This document contains 20 multiple choice questions related to finance topics such as cost of equity, working capital, capital budgeting, and sources of finance. It also contains 17 true or false statements related to similar finance concepts. The questions cover a wide range of foundational finance topics and concepts.
This document contains 20 multiple choice questions related to finance topics such as cost of equity, working capital, capital budgeting, and sources of finance. It also contains 17 true or false statements related to similar finance concepts. The questions cover a wide range of foundational finance topics and concepts.
This document contains 20 multiple choice questions related to finance topics such as cost of equity, working capital, capital budgeting, and sources of finance. It also contains 17 true or false statements related to similar finance concepts. The questions cover a wide range of foundational finance topics and concepts.
This document contains 20 multiple choice questions related to finance topics such as cost of equity, working capital, capital budgeting, and sources of finance. It also contains 17 true or false statements related to similar finance concepts. The questions cover a wide range of foundational finance topics and concepts.
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The risk free rate of return is 8% the expected rate of return on market portfolio is15% the beta of eco boards equity stock is 1.4.According to CAPM the cost equity is__________________. A. A.15.4%. B. B.16.8%. C. C.17.2%. D. D.17.8% 2. __________________Is the activity concerned with planning, raising, controlling and administering of funds in the business. A. Financial management. B. Profit maximization. C. Agency theory. D. Financial manager
3. A project costs Tshs, 100,000 annual cash flow of Tshs. 20,000 for 8 years. It’s payback period is______________. A. 1 year. B. 2 years. C. 3 years. D. 5 years. 4. In finance, "working capital" means the same thing as __________. A. Total assets. B. Fixed assets. C. Current assets. D. Current assets minus current liabilities
5. The issues of shares is involve some costs.This cost is __________.
A. Fixed cost B. Bearing cost C. Floatation cost D. Variable cost 6. Higher working capital usually result in A. Higher risk and higher profit B. Higher risk and lower profit C. Lower risk and higher profit D. Lower risk and lower profit
7. The process of estimating the financial requirements of a organization specifying the
sources of funds and ensuring that enough funds are available at the right time is called A. Financial management B. Financial decision C. Investment decision D. Business finance 8. The job of a finance manager is confined to A. Raising funds B. Management of cash C. Raising of funds and their effective utilization D. None of these 9. Capital budgeting decisions are A. Reversible B. Irreversible C. Unimportant D. All of the above 10. The term mutually exclusive projects mean: A. Choose only the best investments B. Selection of one investment exclude the selection of an alternative C. Selection of both investments is applied D. The elite investment opportunities will get chosen 11. Cost of irredemeemable preference share capital is equal to kip= preference divided divide by A. Total liabilities B. Face value of preference shares C. Total capital D. Net proceeds 12. Face value of debenture less issue cost equal to A. Cost of debenture B. Net proceeds per debentures C. Loss D. Redemption value per debentures 13. …………..refers to the amount invested in various components of current assets A. Temporary working capital B. Net working capital C. Gross working capital D. Permanent working capital
14. Capital budgeting analysis consists of three distinct stages. The first stage is:
A. Discounted Cash Flows
B. Proposal investments
C. Review and Analysis
D. Decision making
15. Which of the following would be consistent with hedging (matching) working capital policy
A. Financing short term needs with short term funds
B. Financing short term needs with long term debt
C. Financing seasonal needs long tern funds
D. Financing some long term needs with short term funds
16. Present value takes _________.
A. Compounding rate B. Inflation rate C. Discounting rate D. Deflation rate
17. Which of the following would be considered a risk-free investment?
A. High-grade corporate bonds B. Equity in a house C. Gold D. Treasury bonds
18. The company’s average cost of capital is ____________.
A. the average cost of equity preference shares
B. the average cost of equity shares and debentures C. the average cost of short term funds D. the average cost of shares and all sources of long-term funds
19. Which of the following formulas represents the future value of Tsh 500 invested at 8% compounded quarterly for five years? A. 500(1+.08)5 B. 500(1+.08)20 C. 500(1+.02)5 D. 500(1+.02)20
20. Which of the following is short term Sources?
A. Bank Credit B. Trade credit C. Commercial Paper D. All of the above
True or false
1. Working capital for a project includes investment in fixed assets
2. For a firm wealth maximization goal is preferable to profit maximization goal 3. The dividend paid to the preference shareholders is a tax-deductible expense. 4. Both the IRR rule and the accounting rate of return rule take into consideration the time value of money 5. Depreciation is non-cash expense. Therefore, it is ignored while estimating the cash flow of a project. 6. Consider the following information of a company for the year 2022. Inventory conversion period 32 days, debtor’s conversion period 45 days and creditors deferred period 23 days. Based on the information, the cash conversion cycle of the company is 100 days.
7. The cost of debt should generally be figured on an after-tax basis.
8. Accounts receivable are an asset that reflects sales made on credit. 9. The profitability per dollar invested is referred to as the profitability index. 10. A risk premium is the difference between a security's return and the risk-free return. 11. Higher risk is associated with greater probability of higher return. 12. An amount of money to be received in the future is worth less today than the stated amount 13. An annuity is a series of consecutive payments of equal amount. 14. Agency theory assumes that corporate managers act to increase the wealth of corporate shareholders. 15. An aggressive working capital policy would have low liquidity, higher risk, and higher profitability potential 16.
