Strategic Finance - 7

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LIST OF ATTEMPTED QUESTIONS AND ANSWERS

Multiple Choice Single Answer
Question A quantity discount is offered :-
Correct Answer On large shipments
Your Answer On large shipments

Multiple Choice Multiple Answer
Question Indicators of the value of an investment are obtained by :-
Correct Answer Reference to its market value , The investee`s assets , The
expected cash flows from the investment
Your Answer The expected cash flows from the investment , Current
investment valuation , The investee`s assets

Multiple Choice Single Answer
Question The following is not a method of payment to the acquired firm:-
Correct Answer Fixed deposits of the acquiring firm
Your Answer Convertible securities
True/False
Question The activity model is normally created by an activity Accountant.
Correct Answer False
Your Answer False

Multiple Choice Multiple Answer
Question A company is prohibited to buy back its own shares in the
following circumstances :-
Correct Answer Through any subsidiary company , Through any investment
company , If a company defaults in repayment of deposits or
interest due thereon
Your Answer Through any subsidiary company , Through any investment
company , If a company defaults in repayment of deposits or
interest due thereon

Select The Blank
Question If the segment result of a segment includes interest or dividend
income its segment assets will not include ________.
Correct Answer Payables
Your Answer Related receivables

Select The Blank
Question Forward or backward integration is a characteristic of ________.
Correct Answer Vertical Mergers
Your Answer Horizontal Mergers

Multiple Choice Single Answer
Question Modigliani - Miller Theoram is based on :-
Correct Answer Perfect Capital Markets
Your Answer Perfect Capital Markets

True/False
Question Value based approach of HRA tracking can be divided into 2
categories - Non - monetary & monetary.
Correct Answer True
Your Answer False

Select The Blank
Question During the costing process, we look at ________.
Correct Answer Resource consumption
Your Answer Resource consumption

Multiple Choice Multiple Answer
Question For accounting standard (AS) 27, Significant influence may be
gained by :-
Correct Answer Share ownership , Statute , Agreement
Your Answer Share ownership , Statute , Agreement

Multiple Choice Multiple Answer
Question As a general rule, an asset is :-
Correct Answer A good or a right that a firm owns in a determined moment ,
Prepayment adjustments , Capitalized expenses
Your Answer A good or a right that a firm owns in a determined moment ,
Capitalized expenses

