12. Degree of financial leverage of business indicates.
a :
(A) Total risk
b :
(B) Operating risk
c :
(C) Financial risk
d :
(D) None of these
Correct Answer: c [(C) Financial risk]
13. Which of the following is a feature of Factoring? (A)Tool of short term borrowing
a :
(A)Tool of short term borrowing
b :
(B)Purchase of export bill only
c :
(C)Used in Export business only
d :
(D)Done without recourse to the client
Correct Answer: a [(A)Tool of short term borrowing]
14. Determinants of credit policy relates to:
a :
(A) Credit standards
b :
(B) Credit terms
c :
(C) Collection Procedures
d :
(D) All of the above
Correct Answer: d [(D) All of the above ]
15. Which of the following is a Profitability Ratio?
a :
(A)Proprietary Ratio
b :
(B) Debt –equity Ratio
c :
(C)Price Earnings Ratio
d :
(D)Fixed Asset Ratio
Correct Answer: c [(C)Price Earnings Ratio]
16. The following is not a Discounted Cash Flow Technique:
a :
(A) NPV
b :
(B) PI
c :
(C) Accounting of Average rate of return
d :
(D) IRR
Correct Answer: c [(C) Accounting of Average rate of return]
17. The excess of Current Assets over Current Liabilities is called
a :
(A) Net Current Assets
b :
(B) Net Working Capital
c :
(C) Working Capital
d :
(D) All of the above
Correct Answer: d [(D) All of the above]
18. Following method is also known as ‘Benefit Cost Ratio.’
a :
(A) NPV
b :
(B) IRR
c :
(C) ARR
d :
(D) PI
Correct Answer: d [(D) PI]
19. Which of the following does not help to increase Current Ratio?
a :
(A) Issue of Debentures to buy Stock
b :
(B) Issue of Debentures to pay Creditors
c :
(C) Sale of Investment to pay Creditors
d :
(D) Avail Bank Overdraft to buy Machine
Correct Answer: d [(D) Avail Bank Overdraft to buy Machine]
20. Profit Maximization is the main objective of business because
a :
(A) Profit acts as a measure of efficiency and
b :
(B) It serves as a protection against risk
c :
(C) Both
d :
(D) none
Correct Answer: c [(C) Both]
21. Collateralized borrowing and lending obligation (CBLO) is a discounted instrument available in electronic book entry for the maturity period ranging from __________.
a :
(A) 1 day to 19 days
b :
(B) 1 day to 15 days
c :
(C) 1 day to 30 days
d :
(D) None of the above
Correct Answer: a [(A) 1 day to 19 days]
22. Which one of the following is a medium term source?
a :
(A) Public Deposits
b :
(B) Lease Financing
c :
(C) Euro Debt Issue
d :
(D) All of the above
Correct Answer: d [(D) All of the above]
23. Which one is the Benefit(s) of Factoring?
a :
(A) Better Cash Flows
b :
(B) Better Assets Management
c :
(C) Better Working Capital Management
d :
(D) All of the above
Correct Answer: d [(D) All of the above]
24. Liquid Liability = Current Liability – Bank Overdraft – ___________
a :
(A) Cash Credit
b :
(B) Trade Credit
c :
(C) Both of the above
d :
(D) None of the above
Correct Answer: a [(A) Cash Credit]
25. Debt- equity Ratio is an example of ________________.
