Recent questions tagged financial-services

The free cash flow to the firm (FCFF) is closest to ___________. a) Rs.130 lakh b) Rs.112 lakh c) Rs.118 lakh d) Rs.124 lakh

Description : The free cash flow to the firm (FCFF) is closest to ___________. a) Rs.130 lakh b) Rs.112 lakh c) Rs.118 lakh d) Rs.124 lakh

Last Answer : c) Rs.118 lakh

The terminal value in year 6 is closest to __________. a) Rs.22.57 b) Rs.20.42 c) Rs.24.30 d) Rs.25.70

Description : The terminal value in year 6 is closest to __________. a) Rs.22.57 b) Rs.20.42 c) Rs.24.30 d) Rs.25.70

Last Answer : a) Rs.22.57

The per share value Dev should assign to RC Ltd. is closest to ___________. a) Rs.15.35 b) Rs.20.86 c) Rs.17.35 d) Rs.18.46

Description : The per share value Dev should assign to RC Ltd. is closest to ___________. a) Rs.15.35 b) Rs.20.86 c) Rs.17.35 d) Rs.18.46

Last Answer : c) Rs.17.35

The required rate of return is closest to ____________. a) 10.012% b) 7.062% c) 0.062% c) 11.065%

Description : The required rate of return is closest to ____________. a) 10.012% b) 7.062% c) 0.062% c) 11.065%

Last Answer : c) 0.062%

There are two income-based approaches that are primarily used when valuing a business, the Capitalization of Cash Flow Method and the ___________. a) Net Present Value Method b) IRR Method c) Discounted Cash Flow Method d) Discounted Payback Period

Description : There are two income-based approaches that are primarily used when valuing a business, the Capitalization of Cash Flow Method and the ___________. a) Net Present Value Method b) IRR Method c) Discounted Cash Flow Method d) Discounted Payback Period

Last Answer : c) Discounted Cash Flow Method

Which of the following is the capitalization rate of the BC Ltd.? a) 5.0% b) 3 % c) 4% d) 4.5%

Description : Which of the following is the capitalization rate of the BC Ltd.? a) 5.0% b) 3 % c) 4% d) 4.5%

Last Answer : c) 4%

What is the annual future earnings of the AZ Ltd. using ‘Capitalization of Earning Method’? a) Rs.150 crore b) Rs.180 crore c) Rs.200 crore d) Rs.190 crore

Description : What is the annual future earnings of the AZ Ltd. using ‘Capitalization of Earning Method’? a) Rs.150 crore b) Rs.180 crore c) Rs.200 crore d) Rs.190 crore

Last Answer : c) Rs.200 crore

The exemption under section 54 of the Income Tax Act, 1961 is available ___________. e) to the extent of capital gain invested in the house property f) proportionate to the net consideration price invested g) to the extent of amount actually invested h) to the extent of net consideration

Description : The exemption under section 54 of the Income Tax Act, 1961 is available ___________. e) to the extent of capital gain invested in the house property f) proportionate to the net consideration price invested g) to the extent of amount actually invested h) to the extent of net consideration

Last Answer : to the extent of capital gain invested in the house property

Under the SARFAESI Act, 2002, the Central Registrar may allow the filing of the particulars of creation of security interest within _____ next following the expiry of the period of initial thirty days on payment of additional fee. a) Ten days b) Thirty days c) Twenty-five days d) Fifteen days

Description : Under the SARFAESI Act, 2002, the Central Registrar may allow the filing of the particulars of creation of security interest within _____ next following the expiry of the period of initial thirty days on payment of additional fee. a) Ten days b) Thirty days c) Twenty-five days d) Fifteen days

Last Answer : b) Thirty days

According to RBI Guidelines on Sale of Stressed Assets by Banks, identification of stressed assets beyond a specified value, as may be determined by bank’s policy, for sale is ___________. a) Top-down b) Bottom–top c) Horizontal d) Vertical

Description : According to RBI Guidelines on Sale of Stressed Assets by Banks, identification of stressed assets beyond a specified value, as may be determined by bank’s policy, for sale is ___________. a) Top-down b) Bottom–top c) Horizontal d) Vertical

Last Answer : a) Top-down

STRIPS stands for ______________. a) Separate Trading of Registered Interest and Principal Shares b) Segregated Trading of Registered Interest and Principal Securities c) Separate Trading of Registered Interest and Principal Securities d) Segregated Trading of Registered Interest and Principal Shares

