Finance Mcqs Practice Test

Question 1

Rate of required return by debt holders is used for estimation the__________?

Accepted Answer

A. Cost of debt

Question 2

In retention growth model, payout ratio is subtracted from one to calculate___________?

Accepted Answer

C. Retention ratio

Question 3

Interest rates, tax rates and market risk premium are factors which an/a_____________?

Accepted Answer

D. Firm cannot control

Question 4

Double declining balance method and sum of years digits are included in__________?

Accepted Answer

D. Accelerated methods

Question 5

Real rate expected cash flows and nominal rate expected cash flows must be______________?

Accepted Answer

B. Equal

Question 6

Real interest rate and real cash flows do not include_____________?

Accepted Answer

C. Inflation effects

Question 7

Net investment in operating capital is subtracted from net operating profit after taxes to calculate___________?

Accepted Answer

B. Free cash flow

Question 8

In cash flow estimation, depreciation is considered as________________?

Accepted Answer

B. Non cash charge

Question 9

Rate of return which is required to satisfy stockholders and debt holders is classified as__________?

Accepted Answer

B. Weighted average cost of capital

Question 10

In cash flow estimation and risk analysis, real rate will be equal to nominal rate if there is__________?

Accepted Answer

A. No inflation

Question 11

Weighted average cost of debt, preferred stock and common equity is classified as_____________?

Accepted Answer

D. Cost of capital

Question 12

In cash flow estimation, depreciation shelters company’s income from_______?

Accepted Answer

C. Taxation

Question 13

Nominal interest rates and nominal cash flows are usually reflected the____________?

Accepted Answer

A. Inflation effects

Question 14

Relevant cash flow which company expects when its will implement project is classified as_____________?

Accepted Answer

C. Incremental cash flow

Question 15

Cash flows that could be generated from an owned asset by company but not use in project are classified as_________________?

Accepted Answer

C. Opportunity costs

Question 16

If default probability is zero and bond is not called, then yield to maturity is_____________?

Accepted Answer

D. Equal to expected return rate

Question 17

Required rate of return in calculating bond’s cash flow is also classified as_______?

Accepted Answer

D. Both A and B

Question 18

Right held with corporations to call issued bonds for redemption is considered as___________?

Accepted Answer

B. Call provision

Question 19

Price of an outstanding bond decreases when market rate is_______________?

Accepted Answer

A. Increased

Question 20

Type of bond in which payments are made on basis of inflation index is classified as_____________?

Accepted Answer

B. Purchasing power bond