1 is concerned with the maximization of a firms earnings

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Reference no: EM13371547

1. __________ is concerned with the maximization of a firm's earnings after taxes.

a) Shareholder wealth maximization

b) Profit maximization

c) Stakeholder maximization

d) EPS maximization

2.  Which of the following statements is correct regarding profit maximization as the primary goal of the firm?

a) Profit maximization considers the firm's risk level.

b) Profit maximization will not lead to increasing short-term profits at the expense of lowering expected future profits.

a) Profit maximization does consider the impact on individual shareholder's EPS.

b) Profit maximization is concerned more with maximizing net income than the stock price.

3. You need to understand financial management even if you have no intention of becoming a financial manager. One reason is that the successful manager of the not-too-distant future will need to be much more of a __________ who has the knowledge and ability to move not just vertically within an organization but horizontally as well. Developing __________ will be the rule, not the exception.

a) Specialist; specialties

b) Generalist; general business skills

c) Technician; quantitative skills

d) Team player; cross-functional capabilities

4.  What one is not the decision of financial management?

a) Asset management decision

b) Financing decision

c) Investment decision

d) Dividend decision

 5. Which of the following statements is not correct regarding earnings per share (EPS) maximization as the primary goal of the firm?

a) EPS maximization ignores the firm's risk level.

b) EPS maximization does not specify the timing or duration of expected EPS.

c) EPS maximization naturally requires all earnings to be retained.

d) EPS maximization is concerned with maximizing net income

6. Money has time value because

a. Money in hand today is more certain than money to be got tomorrow.

b. The value of money -gets discounted as time goes by.

c. The value of money gets compounded as time goes by.

d. Both (a) and (b) above.

e. Both (a) and (c) above.

7. In order to find the value in 1995 of a sum of $ 100 invested in 1993 at X% interest

a. The FVIFA table should be used.

b. The PVIFA table should be used.

c. The FVIF table should be used.

d. The PVIF table should be used.

e. Both FVIFA and FVIF tables can be used.

8.  The relationship between effective rate of interest (r) and nominal rate of interest (i) is best represented by

a) i = (1 + 1)-mmr

b) r = (1 + 1)-nnr

c) r = (1 + 1)-mmr

d) Both (a) and (c) above

f) None of the above.

9. If you invest $ 10,000 today for a period of 5 years, what will be the maturity value if the interest rate is?

(a) 8% (b) 10% (c) 12% (d) 15%

10.. You are considering investing $ 1,500 at an interest rate of 5% compounded annually for 2 years or investing the $1,500 at 7% per year simple interest rate for 2 years. Which option is better?

(A) Simple Interest by $56.25

(B) Compound Interest by $114.05

(C) Compound Interest by $52.75

(D) Simple Interest by $75.19

11. What will be the amount accumulated by $ 9,000 in 9 years if it is compounded at a rate of 9% per year?

(A) F = $ 18,229.30

(B) F = $ 19,547.04

(C) F = $ 20,978.22

(D) F = $ 19,055

12. If Rs300 is invested now, Rs500 two years from now, and Rs700 four years from now at an interest rate of 3% compounded annually, what will be the total amount in 10 years?

(A) F = Rs 1,872.40

(B) F = Rs 1,540.27

(C) F = Rs 1,975.11

(D) F = Rs 1,801.36

13. An individual deposits an annual bonus into a savings account that pays 5% interest compounded annually. The size of the bonus increases by Rs200 each year and the initial bonus amount at t=1 was Rs250. Determine how much will be in the account immediately after the fifth deposit.

(A) F = Rs3019.59

(B) F = Rs3483.89

(C) F = Rs2953.94

(D) F = Rs2752.95

14. What is the equal-payment series for 10 years that is equivalent to a payment series of Rs 15,000 at the end of the first year (t=1) decreasing by Rs300 each year over 10 years? Interest is 9% compounded annually.

