Practice Alternate Sources of Finance Questions and Answers

• A measure of how the returns of two risky assets move in relation to each other is the:
• The expected return on the stock is 15%, the risk-free rate is 8% and the beta for the stock is 1.2. Compute the rate of return that would be expected on t...
• What is the risk measure associated with the Capital Market Line (CML)?
• RSP Ltd has a net profit margin of 12% and a total asset turnover of 1.2 times and a financial leverage multiplier of 1.2 times. RSP Ltd’s return on equi...
• In a period of rising prices and stable inventory quantities, which of the following best describes the effect on gross profit of using LIFO as compared to...
•   For the current period, inappropriate capitalization is most likely to:
•   Which of the following is least likely a condition necessary for revenue recognition?
• Which of the following is most likely an essential characteristic of an asset?
• Which of the following ratios are used to measure a firm’s liquidity and solvency? 
• The group into which business activities are classified for financial reporting of cash flow statement are:
•   With respect to the futures transactions, the purpose of margin is to ________
• A risk-averse investor is best described as an individual as __________
• ABC Ltd has made purchases of Rs.100,000 during the year. The balance sheet shows an average accounts payable balance of Rs12,000. ABC Ltd payable payment ...
• Jay Ltd sells units for Rs 4/bottle. The variable cost for the unit per bottle is Rs.2 and has a fixed operating cost of Rs 4000 and a fixed financing cost...
• Compared to investing in a single security, diversification provides investors a way to _______
• Determine the debt-equity ratio of XYZ Ltd Debt outstanding = 800,000 Equity capital = 1000,000 Share reserves = 100,000
• According to CAPM (Capital Asset Pricing Model), what is the required rate of return for a stock with a beta of 0.7 when the risk-free rate is 5% and the e...
• The value stated on a bond certificate is called ______
• A company’s 1000 par preferred stock pays a Rs 50 annual dividend and has a required rate of return of 8%. Calculate the value of the preferred stock ...
• The stage of venture capital investing that involves product development and market research is referred to as ___________
• A company fails to accrue wages for March that will be paid in April. The company’s year-end balance sheet liabilities:
• An agreement sold over an exchange to buy/sell a commodity or financial instrument at a designated future date is known as:
• Investing cash flows most likely reflect changes in which of the balance sheets’ components?
• Risk of losses caused by flaw in the process, events, systems etc that disrupt the business operations is called:
• ACB Ltd Financial Statement for 2021 include the following information:   There was no sales of property and equipment in the year, depreciation expense...
• A rate at which RBI (Reserve Bank of India) lends to commercial banks by purchasing securities is know as ______
• Which reference rate is likely to get scrapped completely by the end of year 2021?
• During 2021, ZXC Ltd reported a net income of Rs115,600 and had 200,000 shares of common stock and 1000 preferred stock outstanding for the entire year. Pr...
• Issuing bonds by a company would be considered in which activity in a cash flow statement?
• Which of the following are Financial Analysis Techniques?
• The discount rate that makes the present value of expected cash flows from the project equal to the initial cost of the project is called:
• Which of the following most likely increases the wealth of shareholders?
• Compute the payoff to a long position in a forward contract given that the forward price is Rs 35 and the price at maturity is Rs 55.
• For which type of bond, duration of a bond would be equal to its time to maturity
• An option that can be exercised only at expiration is called ____
• Mr. X bought a bond at 1000 at a 10% coupon rate. But he intends to sell the bond after a year to Mr. Y. Mr. Y purchased the bond at 986. At the end of the...
• Bonds with original maturities of one year or less are called:
• In a repurchase agreement, the percentage difference between the repurchase price and amount borrowed is equal to:
• On-the-run government securities are the ones that are _____
• Ratio of change in the price of a call option to a change in price of underlying asset is called: