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Monday, April 30, 2012

Strategic Finance Solved Paper of SCDL Pune - 33

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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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.
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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