Description : STRIPS stands for ______________. a) Separate Trading of Registered Interest and Principal Shares b) Segregated Trading of Registered Interest and Principal Securities c) Separate Trading of ... Interest and Principal Securities d) Segregated Trading of Registered Interest and Principal Shares

Last Answer : c) Separate Trading of Registered Interest and Principal Securitie

Which statute governs external commercial borrowing? e) Foreign Exchange Maximization Act, 1972 f) Foreign Exchange Management Act, 1999 g) Foreign Exchange Minimization Act, 2004 h) Foreign Exchange Regulation Act, 1972

Description : Which statute governs external commercial borrowing? e) Foreign Exchange Maximization Act, 1972 f) Foreign Exchange Management Act, 1999 g) Foreign Exchange Minimization Act, 2004 h) Foreign Exchange Regulation Act, 1972

Last Answer : f) Foreign Exchange Management Act, 1999

Under the SEBI (Share Based Employee Benefits) Regulations, 2014, appreciation means the difference between the ______________. a) market price of the share of a company on the date of exercise of stock appreciation right (SAR) or vesting of SAR, as the case may be, and the SAR price. b) face value of the share of a company on the date of exercise of stock appreciation right (SAR) and vesting of SAR, as the case may be, and the SAR price. c) market price of the share of a company on the date of exercise of share appreciation right (SAR) and the SAR price. d) face value of the share of a company on the date of exercise of share appreciation right (SAR) and the SAR price.

Description : Under the SEBI (Share Based Employee Benefits) Regulations, 2014, appreciation means the difference between the ______________. a) market price of the share of a company on the date of exercise of stock ... a company on the date of exercise of share appreciation right (SAR) and the SAR price.

Last Answer : market price of the share of a company on the date of exercise of stock appreciation right (SAR) or vesting of SAR, as the case may be, and the SAR price.

Which of the following is the act of taking a risk for a fee? e) Guidewire f) Initial Public Offering g) Predictive analytics h) Underwriting

Description : Which of the following is the act of taking a risk for a fee? e) Guidewire f) Initial Public Offering g) Predictive analytics h) Underwriting

Last Answer : h) Underwriting

A Tribunal makes an order under section 230 of the Companies Act, 2013 sanctioning a compromise or an arrangement in respect of a company. In this context, strike the odd one out: a) It will supervise the implementation. b) It can give order for winding up of the company. c) It can modify the order or compromise. d) It can ask for creditors’ responsibility statement.

Description : A Tribunal makes an order under section 230 of the Companies Act, 2013 sanctioning a compromise or an arrangement in respect of a company. In this context, strike the odd one out: a) It will ... . c) It can modify the order or compromise. d) It can ask for creditors' responsibility statement.

Last Answer : d) It can ask for creditors’ responsibility statement.

Which of the following statements is true? a) Debenture holder is an owner of the company. b) Debenture holder can get back its money only on the liquidation of the company. c) A debenture issued at a discount can be redeemed at a premium. d) A debenture holder receives interest only in the event of profits

Description : Which of the following statements is true? a) Debenture holder is an owner of the company. b) Debenture holder can get back its money only on the liquidation of the company. c) A debenture issued ... can be redeemed at a premium. d) A debenture holder receives interest only in the event of profits

Last Answer : c) A debenture issued at a discount can be redeemed at a premium.

Measurement and disclosure do not apply to which of the following? a) Leasing based transactions b) Net realizable values/Impairment of Assets c) Share based payments d) Price received to sell or buy an asset

Description : Measurement and disclosure do not apply to which of the following? a) Leasing based transactions b) Net realizable values/Impairment of Assets c) Share based payments d) Price received to sell or buy an asset

Last Answer : d) Price received to sell or buy an asset

The decline in the combined ratio is most likely to indicate that the insurer has ___________. a) increased its administration expenses b) increased its long term borrowing c) improved its investment returns d) improved its underwriting results

Description : The decline in the combined ratio is most likely to indicate that the insurer has ___________. a) increased its administration expenses b) increased its long term borrowing c) improved its investment returns d) improved its underwriting results

Last Answer : d) improved its underwriting results

An investment entity evaluates the performance of its investments on __________value basis. a) fair b) book c) market d) use

Description : An investment entity evaluates the performance of its investments on __________value basis. a) fair b) book c) market d) use

Last Answer : a) fair

What adjustment is made while using the Discounted Cash Flow method to value cyclical companies? a) Normalize earnings b) Use high discount rate c) Use bank rate for discounting d) Use high growth rate

