This quiz works best with JavaScript enabled. Home > Corporate Finance > Corporate Finance > Corporate Finance – Quiz 23 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Corporate Finance Quiz 23 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Sale of Asset belongs to ..... form of Cash Flow A) Operating. B) Financing. C) Investment. D) All. Show Answer Correct Answer: C) Investment. 2. Which formula is correct to express ROE in DuPont Identity? A) NI/Sales * Sales/TA * TA/Equity. B) Sales/NI * Sales/TA * Equity/TA. C) NI/TA * Sales/Equity * Equity/Sales. D) None of the above are correct. Show Answer Correct Answer: A) NI/Sales * Sales/TA * TA/Equity. 3. Which of the following is affected by interest expense? A) EBITDA. B) EBIT. C) EBT. D) All of them are correct. Show Answer Correct Answer: C) EBT. 4. Company has to pay ..... to government, A) Taxes. B) Dividend. C) Interest. D) None of above. Show Answer Correct Answer: A) Taxes. 5. The Cost of Capital of a company is often called: A) Leverage Rate. B) Hurdle Rate. C) Risk Rate. D) Internal Rate of Return. Show Answer Correct Answer: B) Hurdle Rate. 6. The act where an owner of an option buys or sells the underlying asset, as is his right, is called ..... the option. A) Striking. B) Exercising. C) Opening. D) Strangling. Show Answer Correct Answer: B) Exercising. 7. Why can a company generate profits, but still go bankrupt? A) Profitable companies can never go bankrupt. B) Paying bills is dependent on a company's ability to generate cash, and cash flow is not equal to profit. C) Profitability gets in the way of repayment of debt as it comes due. D) Profitable firms tend to ignore their payment obligations to debtors. Show Answer Correct Answer: B) Paying bills is dependent on a company's ability to generate cash, and cash flow is not equal to profit. 8. Whichofthefollowingdecisionsisacorporatefinancedecision? A) Anacquisitionofanothercompany. B) Achangeinpricingstrategy. C) Anaccountingrevaluationofassetsonthebalancesheet(withnotax implications). D) Addingachildcarecenterforemployee'schildren. E) Alloftheabove. Show Answer Correct Answer: E) Alloftheabove. 9. What does it mean If the debt is secured by specific assets, the lender is entitled to take the asset in event of default? A) Collateral. B) Plan For Repayment at Maturity. C) Provisions for Early Repayment. D) None of above. Show Answer Correct Answer: A) Collateral. 10. A shareholder does not confer right to inspect statutory books. A) True. B) False. Show Answer Correct Answer: B) False. 11. The adjusted present value method (APV), the flow to equity (FTE) method, and the weighted average cost of capital (WACC) method produce equivalent results, but each can have difficulties making computation impossible at times. Given this, which one of these is a correct statement? A) Use the WACC method when the level of debt is known over a project's life. B) The APV method is the most commonly used method in actual practice. C) Use the FTE method when the level of debt is known over a project's life. D) The WACC method is appropriate when the target debt-to-value ratio applies over a project's life. Show Answer Correct Answer: D) The WACC method is appropriate when the target debt-to-value ratio applies over a project's life. 12. One of the most important disadvantages of the corporate form of business is: A) Limited owner liability. B) Ease of transferring ownership. C) Double taxation. D) Unlimited owner liability. Show Answer Correct Answer: C) Double taxation. 13. What is the potential role of a chief financial officer in corporate finance? A) Overseeing financial planning and analysis. B) Managing current liabilities. C) Managing working capital. D) Making investment decisions. Show Answer Correct Answer: A) Overseeing financial planning and analysis. 14. The difference between the sale price and the repurchase price is called the swap rate A) True. B) False. Show Answer Correct Answer: A) True. 15. These costs do not depend on sales and they can be daily, weekly, monthly or yearly. A) Startup costs. B) Fixed costs. C) Variable costs. D) None of above. Show Answer Correct Answer: B) Fixed costs. 16. Which ratio measures a company's ability to pay off its current liabilities with its total current assets such as cash, accounts receivable, and inventories? A) Quick Ratio. B) Networking Capital Ratio. C) Cash Ratio. D) Current Ratio. Show Answer Correct Answer: D) Current Ratio. 17. You are looking at an Insurance product that will pay $ 1, 800 in 10 years if you invest $ 1, 000 today. What is the implied rate of interest? A) 2.1%. B) 5%. C) 6%. D) 8.2%. Show Answer Correct Answer: C) 6%. 18. ..... is also known as Position Statement. A) Balance Sheet. B) Cash Flow Statement. C) Income Statement. D) Fund Flow Statement. Show Answer Correct Answer: A) Balance Sheet. 19. Owned capital is a part of equity shares. A) True. B) False. Show Answer Correct Answer: B) False. 20. Which of the following is a risk factor in capital budgeting A) Industry specific risk factor. B) Competition risk factor. C) Project specific risk factors. D) All of the above. Show Answer Correct Answer: D) All of the above. ← PreviousNext →Related QuizzesCorporate Finance QuizzesCorporate Finance Quiz 1Corporate Finance Quiz 2Corporate Finance Quiz 3Corporate Finance Quiz 4Corporate Finance Quiz 5Corporate Finance Quiz 6Corporate Finance Quiz 7Corporate Finance Quiz 8Corporate Finance Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books