , After the buy back the ratio of debt to total capital and free reserves should not be more than 2 : 1

Multiple Choice Single Answer Question The Public announcement of share buy back has to be made at least :Correct Answer 7 Days prior to the commencement of buy back Your Answer 7 Days prior to the commencement of buy back

Select The Blank Question Combination of 2 or more companies into existing company is called ________. Correct Answer Absorption Your Answer Absorption

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Select The Blank Question ________ is not a example of segment liability. Correct Answer Goodwill Your Answer Accrued liabilities

Multiple Choice Multiple Answer Question The characteristics of working capital are :Correct Answer It is continually required for a going concern , Quantum of working capital fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous basis Your Answer It is continually required for a going concern , Quantum of working capital fluctuates depending on the level of activity , It is impacted by numerous transactions on a continuous basis

True/False Question The accounting records serve as the major source of cost data. Correct Answer True Your Answer True

Select The Blank Question AS 23 - Accounting for investments in associates in consolidated financial statements comes into effect in respect of accounting periods commencing on or after ________. Correct Answer 01.04.2002

Strategic Finance II Your Answer 01.04.2002

True/False Question The activity model is normally created by an activity Accountant. Correct Answer False Your Answer False

True/False Question Organisational changes are similar to mission changes. Correct Answer True Your Answer True

Multiple Choice Single Answer Question Equity includes :Correct Answer Development Rebate Reserve Your Answer Development Rebate Reserve

Select The Blank Question A geographical segment cannot be ________. Correct Answer

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Strategic Finance II

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Countries in different zones Your Answer Countries in different zones

Multiple Choice Single Answer Question The Management of the Company may enter into a negotiated purchase, which is referred to as :Correct Answer Greenfield Your Answer Greenfield

Multiple Choice Single Answer Question The acquirer should intimate to the target company & the concerned stock exchanges as soon as its holding touches :Correct Answer 5 % of the voting capital of the target company Your Answer 5 % of the voting capital of the target company

Multiple Choice Multiple Answer Question Significant influence is the power to :Correct Answer Participate in the financial decisions , Participate in the operating policy decisions Your Answer Participate in the financial decisions , Participate in the operating policy decisions

Multiple Choice Multiple Answer Question

Strategic Finance II

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An investment property is an investment in land or buildings :Correct Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to be in the operations of the investing enterprise Your Answer Not intended to be occupied substantially for use by investing enterprise , Not intended to be in the operations of the investing enterprise

Multiple Choice Single Answer Question The following analysis is more targeted on similar activities or firms that exist in parallel within the activity model or process flow to ensure that they are being done the same best way :Correct Answer Comparative analysis Your Answer Comparative analysis

Strategic Finance II

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Strategic Finance II

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