Description : What adjustment is made while using the Discounted Cash Flow method to value cyclical companies? a) Normalize earnings b) Use high discount rate c) Use bank rate for discounting d) Use high growth rate

Last Answer : a) Normalize earnings

XYZ company has 50 lakh shares outstanding and plans to raise Rs.20 lakh by offering 10 lakh shares at Rs.2 per share. What is XYZ's post-money valuation? a) Rs.1.20 crore b) Rs.1 crore c) Rs.50 lakh d) Rs.2 crore

Description : XYZ company has 50 lakh shares outstanding and plans to raise Rs.20 lakh by offering 10 lakh shares at Rs.2 per share. What is XYZ's post-money valuation? a) Rs.1.20 crore b) Rs.1 crore c) Rs.50 lakh d) Rs.2 crore

Last Answer : a) Rs.1.20 crore

One is entitled to initiate insolvency resolution of a corporate debtor when the corporate debtor __________. a) does not have enough liquid cash to continue operations as a going concern b) has failed to repay a debt when due and payable c) has ceased to be a going concern d) has negative net worth

Description : One is entitled to initiate insolvency resolution of a corporate debtor when the corporate debtor __________. a) does not have enough liquid cash to continue operations as a going concern b) has failed to ... debt when due and payable c) has ceased to be a going concern d) has negative net worth

Last Answer : b) has failed to repay a debt when due and payable

During a merger and acquisition transaction, the ability to find and use good comparable data for a valuation is relatively ____________. a) easy because each successful company within an industry uses the same ratios b) easy because public stock price fluctuation is not sufficient or erratic enough to make a difference c) difficult because book value is adjusted in small companies as FIFO is the method of choice and in public companies’ book value is static due to LIFO d) difficult because size differential, management depth, product diversity and access to lines of credit seldom match the company being valued

Description : During a merger and acquisition transaction, the ability to find and use good comparable data for a valuation is relatively ____________. a) easy because each successful company within an industry ... depth, product diversity and access to lines of credit seldom match the company being valued

Last Answer : d) difficult because size differential, management depth, product diversity and access to lines of credit seldom match the company being valued

Which of the following method would you consider appropriate while valuing the intangible assets? a) Multiple b) Relative c) Consistent d) Exclusive

Description : Which of the following method would you consider appropriate while valuing the intangible assets? a) Multiple b) Relative c) Consistent d) Exclusive

Last Answer : b) Relative

If the aggregate fair market value of prescribed movable property received by a taxpayer as gift during the year is Rs.1,50,000, tax will be charged on ______. a) Rs.1,00,000 b) Rs.50,000 c) Rs.1,50,000 d) Rs.0

Description : If the aggregate fair market value of prescribed movable property received by a taxpayer as gift during the year is Rs.1,50,000, tax will be charged on ______. a) Rs.1,00,000 b) Rs.50,000 c) Rs.1,50,000 d) Rs.0

Last Answer : c) Rs.1,50,000

Relief-from-royalty method estimates the value an asset based on the value of the royalty payments __________. a) from which the company is relieved due to its ownership of the asset b) made by the company to acquire ownership of the asset c) received by the company from the useful life of the asset d) over and above the internal rate of return

Description : Relief-from-royalty method estimates the value an asset based on the value of the royalty payments __________. a) from which the company is relieved due to its ownership of the asset b) made by the ... by the company from the useful life of the asset d) over and above the internal rate of return

Last Answer : a) from which the company is relieved due to its ownership of the asset

What is an intangible asset? a) Non-monetary asset with physical substance b) Monetary asset without physical substance c) Non-monetary asset without physical substance d) Monetary asset with physical substance

Description : What is an intangible asset? a) Non-monetary asset with physical substance b) Monetary asset without physical substance c) Non-monetary asset without physical substance d) Monetary asset with physical substance

Last Answer : c) Non-monetary asset without physical substance

The credit default spread method of valuation of a guarantee given by a parent company on behalf of its subsidiary involves estimating the value ____________. a) using credit default spread based on the credit rating of the subsidiary b) using credit default spread based on the credit rating of the guarantor c) based on probability of default d) of the guarantee using an option pricing model

Description : The credit default spread method of valuation of a guarantee given by a parent company on behalf of its subsidiary involves estimating the value ____________. a) using credit default spread based on ... guarantor c) based on probability of default d) of the guarantee using an option pricing model

Last Answer : a) using credit default spread based on the credit rating of the subsidiary

