This solved paper of Strategic Finance of SCDL Pune has been contributed by Ajay Kumar
THANKS TO: Ajay Kumar
Note: Please tally the answers and verify them from SCDL text books as all answers might not be correct.
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For more check out http://www.quizmantra.com/search/label/Strategic%20Finance
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THANKS TO: Ajay Kumar
Note: Please tally the answers and verify them from SCDL text books as all answers might not be correct.
--------------------------------------------------------------------------------------------
For more check out http://www.quizmantra.com/search/label/Strategic%20Finance
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Strategic Finance
Str Fin1
1. Estimates
become more reliable when managers are not closer to actual work (True/False)
2. Which
of these are the problems of earn-out plan during the financing manager?
A.
Target
Firm should be capable of operating autonomous business entity.
B.
There
should be freedom of operation to the management of the newly acquired firm.
C. There must be willing co-operation to work
towards the success and growth of the target system.
D. It
is contingent on the realization of the projected earnings after manager.
3. HRA
helps in examining expenditure on personal
and in re appraisal of
expenditure on services and _______.
A. Methods
B.
Training
C. Aspects
D. Sources.
4. In
which of the merger all the companies are legally dissolved and a new entity is
created?
A. Absorption
B.
Consolidation
C. Takeover
D. Competition
5. According
to sections 100-104 of the Companies’ Act, the amount involved in the buyback
should not exceed 25% of the total paid
up capital and free reserves of the
company
(True/
False)
6. Under
Centralized Disbursements the Head office of company makes the payments
from its personal account.(True/False)
7. Which
of these are currently established accounting systems to capture and distribute resource cost?
A.
Organizational
Elements
B.
Budgetary
account.
C.
Traditional
Cost Accounting
D. International
Costing Standards.
8. An enterprise should disclose which of the
following for each reportable segment.
A.
Segment
revenue classified into segment revenue from sales to external customers and
segment revenue from transitions other
segments.
B.
Segment
results
C.
Total
carrying amount of segment assets.
D. Total
amount of working capital.
9. According
to capital structure theory. Which of these reduces the agency costs of free
cash flow by reducing cash flow available for spending at the discretion of the
managers?
A.
Debt
B. Equity
C. Capital
D. Arbitrage.
10. A
________ will create an economic advantage when the combined present value of
the firm is greater than sum of their individual present values as separate
entities.
A.
Merger.
B. Competition
C. Demerger
D. Convention
11. The
company shall buy-back its shares through the stock exchange as provided; the
public announcement shall be made at least___ days prior to the commencement of
the buy-back.
A. 7
B. 10
C. 12
D. 15
12. By
preparing a cash budget in a proper manner, a company can have an idea in
advance. Of timing and quantum of excess or shortage of cash (True/False).
13. According
to the capital structure theories, ________________ is the balance of money
when all projects are financed.
A. Transaction
costs.
B. Free
Cash flows
C. Agency
Costs
D. Pecking
order.
14. The
major focus of managing a Working Capital Cycle is on ______________
A. Management
of Current Liabilities
B.
Management
of Current Assets
C. Management
of Funds
D. Management
of Securities.
15. According
to which method of share buy-back, based on the bid received the company selects the offer price from low lowest price onwards
at which the cumulative number of shares offered equals to the maximum number
of shares the company proposes to buy
A. Tender
Offers
B. Open
Market repurchase
C. Negotiated
repurchase
D.
Book-Building
Method.
16. A
full enterprise model when developed companies
A. Organizational
costs are considered.
B. Full
distribution made.
C. Full
capturing done
D. Full
implementation done.
17. If
too much data is collected it is a problem (True/False)
18. For
a firm to ensure minimal inventory the
supply has to be prompt and __________
A. Accurate
B. Adequate
C. In
time
D. Before
time
19. Match
the following.
A. Horizontal
merger.
B. Vertical
merger
C. Conglomerate
merger
D. Concentric
merger
a. Glaxo
Welcome PLC and smithKline Beecham PLC mega merger.
b. Prudential’s
acquisition of Bache & Company
c. Walmart
and Bharathi
d. Vodafone
and Hutch
e. Usha
Martin and Usha Beltron
f.
Formed through the combination of unrelated
business.
20. According
to the financial evaluation during the merger and acquisition, the acquiring
firm will pay premium if it thinks that merge improving the operations and due
to synergy it can increase the target firm’s market value (True/False).
21. According
to which share repurchasing model, there exists a risk free asset and investors
may borrow or lead unlimited amount this asset at constant rate?
A.
Capital
Asset pricing Method
B. Binominal
option pricing model.
C. Leverage
Asset Hypothesis.
D. Signalling
Asset Hypothesis.
22. The
required form receiving the cheque from the customer through the post office is
called ____
A.
Postal
delay
B. Postal
Float
C. Postal
action
D. Postal
flow
23. According
to the whose model of discount, the discounting factor to find the present
value will be lower for dividends expected in the near future and higher for
dividends expected in the distant future?
