Strategic Finance - 11

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Single Answer
Question The Buy back of shares shall not be made from
Correct Answer The promoters or persons in control of the company
Your Answer The promoters or persons in control of the company
Multiple Choice Multiple Answer
Question Operating economies of scale are achieved through
the following mergers :-
Correct Answer Horizontal , Vertical , Conglomerate
Your Answer Vertical , Conglomerate , Horizontal
Multiple Choice Single Answer
Question Free Reserves is a component of :-
Correct Answer Equity
Your Answer Market Capitalization
Select The Blank
Question Capital gains are taxed at ________.
Correct Answer Preferentially lower rate
Your Answer Preferentially lower rate
Select The Blank
Question Forward or backward integration is a characteristic of
________.
Correct Answer Vertical Mergers
Your Answer Vertical Mergers
True/False
Question Valuation of current investments on overall basis is
not considered appropriate.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question The main categories of organisational elements are :-
Correct Answer Managerial , Support , Operational
Your Answer Managerial , Support , Operational
Multiple Choice Single Answer
Question A firm can manage with small inventory if the supply is
:-
Correct Answer Prompt & adequate
Your Answer Prompt & adequate
Multiple Choice Multiple Answer
Question Accounting standard 19 for leases statement is
applied in accounting for all leases other than :-
Correct Answer Lease agreements to explore for or use natural
resources , Licensing agreements for items such as
motion picture films , Lease agreements to use land
Your Answer Lease agreements to explore for or use natural
resources , Licensing agreements for items such as
motion picture films , Lease agreements to use land
Multiple Choice Single Answer
Question Equity includes :-
Correct Answer Development Rebate Reserve
Your Answer Deferred Payment Liabilities
Select The Blank
Question ________ is not a example of segment asset.
Correct Answer Customer advances
Your Answer Customer advances
Multiple Choice Single Answer
Question Book value is relevant to determine the firm's value
because of the following reasons except:-
Correct Answer It cannot be used as a starting point to be compared &
complimented by other analysis
Your Answer It cannot be used as a starting point to be compared &
complimented by other analysis
Multiple Choice Single Answer
Question As per Pecking order theory, which is the costliest
means of funding :-
Correct Answer Equity Shares
Your Answer Equity Shares
Multiple Choice Single Answer
Question Many companies claim their main assets are their :-
Correct Answer People
Your Answer People
Multiple Choice Multiple Answer
Question The net income approach is based on following 3
assumptions :-
Correct Answer There are no taxes , Cost of debt is less than equity
capitalization rate , Use of debt doesn't change the
risk perception of investors
Your Answer There are no taxes , Cost of debt is less than equity
capitalization rate , Use of debt doesn't change the
risk perception of investors
True/False
Question Receivables constitutes a substantial portion of
current assets of several firms.
Correct Answer True
Your Answer True
True/False
Question Decisions related to working capital are repetitive &
frequent.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question One of the important assumptions for capital structure
theories is :-
Correct Answer Debt and equity are the 2 kinds of funds used by the
firm
Your Answer Debt and equity are the 2 kinds of funds used by the
firm
Select The Blank
Question Liquidation value is also known as ________.
Correct Answer Realizable value
Your Answer Net replacement value of the assets
True/False
Question It is possible to place a single value for the acquired
firm.
Correct Answer False
Your Answer False
Multiple Choice Multiple Answer
Question Implicit claims are non written promises and rights
such as :-
Correct Answer Right to provide service to customers , Job security for
the employees
Your Answer Right to provide service to customers , Job security for
the employees , Commitment to pay interest in time
for debentures issued
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 5 % & 15 %
Match The Following
Question Correct Answer Your Answer
Availability of funds in
the market
Cost of funds depends
on this factor
Cost of funds depends
on this factor
Flexibility The extent & the ease
with which the funds
can be raised & paid
back are very
important
The extent & the ease
with which the funds
can be raised & paid
back are very important
Time Takes less time to take
an overdraft from the
bank
Takes less time to take
an overdraft from the
bank
Creditworthiness of the If a company has a If a company has a
issuer good creditworthiness
it is not difficult to raise
short term funds
good creditworthiness it
is not difficult to raise
short term funds
Multiple Choice Multiple Answer
Question A firm with a judicious mixture of debt and equity will
have :-
Correct Answer Lowest cost of capital , High value of firm , Good
market reputation
Your Answer Lowest cost of capital , High value of firm , Good
market reputation
Select The Blank
Question Implicit & Explicit costs are included in the ________.