Multiple Choice Single Answer
Question Deferred payment plan is also known as:-
Correct Answer Earn out plan
Your Answer Earn out plan
True/False
Question There are few methods of allocating depreciation over the useful
life of an assets.
Correct Answer False
Your Answer True
Select The Blank
Question Market approach is used for companies whose shares are
________ on the Stock market.
Correct Answer Listed
Your Answer Listed
Multiple Choice Multiple Answer
Question Operating economies of scale are achieved through the following
mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Horizontal , Vertical , Financial
Multiple Choice Single Answer
Question Tender offers can be afforded by firms with :-
Correct Answer A large amount of financial Slack
Your Answer A large amount of financial Slack
Multiple Choice Single Answer
Question The following method of valuation is used for listed companies
that have an active market for their shares :-
Correct Answer Market value approach
Your Answer Market value approach
Select The Blank
Question According to Altman (1984) total costs in percentage of the
market value of a firm range between ________
Correct Answer 12.1 % & 16.7 %
Your Answer 12.1 % & 16.7 %
Multiple Choice Single Answer
Question Conservative policy for determining the requirements of current
assets is also known as :-
Correct Answer Flexible policy
Your Answer Aggressive policy
Multiple Choice Single Answer
Question Yield or earning approach method of valuation uses :-
Correct Answer Price to earnings ratio
Your Answer Price to earnings ratio
Multiple Choice Multiple Answer
Question The main categories of organisational elements are :-
Correct Answer Managerial , Support , Operational
Your Answer Managerial , Partly functional , Operational
Select The Blank
Question The ________ cost tier has the advantage of being the simplest
to calculate and justify.
Correct Answer Direct
Your Answer Direct
Multiple Choice Multiple Answer
Question The existence of significant influence by an investor is usually
evidenced in the following ways :-
Correct Answer Participation in policy making processes , Material transactions
between the investor & the investee , Interchange of managerial
personnel
Your Answer Participation in policy making processes , Material transactions
between the investor & the investee , Interchange of managerial
personnel
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Equity
Match The Following
Question Correct Answer Your Answer
Sentiments and rumours No fundamental basis. No effect on valuation
Unlisted shares on stock
exchange
Difficult to estimate the
price
Invalid valuation of shares
Manipulation of stock
markets
Invalid valuation of shares Easy to estimate the price
Selective information Valuation by various
people on information
available
Valuation by various
people on information
available
True/False
Question Only firms with a large amount of financial slack can afford
tender offers.
Correct Answer True
Your Answer True
Select The Blank
Question Buy back through book building the process should be made
through ________.
Correct Answer An electronically linked transparent facility
Your Answer Through brokers
Multiple Choice Multiple Answer
Question For M & As, the acquiring firm needs industry data on :-
Correct Answer Market growth , Nature of competition , Degree of regulation
Your Answer Market growth , Marketing capabilities , Nature of competition
True/False
Question The chance of bankruptcy is small when the leverage of a firm is
small.
Correct Answer True
Your Answer False
True/False
Question A change in the method of depreciation is treated as a change in
an accounting policy and is disclosed accordingly.
Correct Answer True
Your Answer True
Select The Blank
Question Economies of scale arises with increase in volume of production
leading to________.
Correct Answer Reduction in the cost of production
Your Answer Reduction in the cost of production
True/False
Question Arbitrage process implies that security cannot sell at different
prices.
Correct Answer True
Your Answer True
Select The Blank
Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Acquisition price
Multiple Choice Single Answer
Question Net period - no cash discount means :-
Correct Answer The seller only specifies the time period allowed for the payment
Your Answer Cash on delivery of goods
True/False
Question A long term investment is an investment other than a current
investment.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Accounting standards (AS - 17) has come into effect in respect
of accounting periods commencing :-
Correct Answer On or after 01.04.2001
Your Answer Prior to 01.04.2001
True/False
Question Accounting standards (AS - 13) is now mandatory.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Valuation methods are highly specific to the following for doing
the valuation :-
Correct Answer To the person , To the firm , To the Consultant
Your Answer To the person , To the firm , To the Consultant
Select The Blank
Question ________ Assets in the balance sheet are normally excluded
from the value of total assets.
Correct Answer Intangible
Your Answer Tangible
Multiple Choice Multiple Answer
Question The budgetary records are useful for:-
Correct Answer Validating accounting costs , Providing a rationale for division of
costs , Replacing missing data
Your Answer Validating accounting costs , Allocating indirect costs into
different cost centres , Providing a rationale for division of costs
Multiple Choice Multiple Answer
Question As per the new sections of the company's act, funds out of which
buy back may be financed include :-
Correct Answer Free reserves of the company , Securities premium account ,
Proceeds of any shares or other specified securities
Your Answer Loans taken from banks and financial institutions , Free reserves
of the company , Securities premium account
Match The Following
Question Correct Answer Your Answer
PpH = P / H ( C + B ) / P
SPE = R / H (C + B ) / R
RR = (C + B ) / R P / H
U % = R / ( C + B ) R / ( C + B )
Multiple Choice Multiple Answer
Question Due to diversification employees seek:-
Correct Answer Job security , Better opportunities within the firm , Higher
compensation
Your Answer Job security , Better opportunities within the firm , More perks &
benefits
Select The Blank
Question In today's fast moving world, the quickest way to get information
on a firm is through ________.
Correct Answer Internet
Your Answer Internet
Multiple Choice Single Answer
Question It is often not possible to directly attribute, or reasonably allocate
:-
Correct Answer The interest bearing liabilities to segments
Your Answer Goodwill
True/False
Question Odd lots purchase is not a method of buy back of shares.
Correct Answer False
Your Answer True