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Question 1 of 20
1. Question
The risk-return trade-off generally means that:
Correct
Investors generally require higher expected returns to accept higher risk, although higher returns are not guaranteed. Diversification may reduce unsystematic risk but does not eliminate all market risk.
Incorrect
Investors generally require higher expected returns to accept higher risk, although higher returns are not guaranteed. Diversification may reduce unsystematic risk but does not eliminate all market risk.
Unattempted
Investors generally require higher expected returns to accept higher risk, although higher returns are not guaranteed. Diversification may reduce unsystematic risk but does not eliminate all market risk.
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Question 2 of 20
2. Question
Inventory turnover is generally calculated as:
Correct
Inventory turnover measures how many times average inventory is sold or used during a period. Cost of goods sold divided by average inventory is the common formula.
Incorrect
Inventory turnover measures how many times average inventory is sold or used during a period. Cost of goods sold divided by average inventory is the common formula.
Unattempted
Inventory turnover measures how many times average inventory is sold or used during a period. Cost of goods sold divided by average inventory is the common formula.
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Question 3 of 20
3. Question
Net profit is ₹90,000 and net sales are ₹9,00,000. Net profit margin is:
Correct
Net profit margin = ₹90,000 ÷ ₹9,00,000 × 100 = 10%.
Incorrect
Net profit margin = ₹90,000 ÷ ₹9,00,000 × 100 = 10%.
Unattempted
Net profit margin = ₹90,000 ÷ ₹9,00,000 × 100 = 10%.
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Question 4 of 20
4. Question
An ordinary annuity differs from an annuity due because its payments occur:
Correct
An ordinary annuity pays at the end of each period. An annuity due pays at the beginning, so each payment earns or discounts for one additional period compared with an ordinary annuity.
Incorrect
An ordinary annuity pays at the end of each period. An annuity due pays at the beginning, so each payment earns or discounts for one additional period compared with an ordinary annuity.
Unattempted
An ordinary annuity pays at the end of each period. An annuity due pays at the beginning, so each payment earns or discounts for one additional period compared with an ordinary annuity.
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Question 5 of 20
5. Question
If USD/INR is quoted as ₹83.20 per USD, the rupee amount for USD 500 is:
Correct
Rupee amount = USD 500 × ₹83.20 per USD = ₹41,600, ignoring fees and spread.
Incorrect
Rupee amount = USD 500 × ₹83.20 per USD = ₹41,600, ignoring fees and spread.
Unattempted
Rupee amount = USD 500 × ₹83.20 per USD = ₹41,600, ignoring fees and spread.
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Question 6 of 20
6. Question
A term loan appraisal commonly considers DSCR. DSCR compares:
Correct
Debt Service Coverage Ratio measures the cash flow available to service debt relative to scheduled principal and interest obligations. Definitions vary by lender, so the prescribed appraisal formula should be followed.
Incorrect
Debt Service Coverage Ratio measures the cash flow available to service debt relative to scheduled principal and interest obligations. Definitions vary by lender, so the prescribed appraisal formula should be followed.
Unattempted
Debt Service Coverage Ratio measures the cash flow available to service debt relative to scheduled principal and interest obligations. Definitions vary by lender, so the prescribed appraisal formula should be followed.
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Question 7 of 20
7. Question
Working capital is:
Correct
Net working capital is current assets less current liabilities. Positive working capital can support short-term operations, but the right level depends on the business model and liquidity quality.
Incorrect
Net working capital is current assets less current liabilities. Positive working capital can support short-term operations, but the right level depends on the business model and liquidity quality.
Unattempted
Net working capital is current assets less current liabilities. Positive working capital can support short-term operations, but the right level depends on the business model and liquidity quality.
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Question 8 of 20
8. Question
The future value of an ordinary annuity assumes each payment is made:
Correct
For an ordinary annuity, payments occur at period-end. The future value formula accumulates each payment to the end of the term; an annuity due is worth more because each payment is made one period earlier.
Incorrect
For an ordinary annuity, payments occur at period-end. The future value formula accumulates each payment to the end of the term; an annuity due is worth more because each payment is made one period earlier.
