Strategic Finance Combined

Strategic Finance II Page 1 of 111
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

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

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

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
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

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

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

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
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.

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

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

Question Correct Answer Your 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
Articles of Association Authorize buy back of securities Resolution permitting the buy
back of shares
Board of Directors Resolution permitting the buy Authorize buy back of securities
back of shares
Shares to be bought back Fully paid up Fully paid up

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

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

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

Question Correct Answer Your Answer
Trust receipt Specifically identified by serial Specifically identified by serial

number or other means number or other means
Terminal warehouse receipt Inventory is stored with a public Inventory is stored with a public
or terminal warehousing or terminal warehousing company
company
Floating lien Loose arrangement as the Well suited for financial good
lender may find it difficult to inventories of capital goods
police
Chattel mortgage Well suited for financial good Affords a higher degree of control
inventories of capital goods 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

Question Companies often need to value its own :-
Correct Answer Shares

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

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.
Correct Answer True

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

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

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

Question Value implies that something has :-
Correct Answer Worth
Your Answer Worth

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

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

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.

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

Select The Blank

Question Mature companies with stable earnings generally pay out ________.
Correct Answer A high proportion of earnings
traditionally avails are provided by .

Marks : 2
14.
government has made it mandatory to include in their annual
reports information on customers, processes & human capital.
Marks : 2
18. Equity includes :-
a)
Deferred Payment Liabilities
Development Rebate Reserve

b)
Loans from other Corporates
c)
Interest Payable
d)
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

Marks : 2
24.
Capital gains are taxed at .
Marks : 2
45.
know the best about a firm's performance.
Marks : 2
49. When a firm invests in human resources by acquisition & training, it anticipates a
Marks : 2
50. Investment decisions are mainly concerned with :-
a)
Liabilities
Equity
b)
Assets
c)
Leverage
d)
Marks : 2
53. As per Pecking order theory, which is the costliest means of funding :-
a)
Secured debt
Unsecured debt
b)
Equity Shares
c)
Preference Shares
d)
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
Question
In market value approach, interested parties never manipulate the stock markets.
Correct Answer
False
Your Answer
True
Question
For accounting standard (AS) 27, Significant influence may be gained by :-
Correct Answer
Share ownership , Statute , Agreement
Your Answer
Share ownership , Statute , Agreement
Question
Accounts payable is also known as :-
Correct Answer
Trade credit from suppliers
Your Answer
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

Question
Correct Answer
Your Answer
Free cash flow theory

Enormous conflicts of interest between Stakeholders and shareholders
Net income approach

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
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
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

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
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
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
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
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
Stock repurchases ________ the debt / equity ratio.
Correct Answer
Increases
Your Answer
Increases
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
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
Question
Determination of residual value of an asset is normally a difficult matter.
Correct Answer
True
Your Answer
True
Question
Free Reserves is a component of :-
Correct Answer
Equity
Your Answer
Equity
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
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
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
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
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
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
1000 crores
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
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
Question
In the tender offer, the purchaser approaches :-
Correct Answer
The shareholder
Your Answer
The shareholder

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
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
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
Question
The 3 groups of participants in a firm are :-
Correct Answer
Suppliers of equity , Debt suppliers , Firm Managers
Your 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
Question
Appraisal value of a firm can be acquired from an independent appraisal agency.
Correct Answer
True
Your Answer
True
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
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
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
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
Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer
True
Your Answer
True
Score Card
Registration
200404214
Number:
Name: Manpreet Malhotra
Subject: Strategic Finance
Assignment Statu 21/03/2006
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.

