Finance Basic Concepts! MCQ Trivia Quiz

39 Questions | Total Attempts: 174

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Finance Basic Concepts! MCQ Trivia Quiz

Finance basic concepts MICA trivia quiz. Finance is essentially the management of money. One of the concepts one has to understand when it comes to finance is risk and reward relationship. Most people who take a calculated risk end up reaping more out of investments. If you are looking for a way to test out your understanding of these concepts this quiz is for you. Do give it a shot!


Questions and Answers
  • 1. 
    Value or wealth maximization objective stands for:
    • A. 

      Maximising earning per share

    • B. 

      Maximising value of debt

    • C. 

      Maximising market value of equity shares

    • D. 

      Maximising Profits

  • 2. 
    Which of the following information is not required to help a potential investor for an investment decision?
    • A. 

      Risk

    • B. 

      Return

    • C. 

      Production

    • D. 

      Dividend Yield

  • 3. 
    Which of the following ratios is used for assessing the long term solvency of a company?
    • A. 

      Stock turnover ratio

    • B. 

      Net profit ratio

    • C. 

      Operating ratio

    • D. 

      Debt equity ratio

  • 4. 
    The difference between the total present value of a stream of cash flows at a given rate of discount and the initial capital outlay is known as:
    • A. 

      Internal rate of return

    • B. 

      Pay back period

    • C. 

      Net present value

    • D. 

      Net profit

  • 5. 
    A bond selling at a premium should have
    • A. 

      A coupon rate lower than the YTM

    • B. 

      A coupon rate higher than the YTM

    • C. 

      A coupon rate equal to the YTM

    • D. 

      The current yield equal to the YTM

  • 6. 
    Which of the following statements explains the operating risk of a business?
    • A. 

      It depends on the amount of fixed cost bearing capital

    • B. 

      It represents variability in earning per share

    • C. 

      It depends on the amount of fixed cost in the cost structure

    • D. 

      It is same as financial risk of a business

  • 7. 
    Which of the following market is not included in the 'Financial markets'?
    • A. 

      New issues market

    • B. 

      Money Market

    • C. 

      Stock Market

    • D. 

      Commodity Market

  • 8. 
    Horizontal financial analysis means:
    • A. 

      Inter-firm comparison

    • B. 

      Analysis of data for one year

    • C. 

      Evaluating series of financial data over a period of time

    • D. 

      Expressing the components of balance sheet as a % of total assets

  • 9. 
    Under which head would the amount received from the  sale of fixed assets be categorized in the  cash flow  statement of a company:
    • A. 

      Financing Activities

    • B. 

      Investing activities

    • C. 

      Operating activities

    • D. 

      None of these

  • 10. 
    Which of the following would change the P/V ratio of a product: 
    • A. 

      Increase in variable cost per unit

    • B. 

      Increase in sales volume

    • C. 

      Decrease in total fixed cost

    • D. 

      None of these

  • 11. 
    Name the financial instrument that commenced it’s trading in NSE  on 29th  August 2009.
    • A. 

      Currency future

    • B. 

      Stock index

    • C. 

      Interest rate futures

    • D. 

      Stock futures

  • 12. 
    Name the financial intermediary which helps in clearing and settlement of Forex trading.
    • A. 

      SWIFT

    • B. 

      NSCCL

    • C. 

      IMF

    • D. 

      CHIPS

  • 13. 
    Vertical Merger takes place when the firms are involved  in:
    • A. 

      Similar business activities

    • B. 

      Similar stages of production In the value chain

    • C. 

      Different stages of production In the value chain

    • D. 

      None of the above

  • 14. 
    Which of the following chains best represents the operating cycle of a business:
    • A. 

      Cash--stock--cash--debtors

    • B. 

      Cash--stock--debtors--cash

    • C. 

      Cash—debtors—cash--stock

    • D. 

      Cash—debtors—stock--cash

  • 15. 
    Economic value added (EVA) is measured by the following : (Where CE is capital employed and NOPAT is Net operating profit after tax)
    • A. 

      EBIT – (WACC X CE)

    • B. 

      NOPAT – (WACC X CE)

    • C. 

      NOPAT + (WACC X CE)

    • D. 

      EBIT – (WACC X EBIT )

  • 16. 
    The free cash flows of any project are calculated a follows:
    • A. 

      Profit after tax less investment in capital expenditure and working capital

    • B. 

      Cash flows after taxes

    • C. 

      Cash flow before taxes less incremental investment in working capital

    • D. 

      Cash flows after tax less (Capital expenditue + incremental working capital investment)

  • 17. 
    Which of the following is not a correct statement in explaining financial leverage?
    • A. 

      It is a result of use of fixed income securities

    • B. 

      It reflects change in EBIT w.r.t. change in sales

    • C. 

      It reflects change in EPS w.r.t. change in EBIT

    • D. 

      At a given level of financing DFL is measured by EBIT/EBT

  • 18. 
    Name the financial institution that helps in converting a pool of illiquid assets into marketable securities.
    • A. 

      Non-Banking Finance company

    • B. 

      Special purpose vehicle

    • C. 

      Mutual Fund

    • D. 

      Clearing corporation of India

  • 19. 
    Name the company which acquired Asset Management Company named DBS Cholamandalam, to start its mutual fund business.
    • A. 