Unattempted
For an ordinary annuity, payments occur at period-end. The future value formula accumulates each payment to the end of the term; an annuity due is worth more because each payment is made one period earlier.
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Question 9 of 20
9. Question
Which ratio is most directly associated with short-term liquidity?
Correct
The current ratio compares current assets with current liabilities and is a liquidity measure. Debt-equity assesses leverage, while ROE and gross margin assess profitability.
Incorrect
The current ratio compares current assets with current liabilities and is a liquidity measure. Debt-equity assesses leverage, while ROE and gross margin assess profitability.
Unattempted
The current ratio compares current assets with current liabilities and is a liquidity measure. Debt-equity assesses leverage, while ROE and gross margin assess profitability.
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Question 10 of 20
10. Question
If present value of future cash inflows is ₹1,50,000 and initial investment is ₹1,20,000, profitability index is:
Correct
PI = ₹1,50,000 ÷ ₹1,20,000 = 1.25. Since PI exceeds 1, the project has positive NPV under the stated assumptions.
Incorrect
PI = ₹1,50,000 ÷ ₹1,20,000 = 1.25. Since PI exceeds 1, the project has positive NPV under the stated assumptions.
Unattempted
PI = ₹1,50,000 ÷ ₹1,20,000 = 1.25. Since PI exceeds 1, the project has positive NPV under the stated assumptions.
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Question 11 of 20
11. Question
A bond has face value ₹1,000, annual coupon ₹90 and market price ₹1,125. Its current yield is:
Correct
Current yield = ₹90 ÷ ₹1,125 × 100 = 8%. Current yield does not account for the gain or loss between market price and redemption value.
Incorrect
Current yield = ₹90 ÷ ₹1,125 × 100 = 8%. Current yield does not account for the gain or loss between market price and redemption value.
Unattempted
Current yield = ₹90 ÷ ₹1,125 × 100 = 8%. Current yield does not account for the gain or loss between market price and redemption value.
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Question 12 of 20
12. Question
Which is a core purpose of working-capital management?
Correct
Working-capital management balances liquidity and profitability by managing inventory, receivables, payables and short-term funding. Excessive working capital can be costly, while too little can disrupt operations.
Incorrect
Working-capital management balances liquidity and profitability by managing inventory, receivables, payables and short-term funding. Excessive working capital can be costly, while too little can disrupt operations.
Unattempted
Working-capital management balances liquidity and profitability by managing inventory, receivables, payables and short-term funding. Excessive working capital can be costly, while too little can disrupt operations.
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Question 13 of 20
13. Question
₹28,750 is invested at 10% compounded annually for 2 year(s). What is its maturity value (nearest rupee)?
Correct
Compound maturity value = Principal × (1 + rate)^years = ₹28,750 × (1 + 10/100)^2 ≈ ₹34,788. Simple interest would produce a different result.
Incorrect
Compound maturity value = Principal × (1 + rate)^years = ₹28,750 × (1 + 10/100)^2 ≈ ₹34,788. Simple interest would produce a different result.
Unattempted
Compound maturity value = Principal × (1 + rate)^years = ₹28,750 × (1 + 10/100)^2 ≈ ₹34,788. Simple interest would produce a different result.
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Question 14 of 20
14. Question
A firm reports current assets of ₹275,000 and current liabilities of ₹137,500. What is its current ratio (approximately)?
Correct
Current ratio = current assets ÷ current liabilities = ₹275,000 ÷ ₹137,500 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
Incorrect
Current ratio = current assets ÷ current liabilities = ₹275,000 ÷ ₹137,500 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
Unattempted
Current ratio = current assets ÷ current liabilities = ₹275,000 ÷ ₹137,500 ≈ 2.00:1. It measures short-term coverage but not the liquidity quality of each asset.
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Question 15 of 20
15. Question
Cost of goods sold is ₹900,000 and average inventory is ₹350,000. Inventory turnover is approximately:
Correct
Inventory turnover = cost of goods sold ÷ average inventory = ₹900,000 ÷ ₹350,000 ≈ 2.57 times. Interpret it against industry norms and stock availability.