A. Walter’s
Model
B.
Gordon’s
Valuation Model
C. Smoothing
theory.
D. Residual
Theory.
24. According
to Miller-Modiglani Model of dividend, when does the situation arise that the firm has
sufficient cash to pay dividends.
A. Shareholders
get cash in their hands.
B. Firm’s
assets reduce.
C. No
net gain or losses
D. Create
Home-made dividend.
25. Most
investments represent financial rights but some are tangible such as certain
investments in
A. Machines
B.
Lands
and Buildings
C. properties
D. assets
26. According
to share repurchase method, only firms with large financial slack can afford
tender offers (True/False)
27. According
to which theory of merger, the surplus managerial resources of the acquirer
combine with the non-managerial organizational capital of the firm?
A.
Managerial
synergy theory
B. Operating
synergy theory
C. Diversification
synergy theory
D. Financial
synergy theory.
28. Investors
can use historical _______ as the measure of future risk only if it is stable
over time.
A.
Beta
B. Gamma
C. Alpha
D. Dividend
29. What
type of data the target firm requires before planning of marger?
A.
Quality
of management.
B.
Profitability
C.
Production
and marketing capabilities
D. Number
of employees.
30. By
which of the methods the company purchase its own shares in the open market?
A. Tender
Offer
B. Private
Negotiation
C. Bonus
shares
D. Through
Brokers
31. How
is the owner of a firm benefited by the Pure diversification theory of merger?
A. Retain
corporate control over his firm
B. Reduce
the risk
C. Vertical
integration of his firm.
D. Become
Chief Executive Officer.
32. If
there is any suspicious or fear, the data becomes _______________
A. Answerable.
B.
Questionable
C. Agreeable
D. Disagreeable
33. Determination
of residual value of an asset is
normally a ________ matter.
A. Easier
B.
Difficult
C. Complicated
D. Understandable.
34. According to which assumptions of
Miller-Modigliani Model of dividend, investors are able to forecast future
prices?
A. Perfect
capital Market.
B. No
taxes
C.
No
risks
D. All
equity firms.
35. Customers
in a particular area will be required to make payments at a local collection
Centre, and cheques collected at local collection Centre are deposited in a
local bank in a Decentralized location.
(True/False)
36. Hedging
Approach is a method of financing where
each asset would be offset with which of the following?
A. Financing
instrument.
B. An
instrument with adequate maturity.
C. Working
Capital knowledge
D. No
knowledge of working capital.
37. A
great deal of times spent by Finance Manager in doing which of the following?
A. Administrating
employees of the organization.
B.
Controlling
the movement of cash.
C.
Monitoring
investment in Inventories.
D.
Administrating
accounts receivable
38. In
which of these, the allocated costs from the activity model to two or more
alternative process methods are evaluated?
A. Significant
cost consumption.
B. Significant
Time Use.
C.
Cost
comparison
D. Time
comparison.
39. COD
means cash on _____________________
A. Delivery
of order.
B.
Delivery
of goods.
C. Delivery
of materials.
D. Delivery
of receivables.
40. Match
the following.
A. Cost
Accounting
B. Labor
C. Salary
or Wage
D. Fringe
benefits
a. Mathematical
calculation
b. Variable
cost
c. Cost
of labour foce.
d. Overheads
e. Cost
Centre
f.
Fixed cost.
41. According
to the span of control theory of dividend, professional managers measure the
large span of controls with which of the following?
A. Number
of employees
B.
Sales
C.
Market
Value
D.
Tax
pay outs
42. To
calculate NPV of the acquiring company, what is the need to be calculated?
A. Share
Value
B.
Cost
and Benefit
C. Operating
losses
D. Managerial
losses.
43. According
to which assumption of Gordon’s model of dividend policy, are streams of
earnings of constant?
A. Perpetual
earnings.
B. No
taxes
C. Constant
retention
D.
Cost
of capital is greater than growth rate.
44. According
to Walter model of dividend, in case of growth firms. Internal rate is more
than opportunity. (True/False)
45. In
participating preference share, in addition to guaranteed return, there could
be ___________
A. Adequate
return
B.
Additional
return
C. Maximum
return.
D. Minimum
return
46. Firms
such as manufactures of Lamps. Which have fairly even sales around the year
tend to have a working capital of which of the following?
A. Unstable.
B.
Stable
C. Moving
D. Fast
47. Types
of Trade Credit are which of the following?
A. Notes
payable
B. Trade
acceptances
C. Open
accounts
D. Closed
accounts
48. When
two companies merge through an exchange of shares, the shareholders of selling
company can save tax.(True/False)
49. Which
theory of merger states that when the cash flow rate of the acquirer is greater
than that of the acquired firm, capital is relocated to the acquired firm and
its investment opportunities improve?
A. Managerial
synergy theory
B. Operating
synergy theory
C. Diversification
synergy theory
D.
