Finance Mcqs

When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:

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When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:

A. Premium
B. Discount
C. Par
D. Cannot be determined without more information

If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates..

Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?

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Mr. Y and Mr. Z are planning to their capital to run a business. They are going to employ which of the following type of business?

A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options

Having more than 2 owners of a business entity is called “Partnership”. Having more than seven owners of a business entity is called corporation..

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

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

A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options

Investing activities – changes in investments and long-term assets
Cash inflows:
From sale of property, plant, and equipment.
From sale of investments in debt or equity securities of other entities.
From collection of principal on loans to other entities.
Cash outflows:
To purchase property, plant, and equipment.
To purchase investments in debt or equity securities of other entities.
To make loans to other entities..

If a firm uses cash to purchase inventory, its quick ratio will?

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If a firm uses cash to purchase inventory, its quick ratio will?

A. Increase
B. Decrease
C. Remain unaffected
D. Become zero

When inventory is purchased for cash, the cash is converted into inventories and there is no effect on net current assets. The current assets remain the same as before the purchase of inventory the current ratio will not be changed. Quick ratio, however, will be reduced if the cash is converted into inventories because while computing quick ratio inventories are not added but cash is included in quick assets. (Quick assets / current liab.) Quick assets = current assets-inventories.

Which of the following set of ratios relates the market price of the firm’s common stock to selected financial statement items?

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Which of the following set of ratios relates the market price of the firm’s common stock to selected financial statement items?

A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios

It determines the market price or fair value of the common stock of company and compare it with the items of balance sheet like holder’s equity etc.