Incorrect
Inventory turnover = cost of goods sold ÷ average inventory = ₹900,000 ÷ ₹350,000 ≈ 2.57 times. Interpret it against industry norms and stock availability.
Unattempted
Inventory turnover = cost of goods sold ÷ average inventory = ₹900,000 ÷ ₹350,000 ≈ 2.57 times. Interpret it against industry norms and stock availability.
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Question 16 of 20
16. Question
A company has debt of ₹1,175,000 and equity of ₹850,000. What is its debt-equity ratio?
Correct
Debt-equity ratio = debt ÷ equity = ₹1,175,000 ÷ ₹850,000 ≈ 1.38:1. Use a consistent definition of debt when comparing companies.
Incorrect
Debt-equity ratio = debt ÷ equity = ₹1,175,000 ÷ ₹850,000 ≈ 1.38:1. Use a consistent definition of debt when comparing companies.
Unattempted
Debt-equity ratio = debt ÷ equity = ₹1,175,000 ÷ ₹850,000 ≈ 1.38:1. Use a consistent definition of debt when comparing companies.
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Question 17 of 20
17. Question
A bond pays annual coupon interest of ₹105 and trades at ₹1025. Its current yield is approximately:
Correct
Current yield = annual coupon ÷ current market price × 100 = ₹105 ÷ ₹1025 × 100 ≈ 10.24%. It excludes any capital gain or loss at redemption.
Incorrect
Current yield = annual coupon ÷ current market price × 100 = ₹105 ÷ ₹1025 × 100 ≈ 10.24%. It excludes any capital gain or loss at redemption.
Unattempted
Current yield = annual coupon ÷ current market price × 100 = ₹105 ÷ ₹1025 × 100 ≈ 10.24%. It excludes any capital gain or loss at redemption.
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Question 18 of 20
18. Question
A project costs ₹375,000 and generates ₹90,000 at each year-end for 3 years. At a 10% discount rate, NPV is closest to:
Correct
NPV = −₹375,000 + ₹90,000/1.10 + ₹90,000/1.10² + ₹90,000/1.10³ ≈ ₹-151,183. A positive NPV indicates value creation under the stated assumptions.
Incorrect
NPV = −₹375,000 + ₹90,000/1.10 + ₹90,000/1.10² + ₹90,000/1.10³ ≈ ₹-151,183. A positive NPV indicates value creation under the stated assumptions.
Unattempted
NPV = −₹375,000 + ₹90,000/1.10 + ₹90,000/1.10² + ₹90,000/1.10³ ≈ ₹-151,183. A positive NPV indicates value creation under the stated assumptions.
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Question 19 of 20
19. Question
A firm reports net profit of ₹222,500 on sales of ₹1,575,000. Its net profit margin is approximately:
Correct
Net profit margin = net profit ÷ net sales × 100 = ₹222,500 ÷ ₹1,575,000 × 100 ≈ 14.13%. Check whether the profit measure is before or after tax when comparing ratios.
Incorrect
Net profit margin = net profit ÷ net sales × 100 = ₹222,500 ÷ ₹1,575,000 × 100 ≈ 14.13%. Check whether the profit measure is before or after tax when comparing ratios.
Unattempted
Net profit margin = net profit ÷ net sales × 100 = ₹222,500 ÷ ₹1,575,000 × 100 ≈ 14.13%. Check whether the profit measure is before or after tax when comparing ratios.
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Question 20 of 20
20. Question
Annual credit sales are ₹4,750,000 and average trade receivables are ₹475,000. Receivables turnover is:
Correct
Receivables turnover = annual credit sales ÷ average receivables = ₹4,750,000 ÷ ₹475,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.
Incorrect
Receivables turnover = annual credit sales ÷ average receivables = ₹4,750,000 ÷ ₹475,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.
Unattempted
Receivables turnover = annual credit sales ÷ average receivables = ₹4,750,000 ÷ ₹475,000 ≈ 10.00 times. Faster turnover may indicate stronger collection, subject to credit policy and industry norms.