Correct Answer Price of a product
Your Answer Price of a product
Match The Following
Question Correct Answer Your Answer
Diversification Growth through the
combination of firms in
unrelated fields of
business
Growth through the
combination of firms in
unrelated fields of
business
Horizontal mergers 2 Firms operate &
compete in a similar
kind of business
Combined firm is more
valuable than the sum
of individual firms
Vertical mergers Firms in different
stages of production
Firms in different
stages of production
Conglomerate mergers Different or unrelated
business activity
Different or unrelated
business activity
Multiple Choice Multiple Answer
Question The main characteristics of operating economies are :-
Correct Answer It is achieved through horizontal, vertical and
conglomerate mergers , It occurs due to indivisibilities
of resources , It is possible in generic management
functions
Your Answer It is achieved through horizontal, vertical and
conglomerate mergers , It occurs due to indivisibilities
of resources , It is possible in generic management
functions
Multiple Choice Single Answer
Question The following analysis is more targeted on similar
activities or firms that exist in parallel within the activity
model or process flow to ensure that they are being
done the same best way :-
Correct Answer Comparative analysis
Your Answer Comparative analysis
Multiple Choice Multiple Answer
Question Every business requires funds on a continual basis for
expenses incurred on for :-
Correct Answer Purchase of raw material , Manufacturing costs ,
Administration
Your Answer Purchase of raw material , Manufacturing costs ,
Administration
True/False
Question There are few methods of allocating depreciation over
the useful life of an assets.
Correct Answer False
Your Answer False
Multiple Choice Single Answer
Question For paying dividends, firms will have a given amount
of :-
Correct Answer Cash available
Your Answer Cash available
Multiple Choice Multiple Answer
Question Financial evaluation involves :-
Correct Answer Determining the earnings , Areas of risk , Best way to
finance a merger
Your Answer Determining the earnings , Areas of risk , Best way to
finance a merger
True/False
Question A single organisation model serves to keep all
individual initiatives to be targeted into a co-ordinated
plan.
Correct Answer True
Your Answer True
True/False
Question The objective of a dividend policy should be to
maximize shareholder's return so that the value of his
investment is maximized.
Correct Answer False
Your Answer True
Select The Blank
Question HLL is ________ % of subsidiary of Unilever PLC.
Correct Answer 0.516
Your Answer 0.5
Multiple Choice Single Answer
Question In a matching approach policy, :-
Correct Answer There is a small risk if shortage of funds
Your Answer There is a small risk if shortage of funds
Select The Blank
Question In case of direct placement of commercial papers it
may be issued for maturities ________ from the date
of issue.
Correct Answer Between 15 days to 1 year
Your Answer Between 15 days to 1 year
Select The Blank
Question ________ is not a characteristic of financial
conglomerates.
Correct Answer Provide ineffective competitive process
Your Answer Provide ineffective competitive process
Multiple Choice Single Answer
Question Controlling block is usually acquired from:-
Correct Answer A single seller
Your Answer A single seller
Multiple Choice Multiple Answer
Question A firm using a conservative policy for determining the
requirements of current assets :-
Correct Answer Has fewer production stoppages , Ensures quick
deliveries to customers , Stimulates sales
Your Answer Has fewer production stoppages , Ensures quick
deliveries to customers , Stimulates sales
True/False
Question Only firms with a large amount of financial slack can
afford tender offers.
Correct Answer True
Your Answer True
Multiple Choice Multiple Answer
Question Changes in the investee`s equity includes those :-
Correct Answer Arising from the revaluation of fixed assets , From
foreign exchange translation differences , From the
adjustment of differences arising on amalgamation
Your Answer Arising from the revaluation of fixed assets , From
foreign exchange translation differences , From the
adjustment of differences arising on amalgamation
True/False
Question Value based approach of HRA tracking can be divided
into 2 categories - Non - monetary & monetary.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Depreciation includes amortization of assets whose
useful life is :-
Correct Answer Predetermined
Your Answer Predetermined
True/False
Question Human assets accounting is still to become an
accepted trend in the industry.
Correct Answer True
Your Answer True
Multiple Choice Single Answer
Question Value implies that something has :-
Correct Answer Worth
Your Answer Worth
Multiple Choice Multiple Answer
Question Long term financing strategy is used by a firm to meet
:-
Correct Answer Fixed assets requirements , Permanent working
capital requirements , Portion of fluctuating working
capital requirement
Your Answer Fixed assets requirements , Permanent working
capital requirements , Portion of fluctuating working
capital requirement