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
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
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
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

Firms have preferences by choosing a way to finance their projects
Net income approach

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

leverages
leverages

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

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
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

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
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.
Correct Answer
False
Your Answer
True
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
Question
Shareholders returns consists of 2 components :-
Correct Answer
Dividend , Capital gains
Your Answer
Interest , Dividend
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
current assets
True/False
Question
Usually only a single method is used for valuation of shares.
Correct Answer
False
Your Answer
False
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
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
Increase in cost of capital means decrease in ________.
Correct Answer
Profitability
Your Answer
Profitability
Question
Investments having no physical existence includes :-
Correct Answer
Shares , Debentures , Bonds
Your Answer
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
Your Answer
50
Question
The following of the depreciable asset may undergo subsequent
changes arising due to price adjustments :-
Correct Answer
Historical cost
Your Answer
Historical cost
Question
Correct Answer
Your Answer
Suppliers of equity , Firm Managers , Government Agencies
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
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
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
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
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
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
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
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
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
Question
A single business segment does not include products & services :-
Correct Answer
With significantly differing risks & returns
Your Answer
With similar risks & returns
True/False
Question
Accounting standards (AS - 13) is now mandatory.
Correct Answer
True
Your Answer
True
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
Your Answer
Job vacancy cost during the new search , Termination pay , Recruiting new employee
as a replacement of the left employee
Question
A firm's current assets include :-
Correct Answer
Marketable securities , Receivables , Inventory
Your Answer
Marketable securities , Receivables , Inventory
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
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
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
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
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
Question
Segment assets are determined after :-
Correct Answer
Deducting related allowances / provisions reported as direct offsets
Your Answer
Deducting income tax assets
Question
Acceptable audit requirements cannot be overlooked even under the pressure of :-
Correct Answer
Timeliness & turnaround
Your Answer
Mergers & acquisitions
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
Question
In an aggressive approach :-
Correct Answer
There is a very large risk of shortage of funds
Your Answer
True/False
Question
Organisational changes are similar to mission changes.
Correct Answer
True
Your Answer
False
Question
The internal staffing performance indicators are :-
Correct Answer
Sales per employee , Recovery rate , Utilization %
Your Answer
Select The Blank
Question
The most popular kind of dividend policy is one that pays a ________.
Correct Answer
Regular, steady dividend
Your Answer
Match The Following
Question
Correct Answer
Your Answer
Amount involved in buy back

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
Shares to be bought back

Fully paid up
Fully paid up
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
Question
Fixed price tender offers are accompanied by an abnormal announcement period return
of :-
Correct Answer
8 - 10 %
Your Answer
6-8%
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
Terminal warehouse receipt

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
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
Your Answer
Internet
Question
Companies often need to value its own :-
Correct Answer
Shares
Your Answer
Shares
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 ________.
Correct Answer
1 year
Your Answer
3 years
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
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
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
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
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
Question
Value implies that something has :-
Correct Answer
Worth
Your Answer
Worth
Question
Examples of accounting methods used by firm are :-
Correct Answer
FIFO , LIFO , Accrual Accounting
Your Answer
FIFO , LIFO , Accrual Accounting
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
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
Question
The earning power of the company approach includes :-
Correct Answer
Mainly discounting of all future earnings
Your Answer
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
Question
The internal staffing performance indicators are :-
Correct Answer
Your Answer
Utilization % , Sales per employee , Recovery rate
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
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
Question
In an aggressive approach :-
Correct Answer
Your Answer
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
Question
The major conditions to be fulfilled for buyback of shares as per the legal
provisions include :-
Correct Answer
Your 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 , 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
Question
Correct Answer
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
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
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
Question
Equity includes :-
Correct Answer
Your Answer
Interest Payable
Question
Correct Answer
Current Liabilities
Your Answer
Current Liabilities
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
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
Question
Segment reporting comes under :-
Correct Answer
AS 17
Your Answer
AS 23
Question
Correct Answer
Your 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
Question
Segment information needs to be presented :-
Correct Answer
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
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
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
Question
The support elements consists of important functions such as :-
Correct Answer
Payroll , Accounting , Automatic data processing
Your Answer
Payroll , Accounting , Automatic data processing
Question
Most companies focus only on :-
Correct Answer
Return on investment
Your Answer
Return on investment
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
Question
Accounts payable is also known as :-
Correct Answer
Your Answer
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

Floating lien
Chattel mortgage
Trust receipt

Question
Acceptable audit requirements cannot be overlooked even under the pressure of
:-
Correct Answer
Your Answer
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

