Question:

Savings in respect of a cost is treated in capital budgeting as:

A.

an inflow

B.

an outflow

C.

nil

D.

as one

Answer» a. an inflow

Question:

A shareholder invests in a Company’s Shares mainly——

A.

for capital appreciation

B.

to receive dividends.

C.

to receive bonus and rights shares

D.

to receive interest on investment regularly.

Answer» a. for capital appreciation

Question:

PQR Ltd. Is a profit-making company. It is absorbed into another group company XYZ Ltd. Which is a loss Company. This case is off

A.

hostile takeover bid

B.

horizontal merger

C.

reverse merger

D.

takeover

Answer» c. reverse merger

Question:

Evaluation of Capital Budgeting Proposals is based on Cash flows because:

A.

cash flows are easy to calculate

B.

cash flows are suggested by sebi

C.

cash is more important than profit

D.

cash flows are unable to prepared

Answer» c. cash is more important than profit

Question:

The abbreviation “IPO” stands for—–

A.

indian public offer

B.

indian post office

C.

initial private offer

D.

initial public offering.

Answer» d. initial public offering.

Question:

Traditionally UTI was a—–

A.

bank

B.

mutual fund.

C.

financial institution

D.

insurance company

Answer» b. mutual fund.

Question:

ABC Ltd. acquires hundred percent of preference share capital of PQR Ltd. It would result in

A.

hostile takeover bid

B.

vertical merger

C.

no relationship

D.

holding subsidiary relationshi p

Answer» d. holding subsidiary relationshi p

Question:

Decision involving purchase of fixed assets are also termed as:

A.

capital structure decisions.

B.

capital budgeting

C.

capital restructurin g

D.

capital mix decisions

Answer» b. capital budgeting

Question:

Which of the following is not a risk factor in capital budgeting ?

A.

industry specific risk factors

B.

competition risk factors

C.

project specific risk factors

D.

interest risk factors

Answer» b. competition risk factors

Question:

Which of the following method of evaluation of capital budgeting proposals focuses on liquidity?

A.

internal rate of return

B.

net present value

C.

accounting rate of return

D.

payback period

Answer» d. payback period