Individuals hold their claims on real assets through ____________ in a well-developed economy. a) intangible assets b) tangible assets c) real estate d) financial assets

Description : Individuals hold their claims on real assets through ____________ in a well-developed economy. a) intangible assets b) tangible assets c) real estate d) financial assets

Last Answer : d) financial assets

The first step in the Monte Carlo simulation process is to _____. a) generate random numbers b) set up cumulative probability distributions c) establish random number intervals d) set up probability distributions

Description : The first step in the Monte Carlo simulation process is to _____. a) generate random numbers b) set up cumulative probability distributions c) establish random number intervals d) set up probability distributions

Last Answer : d) set up probability distributions

Which of the following is an assumption on the returns distribution in Black Scholes Model? a) Normal b) Exponential c) Standard d) Linear

Description : Which of the following is an assumption on the returns distribution in Black Scholes Model? a) Normal b) Exponential c) Standard d) Linear

Last Answer : a) Normal

Which principle tells us that an investor will not invest in an asset if a more attractive substitute exists? a) Principle of alternative b) Principle of expectation c) Principle of substitution d) Principle of risk and return

Description : Which principle tells us that an investor will not invest in an asset if a more attractive substitute exists? a) Principle of alternative b) Principle of expectation c) Principle of substitution d) Principle of risk and return

Last Answer : c) Principle of substitution

A perpetual bond does not have a fixed _________. a) interest rate b) maturity period c) duration d) underlying asset

Description : A perpetual bond does not have a fixed _________. a) interest rate b) maturity period c) duration d) underlying asset

Last Answer : b) maturity period

The collar of a floating-rate bond refers to the minimum and maximum ______. a) call periods b) maturity dates c) coupon rates d) yields to maturity

Description : The collar of a floating-rate bond refers to the minimum and maximum ______. a) call periods b) maturity dates c) coupon rates d) yields to maturity

Last Answer : c) coupon rates

The fixed-rate payer in an interest-rate swap has a position equivalent to a series of ____________. a) long interest-rate puts and short interest-rate calls b) short interest-rate puts and long interest-rate calls c) long interest-rate puts and calls d) short interest-rate puts and calls

Description : The fixed-rate payer in an interest-rate swap has a position equivalent to a series of ____________. a) long interest-rate puts and short interest-rate calls b) short interest-rate puts and long interest-rate calls c) long interest-rate puts and calls d) short interest-rate puts and calls

Last Answer : b) short interest-rate puts and long interest-rate calls

What is the value of Three-Year 4.25% Annual Coupon Bond Puttable at Par one year from now if one year forward rates at T (0), T (1) and T (2) are 2.50%, 3% and 4.5% respectively? a) 101.54 b) 101.71 c) 102.67 d) 102.89

Description : What is the value of Three-Year 4.25% Annual Coupon Bond Puttable at Par one year from now if one year forward rates at T (0), T (1) and T (2) are 2.50%, 3% and 4.5% respectively? a) 101.54 b) 101.71 c) 102.67 d) 102.89

Last Answer : c) 102.67

___________ is the risk that an issuer will fail to satisfy the terms of the agreement with respect to the timely payment of interest and principal. a) Default risk b) Credit spread risk c) Volatility risk d) Downgrade risk

Description : ___________ is the risk that an issuer will fail to satisfy the terms of the agreement with respect to the timely payment of interest and principal. a) Default risk b) Credit spread risk c) Volatility risk d) Downgrade risk

Last Answer : a) Default risk

Which of the following bonds has the shortest duration? a) A bond with 20-year maturity, 10% coupon rate b) A bond with 20-year maturity, 6% coupon rate c) A bond with 10-year maturity, 6% coupon rate d) A bond with 10-year maturity, 10% coupon rate

Description : Which of the following bonds has the shortest duration? a) A bond with 20-year maturity, 10% coupon rate b) A bond with 20-year maturity, 6% coupon rate c) A bond with 10-year maturity, 6% coupon rate d) A bond with 10-year maturity, 10% coupon rate

Last Answer : All else constant, a bond with a longer maturity will be more sensitive to changes in interest rates. All else constant, a bond with a lower coupon will have greater interest rate risk. The correct answer was D) 10-year maturity, 10 percent coupon rate.

