Sources of Business Finance Test

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Sources of Business Finance Test - 15

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Weekly Quiz Competition

Question 1
1 / -0

When $$10\%$$ Debentures stand at Rs. $$10,00,000$$ and Rs. $$8,00,000$$ in the Balance Sheets of $$2013$$ and $$2014$$. It is found that in $$2009$$ the profit on redemption of debentures was Rs. $$8,000$$. The amount of redemption for the purpose of funds flow statement is _____________.

A
Rs. $$2,00,000$$

B
Rs. $$2,08,000$$

C
Rs. $$1,92,000$$

D
Rs. $$7,92,000$$

Solution

$$10\%$$ Debentures for $$2014$$ $$=$$ Rs. $$10,00,000$$
Less : Debentures for $$2013$$ $$=$$ Rs. $$8,00,000$$
   ______________
Debentures decrease    $$=$$ Rs. $$2,00,000$$
Less : Profit on redemption $$=$$ Rs. $$8,000$$
   _____________
Amount of redemption $$=$$ Rs. $$1,92,000$$
_________________
Question 2
1 / -0

Operating cycle can be delayed by ________________.

A
Increase in WIP period

B
Decrease in raw materials storage period

C
Decrease in credit payment period

D
Both (A) and (C) above

E
Both (B) and (C) above

Solution

Operating cycle period = Raw material storage period + Conversion period + Finished goods storage period + average collection period - average payment period.
An increase in WIP (or conversion) period will increase the operating cycle period and this will lead to a delay in the operating cycle.
Hence option (D) is the correct answer.
Question 3
1 / -0

Shelf stock refers to ______________.

A
Perishable goods

B
Items that are to be packaged and sold

C
Items that are stored by the firm and sold with little or no modifications

D
Accessories which are not part of the standard equipment

E
Stock which is to be stored for more than one year.

Solution

Items that are stored by the firm and sold with little or no modifications are called shelf stock.
Hence, option (C) is the correct answer.
Question 4
1 / -0

Arpana Pvt Ltd provide following information:
Sales = 10,00,000
Variable cost = 7,00,000
Fixed cost = 2,00,000
Debentures at $$10\%$$ = 5,00,000
What is the operating leverage of the company?

A
2

B
3

C
4

D
5

Solution

Operating leverage = $$\frac{Contribution}{EBIT}$$
= $$\frac{Rs.3,00,000}{Rs.1,00,000}$$
= 3
Hence, option (B) is the correct answer.
Question 5
1 / -0

Which of the following terms is not used in Banking and Finance?

A
Bid Price

B
Jacksonian Seizure

C
Call Option

D
Blue chip
Question 6
1 / -0

Which of the following is true for 'dirty float'?

A
It is a purely fixed exchange rate system

B
It is compromise between fixed and floating exchange rate systems

C
Central banks sometimes intervene in the forex market to curb sharp changes.

D
Both (B) and (C) above

E
All of (A), (B) and (C) above

Solution

In order to reduce the inefficiencies in the foreign exchange market central banks generally intervene in the currency markets to smoothen the fluctuations. Though officially the exchange rate may be floating, in reality, the central bank may intervene regularly in the currency market, unofficially keeping it fixed. Such a system is referred to as a 'managed float' or a 'dirty float'.
Hence, option (D) is the correct answer.
Question 7
1 / -0

Which of the following feature(s) of preference shares are similar to those of equity shares?

A
Redeemability

B
No obligation to pay dividend

C
Voting rights

D
Change over assets

E
Both (B) and (C) above

Solution

Like in the case of equity shareholders there is no obligatory payment to the preference shareholders and the preference dividend is not tax deductible.
Hence, option (B) is the correct answer.
Question 8
1 / -0

As per financial Inclusion drive, one of the following banks introduced tiny cards with biometric identification. Which of the following is that bank?

A
Central Bank of India

B
Oriental Bank of Commerce

C
Indian Bank

D
State Bank of India
Question 9
1 / -0

American Depository Receipts (ADRs) are divided into __________ number of levels.

A
1

B
2

C
3

D
4

E
None of the above

Solution

ADR is a dollar-denominated negotiable certificate, it represents non-US company;'s Publicly traded equity. ADRs are divided into three levels based on the regulations and privileges of each company's issue.
Hence, option (C) is the correct answer.
Question 10
1 / -0

When a Bank provides a loan for purchase of white goods, it is categorized as a ________________.

A
consumption loan

B
white goods loan

C
consumer durable loan

D
working capital

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Sources of Business Finance Test - 15

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Sources of Business Finance Test - 15

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Question 1

Rs. $$2,00,000$$

Rs. $$2,08,000$$

Rs. $$1,92,000$$

Rs. $$7,92,000$$

Solution

Question 2

Increase in WIP period

Decrease in raw materials storage period

Decrease in credit payment period

Both (A) and (C) above

Both (B) and (C) above

Solution

Question 3

Perishable goods

Items that are to be packaged and sold

Items that are stored by the firm and sold with little or no modifications

Accessories which are not part of the standard equipment

Stock which is to be stored for more than one year.

Solution

Question 4

2

3

4

5

Solution

Question 5

Bid Price

Jacksonian Seizure

Call Option

Blue chip

Question 6

It is a purely fixed exchange rate system

It is compromise between fixed and floating exchange rate systems

Central banks sometimes intervene in the forex market to curb sharp changes.

Both (B) and (C) above

All of (A), (B) and (C) above

Solution

Question 7

Redeemability

No obligation to pay dividend

Voting rights

Change over assets

Both (B) and (C) above

Solution

Question 8

Central Bank of India

Oriental Bank of Commerce

Indian Bank

State Bank of India

Question 9

1

2

3

4

None of the above

Solution

Question 10

consumption loan

white goods loan

consumer durable loan

working capital

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