      L & T Finance

    • B. 

      Mahindra Finance

    • C. 

      Edelweiss Capital

    • D. 

      Bharti enterprize

  • 20. 
    The theory that relates the spot rate, the forward rate of currency and interest rate differential between two countries is
    • A. 

      Purchase power Parity

    • B. 

      Relative purchase power parity

    • C. 

      Law of one price

    • D. 

      Interest rate parity

  • 21. 
    Recently Nifty calculation methodology is changed, from market capitalization-weighted average method to 
    • A. 

      Equally weighted average method

    • B. 

      Free floated weighted average method

    • C. 

      Price weighted method

    • D. 

      Volume weighted methodology

  • 22. 
    Name the steelmaker with which Arcelor-Mittal announced a co-promotional agreement as an entry route to the Indian Steel market.
    • A. 

      Tata Steel

    • B. 

      Uttam Galva Steels Ltd

    • C. 

      Jindal Steel

    • D. 

      Essar Steel

  • 23. 
    Name the world’s 3rd largest petrochem company being taken over by Reliance Industries making it one of the biggest acquisitions by a Desi company?
    • A. 

      Yemen Refinery

    • B. 

      Schoneweiss & Co.

    • C. 

      Lyondell Basell

    • D. 

      None of these

  • 24. 
    Which company was recently barred from the MOU with Andhra Pradesh Government to construct the prestigious Hyderabad Metro Rail project company?
    • A. 

      Afcons Infrastructure Limited

    • B. 

      IVRCL Infrastructures and projects Ltd.

    • C. 

      Hindustan Steelworks construction Ltd.

    • D. 

      Maytas Infra Ltd.

  • 25. 
    Who is the largest Indian player in the 2 wheeler market for 8 years in a row ? 
    • A. 

      Hero Honda

    • B. 

      Bajaj Auto

    • C. 

      TVS Suzuki Ltd.

    • D. 

      Scooters India Ltd

  • 26. 
    Which bank introduced Net Safe Credit cards?
    • A. 

      ICICI

    • B. 

      HDFC

    • C. 

      Standard Chartered

    • D. 

      State Bank of India

  • 27. 
    What are the liquid stocks that do not follow SEBI rules called?
    • A. 

      A stocks

    • B. 

      B stocks

    • C. 

      C stocks

    • D. 

      Z stocks

  • 28. 
    Grasim Cement is promoted by which company?  
    • A. 

      Adani Group

    • B. 

      Reliance ADA group

    • C. 

      Jaypee Group

    • D. 

      Aditya Birla Group

  • 29. 
    What  % growth rate did the Indian economy report for the quarter ended in September 2009?   
    • A. 

      5.5 %

    • B. 

      7.9 %

    • C. 

      6.7 %

    • D. 

      10.2 %

  • 30. 
    What is the term used for depreciating the company’s intangible assets?
    • A. 

      Depreciation

    • B. 

      Amortization

    • C. 

      Write off

    • D. 

      Appreciation

  • 31. 
    Exchange of principal and interest in one currency for the same in other currency is known as......
    • A. 

      Exchange Rate

    • B. 

      Cross Currency Rate

    • C. 

      Currency Swap

    • D. 

      Currency rate

  • 32. 
    In an option ……………
    • A. 

      Option writer has an obligation and option buyer has the right

    • B. 

      Option writer has a right and option buyer has obligation

    • C. 

      Option writer is obligated to pay premium to buyer

    • D. 

      Put means buy and call means sell.

  • 33. 
    Quick ratio is also known as ………..
    • A. 

      Current Ratio

    • B. 

      Acid Test Ratio

    • C. 

      Liquity Ratio

    • D. 

      Inventory Ratio

  • 34. 
    What is arbitrage ?
    • A. 

      Buying something at a lower price in one market & selling the same at a higher price in another market

    • B. 

      Tax-loss Selling

    • C. 

      Buying Stock option

    • D. 

      None of these

  • 35. 
    What is a bond?
    • A. 

      Paper Money

    • B. 

      Certificate of Debt

    • C. 

      Credit money

    • D. 

      Private equity

  • 36. 
    Beta coefficient used in calculating the cost of equity, measures...
    • A. 

      Systematic Risk

    • B. 

      Unsystematic Risk

    • C. 

      Total Risk

    • D. 

      Average Return

  • 37. 
    What is the correct description of the situation of a firm which coverts it's debentures into the equity?
    • A. 

      Increase in debt-equity ratio and increase in the risk factor

    • B. 

      Increase in debt-equity ratio and decrease in the risk factor

    • C. 

      Decrease in debt-equity ratio and increase in the risk factor

    • D. 

      Decrease in debt-equity ratio and decrease in the risk factor

  • 38. 
    Which of the following statements  is incorrect  with respect to variable and fixed cost ?
    • A. 

      Higher the volume of production higher is the total variable cost

    • B. 

      Higher the volume of production,lower is the fixed cost per unit

    • C. 

      As the volume of production increases the total cost increases at a decreasing rate

    • D. 

      Lower the volume of production ,lower is the fixed cost per unit

  • 39. 
    What does a bull market mean ?
    • A. 

      A market charecterised by rising prices for securities

    • B. 

      Unpredictable Market

    • C. 

      A market charecterised by falling prices

    • D. 

      A stable market