Question
Correct Answer
Your Answer
Amount involved in buy back

Fully paid up
Articles of Association
Board of Directors
Shares to be bought back

Fully paid up
Question
Shareholders returns consists of 2 components :-
Correct Answer
Your 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
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. The HHI index reflects :-
a)
Inequality & degree of concentration
Transparency
b)
Disclosure through public announcement
c)
Interest of small shareholders
d)
11. 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 :-
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
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

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
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
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
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
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
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
Question
in case of temporary working capital, the investment in current assets varies with
:-
Correct Answer
Seasonal requirements
Your Answer
Seasonal requirements
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
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
True
Your Answer
True
Select The Blank
Question
Forward or backward integration is a characteristic of ________.
Correct Answer
Vertical Mergers
Your Answer
Vertical Mergers
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
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
In market value approach, interested parties never manipulate the stock markets.
Correct Answer
False
Your Answer
False
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
Question
Decrease in leverage results in increasing the :-
Correct Answer
Overall cost of capital
Your Answer
Overall cost of capital
Question
Suppliers of equity are interested in :-
Correct Answer
High share prices
Your Answer
High share prices
Match The Following
Question
Correct Answer
Your Answer

Net income approach


leverages
leverages

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

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
Question
A single business segment does not include products & services :-
Correct Answer
Your Answer
True/False
Question
For determining exchange ratio, the model developed by Conn & Nielson is
used.
Correct Answer
True
Your Answer
True
Question
Debt suppliers main concern is :-
Correct Answer
Interest & debt repayment
Your Answer
Interest & debt repayment
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
Your 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
Question
The following disclosures in financial statements in relation to investments are
appropriate :-
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
Question
Correct Answer
Your Answer
Market growth , Marketing capabilities , Nature of competition
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
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
Question
Personnel services expenses is made up of:-
Correct Answer
Personnel salaries , Cost of facilities , Training & development budgets
Your Answer
Cost of facilities , Training & development budgets
Question
Investments having no physical existence includes :-
Correct Answer
Your Answer
Select The Blank
Question
the commercial paper may be issued in the multiples of ________.
Correct Answer
5 lakhs
Your Answer
5 lakhs
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 ________.
Correct Answer
Your 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
Question
One of the important assumptions for capital structure theories is :-
Correct Answer
Your Answer
The payout ratio is never 100 %
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. The FEA Tools encompass a vast array of information & policy into :-
a)
Many evaluations
One evaluation
b)
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
Match The Following
Question
Correct Answer
Your Answer
AS 4
Contingencies & events occurring after the balance sheet date
AS 13
Accounting for investments
AS 23
Accounting for investments in associates in consolidated financial statements
AS 21
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
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
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
Your Answer
Replacement cost
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
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
Select The Blank
Question
Combination of 2 or more companies into existing company is called ________.
Correct Answer
Absorption
Your Answer
Absorption
Select The Blank

Question
________ is not a example of segment liability.
Correct Answer
Goodwill
Your Answer
Accrued liabilities
17. According to Merton Miller & Franco Modigliani, the only important determinant of a
company's market value is :-
a)
Decision regarding firm's payout of dividend
Retention of dividend for internal financing

b)
Its investment policy
c)
Investment opportunities available
d)
24. Fixed price tender offers are accompanied by an abnormal announcement period
return of :-
a)
2-3%
6-8%
b)
8 - 10 %
c)
10 - 15 %
d)
30. Opportunity costs and real costs decrease the market value of a firm.
True
False
43.
HLL is % of subsidiary of Unilever PLC.
.75,0.5,0.25,0.516
47. The statute governing an enterprise may provide

the basis for computation of the depreciation.
True
False
1. Line of credit 1. The cash flow ability of