Financial
synergy theory
50. The
Voluntary rewarding method develops a consistent framework supported by
rewarding mechanisms once introduced and approved at _______________
A.
Enterprise
level
B. Management
Level
C. Employee
level
D. Customer
level
51. The
Activity accountant will have to apply ___________ while selecting data and
source.
A. Normal
judgment
B. Professional
judgment
C. Actual
judgment
D. Anticipatory
judgment
52. According
to Modigliani-Miller theorem, in asymmetric information costs, who knows more
about the firm than shareholders and debt financiers?
A.
Firm
Managers
B. Trade
Unions
C. Speculators
D. Hedgers
53. Wastage
is considered in direct traceable cost (True/False)
54. Exit
cost analysis can be classified into 3 categories.
A. Lost
efficiency prior to separation
B. Job
vacancy cost during the new search
C.
Termination
pay
D. Exclusive
pay
55. The
best time frame to look for an appropriate and sufficient amount of data is
first previous full fiscal year. (True/False)
56. Developing
the Activity model involves which of the following?
A. Interviews
with Management.
B.
Interviews
with other subject matter experts.
C. Interviews
with employees
D. Interviews
with clients.
57. Which
of these models concludes that the expected return of an asset equals the
riskless return plus a measure of the assets non diversifiable risk times the
market-wide risk premium.
A. Capital
Asset pricing method.
B. Tax
differential theory.
C. Leverage
Hypothesis.
D. Signalling
Hypothesis.
58. Examples
of segment liabilities include which of the following?
A.
Trade
and other payables.
B.
Accrued
liabilities
C.
Customer
advantages.
D. Trade
and Transactions.
59. According
to traditional system of accounting, which of these do not have proper system
for allocation?
A. Inflation.
B. Interest
Rate
C. National
Income
D. Employment.
60. According
to the dividend payment procedures, the dividend payment may be _____ or final.
A. Ex-dividend
B.
Interim
C. Substantial
D. Subscribed
61. All
the risks and rewards incident to legal ownership are transferred by lessor in
_________
A. Operating
lease
B.
Finance
Lease
C. Working
lease
D. Combined
lease.
62. Management
of Current Assets and Current Liabilities refers to management of __________
A. Working
regular Cycle.
B. Working
Capital Cycle.
C.
Working
Finance Cycle.
D. Working
Management Cycle.
63. The
essence of arbitrage argument of ________ is that investors are able to
substitute personal leverage for corporate leverage.
A.
Modigliani
– Miller
B. Net
Operating Income
C. Intermediate
Approach
D. Free
Cash Flow
64. Which
of these are steps for evaluating acquisition?
A.
Determine
CF(X)
B.
Determine
PV (X)
C.
Determine
the ownership position (op)
D. Calculate
EPS(X)
65. A
major deterrent of HRA is due to the lack of which aspect.
A. Industry
norms
B.
Industry
standards.
C. Industry
rules
D. Industry
Customs
66. According
to Net operating income Approach, Ko and Kd are constants for all levels of
leverage.
(True/False)
67. Which
share repurchase model describes the relationship between risk and expected
return, and serves as a model for the pricing of risk securities.
A. Capital
Asset Pricing method.
B. Binominal option pricing model
C. Leverage
Asset Hypothesis
D. Signalling
Asset Hypothesis
68. Determination
of useful life of a depreciable asset is a matter of _______ and is normally
based on various factors including experience with similar types as assets.
A. Estimating.
B. Calculating
C. Covering
D. Evaluating.
69. According
to financial evaluation during merger and acquisition, if acquiring firm pays
cash equal to the value of the acquiring firm, then the entire advantage of the
merger will accrue to the shareholders of the acquiring firm. (True/False)
70. According
to EFI survey which of these are the reasons for share repurchase.
A.
General corporate purpose
B.
Off
set dilution from exercise of options
C.
Stock
undervaluation
D. Capital
accumulation.
71. The
Organization’s accounting system is not the major source of cost data. (True/False)
72. Which
company started showing human resource as an asset in its balance sheet?
(Infosys)
73. The
service sector emphasizes the qualities and expertise of staff. (True/False).
74. The
useful life of a depreciable asset is shorter than its physical life and is
A.
Predetermined
by legal or contractual limits, such as the expiry dates of related leases.
B.
Directly
governed by extraction or consumption
C.
Dependent
on the extent of use and physical deterioration on account of wear and tear
which again depends on operational factors.
D. Directly
governed by the management.
75. The
cost of inventories of items that are not ordinarily interchangeable, and goods
or services produced and segregated for ________ projects should be assigned by
specific identification of their individual costs.
A. Fixed
B.
Specific
C. Variable
D. Considerable
76. The
main stakeholders include
A. Employees
B. Investors,
employees etc
C. Management
D. Creditors
77. Central
Disbursements involve increase in the transit time.(TRUE/FALSE)
78. According
to Modigliani-Miller Theorem, the more the firm finances his business with
debt, the less the _______ are.
A.
Corporate
taxes.
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