1.

In which form of business organizations, owners have

limited liability?

1. Sole proprietorship

2. Partnership

3. Joint stock company

4. None of the given

2. Head of Treasury department reports to whom?

1. Financial and cost Accountant

2. Chief of financial officer

3. Cash and credit manager

4. Board of directors

3. When a corporation wishes to borrow from public on a

long-term basis, it does so by issuing or selling:

1. Debt securities or bonds

2. Common Stocks

3. Preferred Stock

4. All of the given

4. The conflict of interest between stockholders and

management is known as:

1. Agency problem

2. Interest conflict

3. Management conflict

4. Agency cost
5. Which of the following comes under the head of
discounted cash flow criteria for capital budgeting
decisions?

1. Payback Period

2. Net Present Value

3. Average Accounting Return

4. None of the given

6. Period costs include which of the following?

1. Selling expense

2. Raw material

3. Direct labor

4. Manufacturing overhead

7. A firm reports total liabilities of Rs. 300,000 and

owner‟s equity of Rs. 500,000.What would be the
total worth of the firm‟s assets?

1. Rs. 300,000

2. Rs. 500,000

3. Rs. 800,000

4. Rs. 1100,000

8. A given rate is quoted as 9 percent APR, but the EAR

is 9.38 percent. What is the compounding period?

1. Semiannually

2. Quarterly

3. Monthly
 4. Daily

9. Which one of the following formula will be used to

calculate profit margin ratio?

1. Profit Margin Ratio = Sales / Net income

2. Profit Margin Ratio = Net income / Sales

3. Profit Margin Ratio = Net income / CGS

4. Profit Margin Ratio = Net income / Operating profit

10. JJ Inc. has a 4 percent return on total assets of

Rs. 500,000 and a net profit margin of 5 percent. Total
sales for JJ Inc. would be :

1. Rs. 150,000

2. Rs. 200,000

3. Rs. 250,000

4. Rs. 400,000

11. Which of the given is correct?

1. Financial asset is a document representing a claim to

income

2. Real asset is a document representing a claim to

income

3. Financial asset is an object that provides a service

4. All of the given

12. In which type of business, all owners share in

gains and losses and all have unlimited liability for all
business debts?

1. Sole-proprietorship
 2. General Partnership

3. Limited Partnership

4. Corporation

13. All else equal, the market value of a corporate

bond is always inversely related to its:

1. Time to maturity

2. Coupon rate

3. Yield to maturity

4. All of the given

14. Which of the following best represents the term

"Financing"?

1. It means raising money to acquire something.

2. It is an object that provides services.

3. It is trade license to trade securities on behalf of

investors.

4. It represents an ownership interest.

15. Which of the following is subcategory (ies) of

finance department?

1. Accounting department only

2. Treasury department only

3. Accounting department and Treasury department

4. None of the given

16. Which of the following diffulty(ies) is(are) faced

while valuing a common stock?
 1. Unknown future cash flows

2. Life of investment is limited

3. Coupon rate is difficult to determine

4. All of the given

17. Which of the following is the amount of cash we

would get if we actually sell an asset?

1. Market Value

2. Book Value

3. Intrinsic Value

4. None of the given

18. Sumi Inc. has just paid a dividend of Rs. 7 per

share. The dividend of this company grows at a steady
rate of 5% per year. What will be the dividend in 5
years?

1. Rs. 4.41

2. Rs. 6.12

3. Rs. 7.35

4. Rs. 8.93

19. Which of the following has "Limited liability" for

business debts?

1. Sole proprietorship

2. General partnership

3. Corporation

4. All of the givem

20. Which one of the following typically applies to
preferred stock but not to common stock?

1. Dividend yield

2. Cumulative dividends

3. Voting rights

4. Tax deductible dividends

21. Which of the following is the most significant

financial advantage of corporate form?

1. Easy to raise money

2. Double taxation

3. Easy to start

4. All business income is divided among shareholder

22. Which of the following item provides the

important function of shielding part of income from
taxes?

1. Inventory

2. Supplies

3. Machinery

4. Depreciation

23. Which of the following ratios is NOT from the set

of Asset Management Ratios?

1. Inventory Turnover Ratio

2. Receiveable Turnover

3. Capital Intensity Ratio

 4. Return on Assets

24. A business owned by a single person is known as:

1. Sole-proprietorship

2. General partnership

3. Limited partnership

4. Corporation

25. All of the followings are tax admissible items

EXCEPT:

1. Interest

2. Dividend

3. Salaries payable

4. Depreciation

26. The principal amount of a bond at issue is called:

1. Par value

2. Coupon value

3. Present value of an annuity

4. Present value of a lump sum

27. Mr. Ahmed wants to receive Rs. 1,800 forever at

the end of each year. What will be the present value
of this series of cash flow if rate of interest is 10%?

