Thursday, July 2, 2009

Strategic Finance - 16

Question 1 Decrease in leverage results in increasing the :-
Correct Answer Overall cost of capital
Question 2 Value implies that something has :-
Correct Answer Worth
Question 3 Organisational changes are similar to mission changes.
Correct Answer True
Question 4 In value of assets method the following is also to be included as they are also of value
to the company :-
Correct Answer Non trading assets
Question 5 In the reproduction value method of valuation, the value of assets is taken to be on the
basis of ________
Correct Answer Replacement cost
Question 6 Diversification helps in preserving a firm's reputation & goodwill.
Correct Answer True
Question 7 Normally the basis for identifying an enterprise segments are :-
Correct Answer The organizational structure of an enterprise
Question 8 Investments having no physical existence includes :-
Correct Answer Shares , Debentures , Bonds
Question 9 The 3 groups of participants in a firm are :-
Correct Answer Suppliers of equity , Debt suppliers , Firm Managers
Question 11 A good accounting system does NOT have the characteristics such as :-
Correct Answer Does not cover decisions over the life cycle
Question 12 The direct costs tier normally only includes the following :-
Correct Answer The personnel payroll , Supplies , Individual rental equipment
Question 13 ________ are not diversible.
Correct Answer Market related risks
Question 14 The important aspect of dividend policy is :-
Correct Answer To determine the amount of earnings to be distributed to shareholders ,
Amount to be retained in the firm
Question 15 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
Question 16 The main theories behind share repurchases are :-
Correct Answer Dividend or personal taxation hypothesis , Leverage hypothesis , Information
or signalling hypothesis
Question 17 A change in the method of depreciation is treated as a change in an accounting policy
and is disclosed accordingly.
Correct Answer True
Question 18 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)
Question 19 Segment result is segment revenue less segment expenses.
Correct Answer True
Question 20 To `gather costs', means capturing all relevant expenses that pertain to the selected
model and processes.
Correct Answer True
Question 21 The resource theory considers that the competitive position of a firm depends on its
________ Assets.
Correct Answer Specific
Question 22 Segment revenue includes ________.
Correct Answer Revenue from transactions with other segments of the enterprise
Question 23 Deferred payment plan is also known as:-
Correct Answer Earn out plan
Question 24 The statute governing an enterprise may provide the basis for computation of the
Correct Answer True
Question 25 The final selection of the method of shares valuation depends upon ________.
Correct Answer The purpose for which valuation is being done.
Question 26 In a merger decision, the value of a firm depends upon:-
Correct Answer Earnings , Operating characteristics of acquiring firm , Financial
characteristics of acquiring firm
Question 27 In an aggressive approach :-
Correct Answer There is a very large risk of shortage of funds
Question 29 Significant influence is the power to :-
Correct Answer Participate in the financial decisions , Participate in the operating policy
Question 30 The costs should be gathered & allocated within the organisation at the ________
structural layer.
Correct Answer Lowest possible
Question 31 A single organisation model serves to keep all individual initiatives to be targeted into
a co-ordinated plan.
Correct Answer True
Question 32 During the costing process, we look at ________.
Correct Answer Resource consumption
Question 33 Money becomes less valuable when received at a latter stage instead of in present
Correct Answer True
Question 34 The external staffing performance indicators include :-
Correct Answer Compensation per Re. Profit , Personnel services head count , Profit per head
Question 35 The Management of the Company may enter into a negotiated purchase, which is
referred to as :-
Correct Answer Greenfield
Question 36 One of the selective developments that has taken place in recent times is companies
are going in for :-
Correct Answer Activity based costing and management
Question 37 ________ is not a characteristic of financial conglomerates.
Correct Answer Provide ineffective competitive process
Question 38 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
Question 39 Notes payable means the buyer signs a note that evidences a debt to the seller.
Correct Answer True
Question 40 Business risk & financial risk do not have any influence on ________.
Correct Answer Accounting numbers
Question 41 During Share repurchase, it is necessary to transfer certain sum to :-
Correct Answer Capital redemption reserve Account
Question 42 The main assumptions for stock repurchase models are as follows :-
Correct Answer The market is efficient , There is perfect competition in the securities market
Question 43 Cash dividends are taxable at ordinary tax rates.
Correct Answer True
Question 44 When a firm invests in human resources by acquisition & training, it anticipates a
Correct Answer Future generation of profits & services
Question 45 The amount to be invested by any single investor in a commercial paper shall not be
less than Rs. ________.
Correct Answer 25 lacs
Question 46 Tender offers are used primarily for :-
Correct Answer Large Equity repurchases
Question 47 Many companies claim their main assets are their :-
Correct Answer People

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