The Finance Aptitude Test! Trivia Quiz

40 Questions | Total Attempts: 67

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The Finance Aptitude Test! Trivia Quiz

The finance aptitude test trivia quiz. The capital market line helps to check the risk return relationship of portfolio and helps in valuing firms. This is one of the things that people who have in-depth knowledge in finance need to know. If you want to test yourself, the quiz below is exactly what you need to refresh your memory on more topics already studied under finance. Give it a shot!


Questions and Answers
  • 1. 
    "Shareholder wealth" in a firm is represented by
    • A. 

      The number of people employed in the firm

    • B. 

      The book value of the firm's assets less the book value of its liabilities

    • C. 

      The amount of salary paid to its employees

    • D. 

      The market price per share of the firm's common stock.

  • 2. 
    The long-run objective of financial management is to:
    • A. 

      Maximize earnings per share.

    • B. 

      Maximize the value of the firm's common stock

    • C. 

      Maximize return on investment.

    • D. 

      Maximize market share.

  • 3. 
    The market price of a share of common stock is determined by:
    • A. 

      The board of directors of the firm

    • B. 

      The stock exchange on which the stock is listed.

    • C. 

      The president of the company

    • D. 

      Individuals buying and selling the stock

  • 4. 
    Time value of money supports the comparison of cash flows recorded at different time period by
    • A. 

      Discounting all cash flows to a common point of time

    • B. 

      Compounding all cash flows to a common point of time

    • C. 

      Both Compounding & Discounting cash flows

    • D. 

      Deducting the differences in cash flows at different time period

  • 5. 
    Risk of two securities with different expected return can be compared with
    • A. 

      Coefficient of variation

    • B. 

      Standard deviation of securities

    • C. 

      Variance of Securities

    • D. 

      Alpha of securities

  • 6. 
    ____________ is defined as the length of time required to recover the initial cash out-lay.
    • A. 

      Payback-period

    • B. 

      Inventory conversion period

    • C. 

      Discounted payback-period

    • D. 

      Budget period

  • 7. 
    ____________ is the length of time between the firm’s actual cash expenditure and its own cash receipt.
    • A. 

      Cash conversion cycle

    • B. 

      Net operating cycle

    • C. 

      Working capital cycle

    • D. 

      Gross operating cycle

  • 8. 
    When goods are sent to the consignee‐ the journal entry passed
    • A. 

      Goods A/c Dr., Consignment A/c Cr.

    • B. 

      Consignment A/c Dr, Cash A/c Cr.

    • C. 

      Goods sent on Consignment A/c Dr., Consignment A/c. Cr.

    • D. 

      Consignment A/c Dr., Goods Sent on Consignment A/c Cr.

  • 9. 
    Which type of account is entered in profit & loss a/c?
    • A. 

      Nominal

    • B. 

      Personal

    • C. 

      Real

    • D. 

      Goodwill

  • 10. 
    A company can improve (lower) its debt-to-total assets ratio by doing which of the following?
    • A. 

      Borrow More

    • B. 

      Sell Common Stock

    • C. 

      Shift short term to long term

    • D. 

      Shift Long Term to Short Term

  • 11. 
    A profitability index of .85 for a project means that
    • A. 

      The present value of benefits is 85% greater than the project's costs

    • B. 

      The project's NPV is greater than zero

    • C. 

      The project returns 85 cents in present value for each current rupee invested.

    • D. 

      The payback period is less than one year

  • 12. 
    Which of the following statements is correct?
    • A. 

      If the NPV of a project is greater than 0, it’s PI will equal 0.

    • B. 

      If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0.

    • C. 

      If the PI of a project is less than 1, its NPV should be less than 0

    • D. 

      NPV will be greater than 0

  • 13. 
    Which one of these not shown on profit & loss a/c?
    • A. 

      Rent

    • B. 

      Bad Debt

    • C. 

      Wages

    • D. 

      Salaries

  • 14. 
    Capital market line is
    • A. 

      Capital allocation line of a market portfolio

    • B. 

      Capital allocation line of a risk free asset

    • C. 

      Capital allocation line of risk & market portfolio

    • D. 

      Capital allocation line of return & market portfolio

  • 15. 
    If required rate of return > Coupon rate, the bond will be valued at
    • A. 

      Premium

    • B. 

      Par

    • C. 

      Discount

    • D. 

      Zero

  • 16. 
    There is no difference between the capital market line and the security market line as both the terms are the same.
    • A. 

      True

    • B. 

      False

  • 17. 
    If the coupon rate is constant, the value of bond when close to maturity will be
    • A. 

      Issue Price

    • B. 

      Par Value

    • C. 

      Redemption Value

    • D. 

      Discount Value

  • 18. 
    Type of contract which involves future exchange of assets between independent parties at a specified price is classified as
    • A. 

      Futures Contract

    • B. 

      Spot Contract

    • C. 

      Swap Contract

    • D. 

      Forward Contract

  • 19. 
    Beta reflects stock risk for investors which is usually
    • A. 

      Individual

    • B. 

      Collective

    • C. 

      Weighted

    • D. 

      Linear

  • 20. 
    By definition, currency appreciation occurs when
    • A. 

      The value of all currencies fall relative to gold

    • B. 

      The value of all currencies rise relative to gold

    • C. 

      The value of one currency rises relative to another currency

    • D. 

      The value of one currency falls relative to another currency.

  • 21. 
    During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?
    • A. 

      Rs. 33,000

    • B. 

      Rs. 25,000

    • C. 

      Rs. 17,000

    • D. 

      Rs. 8,000

  • 22. 
    You need Rs.10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent compounded annually, how long will you have to wait to buy the television?
    • A. 

      8.42 Years

    • B. 

      10.51 Years

    • C. 

      15.75 Years

    • D. 

      18.78 Years

  • 23. 
    How many years will it take to pay off an Rs? 11,000 loan with an Rs. 1,241.08 annual payment and a 5% interest rate?
    • A. 

      6

    • B. 

      12

    • C. 

      24

    • D. 

      48

  • 24. 
    A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is the retention ratio for the firm?
    • A. 

      12%

    • B. 

      25%

    • C. 

      40%

    • D. 

      60%

  • 25. 
    If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
    • A. 

      Rs. 1,000

    • B. 

      Rs. 1,244

    • C. 

      Rs. 1,331

    • D. 

      Rs. 1,464

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