1. Rs. 180

2. Rs. 1,800

3. Rs. 1,980
 4. Rs. 18,000

28. Product costs include which of the following?

1. Selling expenses

2. General expenses

3. Manufacturing overhead

4. Administrative expenses

29. Time trend analysis of financial statements is

used to compare the performance of firm with:

1. Firm's own previous performance

2. Performance of similar firms

3. Performance of the industry

4. Performance of all firms in country

30. All of the following are the features of privately

placed bonds EXCEPT:

1. Pay regular interest payments as decided

2. Pay principle amoumt at the time of maturity

3. Offered to general public

4. Cost of bonds considered as cost of doing business

31. Between the two identical bonds having different

coupon, the price of the ________ bond will change
less than that of ________ bond.

1. Higher-coupon; lower-coupon

2. Lower-coupon; higher-coupon

3. Long-term; short-term
 4. None of the given

32. Which of the following set of ratios is used to

assess a business's ability to generate earnings as
compared to its expenses and other relevant costs
incurred during a specific period of time?

1. Liquidity Ratios

2. Leverage Ratios

3. Profitability Ratios

4. Market Value Ratios

33. Which of the following terms refers to the use of

debt financing?

1. Operating Leverage

2. Financial Leverage

3. Manufacturing Leverage

4. None of the given

34. Which of the following measures the present

value of an investment per dollar invested?

1. Net Present Value (NPV)

2. Average Accounting Return (AAR)

3. Internal Rate of Return (IRR)

4. Profitability Index (PI)

35. Which of the following is the amount of cash we

would get if we actually sell an asset?

1. Market Value

2. Book Value
 3. Intrinsic Value

4. None of the given

36. The value of net working capital will be greater

than zero when:

1. Current Assets > Current Liabilities

2. Current Assets < Current Liabilities

3. Current Assets = Current Liabilities

4. None of the given

37. What will be the coupon value of a Rs. 1,000

face-value bond with a 10% coupon rate?

1. Rs. 100

2. Rs. 510

3. Rs. 1,000

4. Rs. 1,100

38. If a firm’s debt ratio is 45%, this means _______

of the firm’s assets are financed by equity financing.

1. 50%

2. 55%

3. 45%

4. Cannot be determined without more information

39. Which of the following refers to the cash flows

that result from the firm’s day-to-day activities of
producing and selling?

1. Operating Cash Flows

 2. Investing Cash Flows

3. Financing Cash Flows

4. All of the given

40. Standard Corporation sold fully depreciated

equipment for Rs. 5,000. This transaction will be
reported on the cash flow statement as a(n):

1. Operating activity

2. Investing activity

3. Financing activity

4. None of the given

41. In which of the following tax system, a tax payer

is charged uniformly for all levels of his taxable
income?

1. Progressive Tax Rate

2. Marginal Tax Rate

3. Flat Tax Rate

4. Average Tax Rate

42. XYZ Company has a ROE of 12 percent and a

dividend payout ratio of 40 percent. What is the firm’s
maximum sustainable rate of growth?

1. 3.73%

2. 5.93%

3. 7.76%

4. 9.17%
43. Net Income after taxation differs from Net Cash
Flow from operations because:

1. Depreciation expense is shown in the Cash Flow

Statement and not in the Income Statement

2. Non-cash items are included in the Income Statement,

but not in the Cash Flow Statement

3. Cash sales are shown in the Cash Flow Statement but

not in the Income Statement

4. Cash expenses are shown in the Cash Flow Statement

but not in the Income Statement

44. Standard Company had net sales of Rs. 750,000

over the past year. During that time, average
receivables were Rs. 150,000. Assuming a 365-day
year, what was the average collection period?

1. 5 days

2. 36 days

3. 48 days

4. 73 days

45. Which of the following issue is NOT covered by

"Investment" area of finance?

1. Best mixture of financial investment

2. International aspects of corporate finance

3. Associated risks and rewards

4. Pricing financial assets

46. Which of the following form of business

organization is least regulated?

1. Sole proprietorship
 2. General Partnership

3. Limited Partnership

4. Corporation

47. Finance is vital for which of the following

business activity (activities)?

1. Marketing Research

2. Product Pricing

3. Design of marketing and distribution channels

4. All of the given

48. Who of the following make a broader use of

accounting information?

1. Accountants

2. Financial Analysts

3. Auditors

4. Marketers

49. Mr. A has just recently started a business by

investing a capital of Rs. 500,000. He will be the only
owner of the business and also enjoy all the profits of
the business. Which type of business is being
employed by Mr. A?

1. Sole-proprietorship

2. Partnership

3. Corporation

4. None of the given

50. The process of determining the present value of a
payment or a stream of payments that is to be
received in the future is known as:

1. Discounting

2. Compounding

3. Factorization

4. None of the given

51. Which of the following measure reveals how

much profit a company generates with the money
shareholders have invested?

