Finance — Mixed Practice — Part 3: 40 MCQs with Explanations

Method of matching orders by posting orders of buying and selling is classified as Electronic communication network .

Funds which are used as interest-bearing checking accounts are classified as Money market funds .

Federal Reserve policy and federal surplus or deficit of budget affect the Cost of money .

Bonds which are riskier than corporate bonds and are issued by major corporations are classified as Preferred stocks .

Professionals such as doctors, accountants and lawyers often make corporations are classified as Both B and C .

Ability to trade at net price very quickly is classified as Liquidity .

Rate of required return by debt holders is used for estimation the Cost of debt .

Current option price is added to present value of portfolio for calculating Current value of stock .

Projects which are mutually exclusive but different on scale of production or time of completion then the Net present value of method .

Long period of bond maturity leads to More price changes .

If coupon rate is equal to going rate of interest, then bond will be sold At par value .

As free bonds issue for welfare by industrial agencies or pollution control agencies are classified as Both B and C .

A price for equity is called Cost of equity .

Hewlett-Packard and Microsoft are examples of Corporation .

Double declining balance method and sum of years digits are included in Accelerated methods .

In retention growth model, payout ratio is subtracted from one to calculate Retention ratio .

Real rate expected cash flows and nominal rate expected cash flows must be Equal .

Real interest rate and real cash flows do not include Inflation effects .

Right held with corporations to call issued bonds for redemption is considered as Call provision .

Required rate of return in calculating bonds cash flow is also classified as Both A and B .

If default probability is zero and bond is not called, then yield to maturity is Equal to expected return rate .

Cash flows that could be generated from an owned asset by company but not use in project are classified as Opportunity costs .

Relevant cash flow which company expects when its will implement project is classified as Incremental cash flow .

Nominal interest rates and nominal cash flows are usually reflected the Inflation effects .

In cash flow estimation, depreciation shelters companys income from Taxation .

Rate of return which is required to satisfy stockholders and debt holders is classified as Weighted average cost of capital .

In cash flow estimation, depreciation is considered as Non cash charge .

Type of bond in which payments are made on basis of inflation index is classified as Purchasing power bond .

Method uses for an estimation of cost of equity is classified as Discounted cash flow method .

Variability for expected returns for projects is classified as Stand-alone risk .

During planning period, a marginal cost for raising a new debt is classified as Relevant cost .

If coupon rate is more than going rate of interest, then bond will be sold Below its par value .

Bonds issued to individuals by corporations are classified as Corporate bonds .

Forecast by analysts, retention growth model and historical growth rates are methods used for an Estimate future growth .

An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax Cost of debt .

Beta which is estimated as regression slope coefficient is classified as Historical beta .

Set of rules consisting of behavior towards its directors, creditors, shareholders, competitors and community is considered as Corporate governance .

Price for debt is called Interest rate .

Net income available to stockholders is $150 and total assets are $2,100 then return on total assets would be 7.14% .

A technique uses in comparative analysis of financial statement is Common size analysis .