Strategic Finance - 25

ATTEMPTED QUESTIONS AND ANSWERS
Multiple Choice Multiple Answer
Question Exit costs are classified into 3 categories namely :-
Correct Answer Lost efficiency prior to separation , Job vacancy cost during
the new search , Termination pay
Multiple Choice Multiple Answer
Question The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
True/False
Question Tender offers us an alternative approach to acquire another
firm.
Correct Answer TRUE
Select The Blank
Question Increase in cost of capital means decrease in ________.
Correct Answer Profitability
Multiple Choice Single Answer
Question To calculate depreciable amount the following is subtracted
from its historical cost :-
Correct Answer Estimated residual value
Multiple Choice Single Answer
Question The value of the asset does not include:-
Correct Answer Price per share
Multiple Choice Multiple Answer
Question The main characteristics of CAPM are :-
Correct Answer It is an equilibrium Model , It describes the pricing of assets
as well as derivatives , Expected security return = Riskless return + beta x )
(expected market risk premium
True/False
Question Assets held as stock - in - trade are also investments.
Correct Answer FALSE
Select The Blank
Question Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the
enterprise
Multiple Choice Single Answer
Question Which is an example out of the following to which special
consideration apply for depreciation :-
Correct Answer Regenerative natural resources
Multiple Choice Single Answer
Question The value based approach of HRA Tracking suggests
that the value of human resources depends upon :-
Correct Answer Capacity to generate revenue
True/False
Question According to NI Approach, decrease in leverage decreases
the overall cost of capital and increases the firm's value.
Correct Answer FALSE
Multiple Choice Multiple Answer
Question The employer in offering the job contract assumes a range
of legal obligations such as :-
Correct Answer Rewards - cash like & non cash like , Health & safety policies ,
Pensions & contributions to social security payments
Multiple Choice Multiple Answer
Question The main categories of organisational elements are :-
Correct Answer Managerial , Support , Operational
Multiple Choice Single Answer
Question Controlling block is usually acquired from:-
Correct Answer A single seller
Multiple Choice Multiple Answer
Question Personnel services expenses is made up of:-
Correct Answer Personnel salaries , Cost of facilities , Training &
development budgets
True/False
Question Valuation of current investments on overall basis is not
considered appropriate.
Correct Answer TRUE
Select The Blank
Question Combination of 2 or more companies into existing company
is called ________.
Correct Answer Absorption
Multiple Choice Multiple Answer
Question An investment property is an investment in land or buildings :-
Correct Answer Not intended to be occupied substantially for use by ,
investing enterprise Not intended to be in the operations of the investing enterprise
True/False
Question Organisational changes are similar to mission changes.
Correct Answer TRUE
Match The Following
Question Correct AnsYwoeurr Answer
Free cash Enormous conflicts of interest between Stakeholders and shareholders
flow theory
Net incomeCost of debt & equity do not change with a change in leverage ratio
approach
Net opera The overall capitalization rate remains constant for all levels of financial
ting income approach leverages
Modigliani -weighted average cost of capital does not change with a change
Miller Theory in the proportion of debt to equity in the capital structure
Select The Blank
Question In the shareholding pattern of a company, the promoter's
holding includes________.
Correct Answer Foreign Promoters
Multiple Choice Single Answer
Question Yield or earning approach method of valuation uses :-
Correct Answer Price to earnings ratio
Multiple Choice Single Answer
Question As per Pecking order theory, which is the costliest means
of funding :-
Correct Answer Equity Shares
True/False
Question The carrying amount for current investments is the lower of
cost & fair value.
Correct Answer TRUE
Multiple Choice Multiple Answer
Question The limitations of value of assets approach include :-
Correct Answer Book value of the assets is directly dependent on the
accounting policies followed by the company , There are no standard procedures
for valuation of intangible assets , No importance to the market value of the asset
True/False
Question Management of working capital refers to the management
of total assets and liabilities of a company.
Correct Answer FALSE
True/False
Question When a company is able to assess an individual's worth,
it helps in increasing its own worth.
Correct Answer TRUE
Multiple Choice Single Answer
Question The Board of Directors should pass a resolution permitting
the buy back upto what percent of the paid up equity capital?
Correct Answer 0.1
Select The Blank
Question Long term cash forecasting is generally for a period of
________ years.
Correct Answer 3 to 5 years
Select The Blank
Question Economies of scale arises with increase in volume of
production leading to________.
Correct Answer Reduction in the cost of production
Multiple Choice Multiple Answer
Question The internal staffing performance indicators are :-
Correct Answer Sales per employee , Recovery rate , Utilization %
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
Multiple Choice Multiple Answer
Question Accounting numbers are not influenced by :-
Correct Answer Dividend policy , Time span of money , Financial and
business risk
Select The Blank
Question Cost of ________ is more than other sources for raising
short - term finance.
Correct Answer Bank finance
True/False
Question Segment result is segment revenue less segment expenses.
Correct Answer TRUE
Multiple Choice Single Answer
Question The depreciable assets are assets which are expected
to be used :-
Correct Answer During more than 1 accounting period
Multiple Choice Single Answer
Question Research into true human resources accounting began in :-
Correct Answer 1960`s
Select The Blank
Question An asset is included in segment assets, if and only if the
related depreciation or amortisation is included in ________.
Correct Answer Segment expense
Select The Blank
Question A shareholder expects a higher rate of return as a firm's
compensation for ________.
Correct Answer Increased risk
Select The Blank
Question Segment assets are ________.
Correct Answer Directly attributable to the segment
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
Multiple Choice Single Answer
Question Often a company borrows loans / debts by giving the
following as a security :-
Correct Answer Shares
Match The Following
Question Correct AnsYwoeurr Answer
A highly Shows the illusion of financial problems
leveraged firm
Fiscal advaIsntdaegdeu, ctible from the profit
the interest of financing with debt
Financing Prevents firms from investing too much
with a high percentage of debt
Firms mustDiscussions about the sell out of assets must be made
repay debts
Multiple Choice Single Answer
Question Arbitrage means :-
Correct Answer Securities cannot sell at different prices
True/False
Question Opportunity costs and real costs decrease the market
value of a firm.
Correct Answer TRUE
Select The Blank
Question the commercial paper may be issued in the multiples of ________.
Correct Answer 5 lakhs