1. Profit Margin

2. Return on Assets

3. Return on Equity

4. Debt-Equity Ratio

52. Which of the following is a non-cash item?

1. Tax

2. Depreciation

3. Account Receivables

4. All of the given

53. The most common application of term "Finance"

involves raising money to acquire _________.

1. Land & Building

2. Machinery & Equipment

3. Inventory
 4. All of the given

54. During the accounting period, sales revenue is

Rs. 25,000 and accounts receivable increases by Rs.
8,000. What will be the amount of cash received from
customers for the period?

1. Rs. 33,000

2. Rs. 25,000

3. Rs. 17,000

4. Rs. 8,000

55. Which of the following statement measures

performance over a specific period of time?

1. Income Statement

2. Balance Sheet

3. Cash Flow Statement

4. Retained Earning Statement

56. Decisions about “how to raise money” and “what

to do with it” are part of which of the following?

1. Business Finance

2. Change management

3. Costing for accounting

4. All of the given

57. If you plan to save Rs. 5,000 with a bank at an

interest rate of 8%, what will be the worth of your
amount after 4 years if bank offers simple interest?

1. Rs. 5,400
 2. Rs. 5,900

3. Rs. 6,600

4. Rs. 6,802

58. If a firm uses cash to purchase inventory, its

current ratio will:

1. Increase

2. Decrease

3. Remain unaffected

4. Become zero

59. A ________ is an agent who arranges security

transactions among investors.

1. Broker

2. Dealer

3. Member

4. Specialist

60. Which of the following ratio is a way to measure

a company's performance?

1. Short-term solvency ratio

2. Turnover ratio

3. Profitability ratio

4. Market value ratio

61. Balance sheet for a company reports current

assets of Rs. 700,000 and current liabilities of Rs.
460,000. What would be the Current Ratio for the
company if there is an inventory level of Rs. 120,000?
 1. 1.01 times

2. 1.26 times

3. 1.39 times

4. 1.52 times

62. A ________ covenant limits or prohibits actions

that company might take.

1. Positive

2. Negative

3. Neutral

4. None of the given

63. Business Finance addresses which of the

following?

1. Capital budgeting

2. Capital structure

3. Working capital management

4. All of the given

64. Which of the following equation best represents

Net Working Capital?

1. Current liabilities - current assets

2. Current assets - current liabilities

3. Current assets = current liabilities

4. None of the given

65. Time value of money is an important finance

concept because:
 1. It takes risk into account

2. It takes time into account

3. It takes compound interest into account

4. All of the given

66. In how many years, an amount will be doubled at

a discount rate of 8 percent?

1. 3 years

2. 6 years

3. 9 years

4. Cannot be determined without more information

67. Agency problems can be controlled by which of

the way?

1. Monitor what the agent is doing?

2. Employ auditors to review company books to make

sure funds are used properly

3. Pay bonus share to manager as compensation plan

4. All of the given

68. Cash flow to the creditors can be calculated by

using which one of the following expressions?

1. Interest paid - retirement of debt - new borrowings +

dividends

2. Interest paid + retirement of debt + new borrowings -

dividends

3. Interest paid - retirement of debt - proceed from new

borrowings
 4. Interest paid + retirement of debt - proceed from new
borrowings

69. In which type of market, new securities are

traded?

1. Primary market

2. Secondary market

3. Tertiary market

4. None of the given

70. Agency problems can be controlled by which of

the way?

1. Monitor what the agent is doing?

2. Employ auditors to review company books to make

sure funds are used properly

3. Pay bonus share to manager as compensation plan

4. All of the given

71. The preferred stock of a company currently sells

for Rs. 25 per share. The annual dividend of Rs. 2.50
is fixed. Assuming a constant dividend forever, what
is the rate of return on this stock?

1. 5.00 percent

2. 7.00 percent

3. 8.45 percent

4. 10.0 percent

72. What will be the value of a Rs. 1,000 face-value

bond with an 8% coupon rate at 8% required rate of
return?
 1. More than its face value

2. Less than its face value

3. Equal to its face value

4. Cannot be determined without more information

73. The most important item that can be extracted

from financial statements is the actual ________ of
the firm.

1. Net Working Capital

2. Cash Flow

3. Net Present Value

4. None of the given

74. Mr. Ali has an opprtunity to invest Rs. 45,000 in a

local bank at 13% compound interest rate for 6 years.
What amount he will receive after 6 years?

1. Rs. 93,690

2. Rs. 80,100

3. Rs. 97,500

4. Rs. 65,770

75. Which of the given is (are) major difference(s)

between net income and cash flow of the company?

1. Accounts receivable only

2. Depreciation only

3. Accounts payable only

4. All of the given

76. In which of the following form of business "All
business income is not considered as personal
income"?

1. Corporate form

2. Partnership

3. Sole proprietorship

4. None of the given