(A) A = Rs 7120.85

(B) A = Rs 10,118.72

(C) A = Rs 12,929.01

(D) A = Rs 13,860.66

15. the time value of money in the present year will be

i) less than the value of future year

ii) more than the value of the future year

i) will be the same in future year

ii) will be in negative

16. Which is the best measure of capital budgeting?

i) Payback period

ii) Annual rate of return

iii) Profitability index

iv) NPV

17. When we want to go to future value of a lump sum amount, we use;

i) present value factor tables

ii) present value annuity factor tables

ii) compounded value factor tables

iv) compounded value annuity factor tables

18. When we want to come to the present value from future value of a lump sum amount, we use;

 i) present value factor tables

ii) present value annuity factor tables

ii) compounded value factor tables

iv) compounded value annuity factor tables

19. When we want to go to future value of an Annuity, we use;

 i) present value factor tables

ii) present value annuity factor tables

ii) compounded value factor tables

iv) compounded value annuity factor tables

20. When we want to come to the present value from future value of an Annuity, we use;

 i) present value factor tables

ii) present value annuity factor tables

ii) compounded value factor tables

iv) compounded value annuity factor tables

21. Capital Budgeting means;

i) Budgeting of the capital for investments in the long term Fixed assets

ii) Financing of the capital for investments in the long term Fixed assets

iii) Mitigating the losses

iv) Preparing cash budgets

22. In capital budgeting, when money is going out of the firm, it is called

i) Cash outflow

ii) Cash inflow

iii) Dividend

iv) Interest received

23. the mutually exclusive decisions are those,

i) acceptance of one proposal will automatically reject the the other proposal

ii) acceptance of both the two proposals

iii) rejection of all the proposals

iv) does not include any proposal

24. In capital budgeting, when money is coming in the firm, it is called

i) Cash outflow

ii) Cash inflow

iii) Dividend

iv) Interest foregone

25. Which of the following is not the reason for Time Preference of money?

i) Future uncertainties 

ii) Investment opportunities

iii) Interest income

iv) The value of money will remain the same every time

26. Capital structure of a firm means:

i) The proportion of Debt & equity

ii) Structure of financing ratio

ii) Cash & capital proportion

iii) Drawings by the owner

27. Which of the following is not a factor effecting capital structure?

i) Flexibility

ii) Control

iii) Size

iv) Profitability ratios

28. The Operating Leverage gives the relationship between

i) Sales revenue & EBIT of the firm

ii) EBIT & EPS of the firm

iii) Sales Revenue & EPS of the firm

iv) None of above

29. The Financial Leverage gives the relationship between

i) Sales revenue & EBIT of the firm

ii) EBIT & EPS of the firm

iii) Sales Revenue & EPS of the firm

iv) None of above

30. The Combined Leverage gives the relationship between

i) Sales revenue & EBIT of the firm

ii) EBIT & EPS of the firm

iii) Sales Revenue & EPS of the firm

iv) None of above

31. The operating profit is same as:

i) Net profit

ii) EBIT

iii)  Gross profit

iv) None of the above

32. The EBIT is :

i) Earnings before interest on taxes

ii) Earnings before interest & taxes

iii) Earnings before income & taxes

iv) Earnings before income tax

33. EPS is:

i) Earnings per share

ii) Earnings profits

iii) Earnings per sales

iv) Earnings per year

34. The weighted average cost of capital is calculated :

i) on market value but not book value

ii) on both market value & book value

iii) on book value but not market value

iv)  none of the above

35. The cost of Debt is always calculated 

i) Before tax

ii) After tax

iii) After dividend

iv) Before interest

36. The cost of equity takes into account the

i) The market price of the share

ii) The book value of the share

iii) The last years dividend

iv) all the above

37. The cost of Retained Earnings is same as :

i) Cost of Equity

ii) Cost of Debt

iii) Cost of preference shares 

iv) All of the above

38. The optimum capital structure is the one with
i) highest value of the firm

ii) Lowest value of the firm

iii) highest shares in numbers

iv) highest debt

39. International Finance is

i) Same as domestic finance

ii) different from domestic finance

iii) not so relevant

iv) is used while shutting down of a firm

40. Which of the following is not a function of finance Manager?

i) Financing the capital decisions

ii) investing the capital in profitable projects

iii) distributing the capital among different suppliers of products

iv) Dividend decision

Reference no: EM13371547

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