the borrower to pay the loan
is usually of paramount
importance
2. Revolving credit 2. Does not constitute any
agreements legal commitments on the
part of the
bank
3. Transaction loan 3. The clean up period is
more than 6
months
4. Unsecured loans 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
False
Match The Following
Question
Correct Answer
Your Answer
AS 21
AS 4
AS 13
AS 23
Select The Blank
Question
There is a ________ relationship between the number of employees & the use of operating supplies.
Correct Answer
Natural
Your Answer
Natural
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)
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
Question
As per Pecking order theory, which is the costliest means of funding :-
Correct Answer
Equity Shares
Your Answer
Equity Shares
Question
Free Reserves is a component of :-
Correct Answer
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
Question
The overhead expenses include :-
Correct Answer
Utilities , Maintenance , Security
Your Answer
Utilities , Maintenance , Security
Question
Examples of accrued expenses are :-
Correct Answer
Wages , Income tax , Property tax
Your Answer
Wages , Income tax , Property tax
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
Question
The number of bidding centers shall not be less than ________ for buy back through book building.
Correct Answer
30
Your Answer
30
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

Question
usually the `controlling block' tends to be between :-
Correct Answer
20 & 40 percent
Your Answer
20 & 40 percent
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
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
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
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
Question
Investment decisions are mainly concerned with :-
Correct Answer
Assets
Your Answer
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
Question
Correct Answer
Current Liabilities
Your Answer
Reserves
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
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
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
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
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
Your Answer
Replacement cost
Question
The major conditions to be fulfilled for buyback of shares as per the legal provisions include :-
Correct Answer
Your Answer
Question
The Public announcement of share buy back has to be made at least :-
Correct Answer
Your Answer
Select The Blank
Question
Combination of 2 or more companies into existing company is called ________.
Correct Answer
Absorption
Your Answer
Absorption
Select The Blank
Question
________ is not a example of segment liability.
Correct Answer
Goodwill
Your Answer
Accrued liabilities
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
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
Question
Equity includes :-
Correct Answer
Your Answer
Select The Blank
Question
A geographical segment cannot be ________.
Correct Answer
Countries in different zones
Your Answer
Countries in different zones
Question
The Management of the Company may enter into a negotiated purchase, which is referred to as :-
Correct Answer
Greenfield
Your Answer
Greenfield
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
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
Question
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
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

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Strategic Finance II Page 1 of 111

LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Correct Answer True

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer Marketable securities , Receivables , Inventory

Multiple Choice Multiple Answer

Correct Answer Earnings , Operating characteristics of acquiring firm , Financial characteristics of

Multiple Choice Multiple Answer

Correct Answer True

Select The Blank

Multiple Choice Single Answer

Correct Answer Exchange ratio

Select The Blank

Correct Answer False

Select The Blank

Correct Answer Vertical Mergers

Multiple Choice Single Answer

Correct Answer Deducting related allowances / provisions reported as direct offsets

Multiple Choice Single Answer

Multiple Choice Single Answer

Correct Answer False

Multiple Choice Single Answer

Correct Answer There is a very large risk of shortage of funds

Correct Answer True

Multiple Choice Multiple Answer

Correct Answer Sales per employee , Recovery rate , Utilization %

Select The Blank

Correct Answer Regular, steady dividend

Match The Following

Question Correct Answer Your Answer

Multiple Choice Single Answer

Multiple Choice Single Answer

Multiple Choice Multiple Answer

Match The Following

Trust receipt Specifically identified by serial Specifically identified by serial

Select The Blank

Multiple Choice Single Answer

Correct Answer Shares

Multiple Choice Multiple Answer

Correct Answer True

Select The Blank

Correct Answer 1 year

Multiple Choice Multiple Answer

Select The Blank

Correct Answer True

Multiple Choice Single Answer

Multiple Choice Multiple Answer

Multiple Choice Single Answer

Correct Answer 1960`s

Select The Blank

Correct Answer Directly attributable to the segment

Correct Answer True

Select The Blank

Multiple Choice Single Answer

Question Value implies that something has :-

Correct Answer Worth

Your Answer Worth

Multiple Choice Multiple Answer

Correct Answer FIFO , LIFO , Accrual Accounting

Multiple Choice Multiple Answer

Multiple Choice Multiple Answer

Correct Answer False