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?

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.

Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?

A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk

How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual payment and a 5% interest rate?

A. 6 years
B. 12 years
C. 24 years
D. 48 years

Using financial calculator in excel, Put, PV = 11,000, PMT, 1241.08, Rate = 5% and solve for Nper = 12 Years.

Which of the following is measured by retention ratio?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

Retention ratio determines how much amount of net income is retained for re-investment and how much is paid as dividend..

In which type of business, all owners in gains and losses and all have unlimited liability for all business debts?

A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation

Business Finance addresses which of the following?

A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options

A company having a current ratio of 1 will have ________ net working capital.

A. Positive
B. Negative
C. zero
D. None of the given options

NWC = CA – CL
If Current ratio = 1:1, its means assets are equal to liabilities.
So, net working capital is zero..

Which of the given area is NOT addressed by Business Finance?

A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options

All of the given areas are addressed by Business Finance.

Between the two identical bonds having different maturity periods, the price of the ______ bond will change less than that of ______ bond.

A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options

The longer the time to maturity, all else being equal, increases duration. Higher duration = higher sensitivity to interest rate changes.
Interest rates higher = price lower.