If interest rates are expected to increase, the coupon payment structure most likely to benefit the issuer is a ______. a) step-up coupon b) inflation-linked coupon c) put option d) cap in a floating-rate note

Description : If interest rates are expected to increase, the coupon payment structure most likely to benefit the issuer is a ______. a) step-up coupon b) inflation-linked coupon c) put option d) cap in a floating-rate note

Last Answer : d) cap in a floating-rate note

Agency bonds are issued by _____________. a) local governments b) national governments c) quasi-government entities d) corporates

Description : Agency bonds are issued by _____________. a) local governments b) national governments c) quasi-government entities d) corporates

Last Answer : c) quasi-government entities

Which is a type of preferred stock that stockholders can exchange for a predetermined number of a company’s common stock? a) Prior preferred stock b) Convertible preferred stock c) Participating preferred stock d) Cumulative preferred stock

Description : Which is a type of preferred stock that stockholders can exchange for a predetermined number of a company’s common stock? a) Prior preferred stock b) Convertible preferred stock c) Participating preferred stock d) Cumulative preferred stock

Last Answer : b) Convertible preferred stock

Typical parameters used in quantitative methods to estimate discount for lack of marketability include ____________. a) duration of the restriction and risk of the investment b) return of the investment c) dividends paid

Description : Typical parameters used in quantitative methods to estimate discount for lack of marketability include ____________. a) duration of the restriction and risk of the investment b) return of the investment c) dividends paid

Last Answer : a) duration of the restriction and risk of the investment

Which of the following is an asset pricing model based on the ideas that an asset’s returns can be predicted using the relationship between that asset and many common risk factors? a) Arbitrage pricing theory b) Arbitrage risk theory c) Arbitrage asset theory d) Risk pricing theory

Description : Which of the following is an asset pricing model based on the ideas that an asset’s returns can be predicted using the relationship between that asset and many common risk factors? a) Arbitrage pricing theory b) Arbitrage risk theory c) Arbitrage asset theory d) Risk pricing theory

Last Answer : a) Arbitrage pricing theory

When an investor uses a derivative instrument to reduce his exposure to the price volatility of certain underlying assets, he is said to be _______. a) speculating b) squaring c) hedging d) arbitraging

Description : When an investor uses a derivative instrument to reduce his exposure to the price volatility of certain underlying assets, he is said to be _______. a) speculating b) squaring c) hedging d) arbitraging

Last Answer : c) hedging

In case of valuation of firms for takeovers, which of the following provides a better estimate of value? a) Cash flows b) Free cash flows c) Future cash flows d) Free cash flow to equity

Description : In case of valuation of firms for takeovers, which of the following provides a better estimate of value? a) Cash flows b) Free cash flows c) Future cash flows d) Free cash flow to equity

Last Answer : d) Free cash flow to equity

In time-series analysis, which source of variation can be estimated by the ratio-to-trend method? a) Cyclical b) Trend c) Seasonal d) Irregular

Description : In time-series analysis, which source of variation can be estimated by the ratio-to-trend method? a) Cyclical b) Trend c) Seasonal d) Irregular

Last Answer : c) Seasonal

Which of the following represent the three major categories of risks faced by a business organisation? a) Business risks, personnel risks, budget risks b) Project risks, technical risks, business risks c) Planning risks, technical risks, personnel risks d) Management risks, technical risks, design risks

Description : Which of the following represent the three major categories of risks faced by a business organisation? a) Business risks, personnel risks, budget risks b) Project risks, technical risks, ... ) Planning risks, technical risks, personnel risks d) Management risks, technical risks, design risks

Last Answer : b) Project risks, technical risks, business risks

‘Economies of Scale’ arises from _______ synergy in Merger and Acquisitions. a) operating b) financial c) managerial d) market

Description : ‘Economies of Scale’ arises from _______ synergy in Merger and Acquisitions. a) operating b) financial c) managerial d) market

Last Answer : a) operating

What do ‘Cash Cows’ symbolize in The Boston Consulting Group's product portfolio matrix? a) Remain Invested b) Problem Child c) Stable Cash Flow d) Cash Traps

Description : What do ‘Cash Cows’ symbolize in The Boston Consulting Group's product portfolio matrix? a) Remain Invested b) Problem Child c) Stable Cash Flow d) Cash Traps

Last Answer : c) Stable Cash Flow

Which of the following would most likely be useful for performing sensitivity analysis of business valuation? a) Standard of Value b) Understanding of Business c) Premise of Value d) Audit Opinion

Description : Which of the following would most likely be useful for performing sensitivity analysis of business valuation? a) Standard of Value b) Understanding of Business c) Premise of Value d) Audit Opinion

Last Answer : b) Understanding of Business

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