Cost of capital includes:

• A) Cost of preferred shares
• B) All of the given options
• C) Cost of common shares
• D) Cost of bonds

What will be NPV of a project if PV of cash inflows is Rs. 550,000 and initial investment is Rs. 600,000?

• A) Rs. 550,000
• B) Rs. 600,000
• C) Rs. 50,000
• D) Rs. 1,150,000

All are the examples of non-cash items EXCEPT:

• A) Financial charges
• B) Bad debts
• C) Depreciation
• D) Amortization

Cost of debt includes:

• A) Cost of debentures
• B) Cost of fixed income securities
• C) All of the given options
• D) Cost of bonds

What will be cost of preferred shares if a company is paying Rs. 12 per share dividend and the shares are selling Rs. 95 per share in the market?

• A) None of the given options
• B) 7%
• C) 15%
• D) 12.63%

What will be weighted average cost of capital if a company has 50% debt with a cost of 15% and 50% equity with a cost of 18%? (Tax rate = 35%)?

• A) 15%
• B) None of the given options
• C) 13.875%
• D) 18%

Which of the following is(are) used for estimating cash flows?

• A) All of the given options
• B) Incremental Cash Inflow
• C) Initial Cash Outflow
• D) Terminal Cash Flow

Which of the followings is true with respect to straight line method of depreciation?

• A) Depreciation expense remains constant every year
• B) None of the given options
• C) Depreciation expense increases every year
• D) Depreciation expense decreases every year

Generally, net working capital is defined as:

• A) Total assets
• B) Current assets minus current liabilities
• C) Current assets
• D) Current liabilities

The beta of the risk free asset is:

• A) 0.00
• B) -1.00
• C) 1.00
• D) 0.50

Which of the following statement is TRUE in regards to conservative approach to financing working capital?

• A) Financing the short term needs of the business through short term debt
• B) Financing the seasonal needs of the business through equity
• C) Financing the short term needs of the business through long term debt
• D) Financing the long term needs of the business through short term debt

Which of the following statement is TRUE in regards to hedging approach to financing working capital?

• A) Financing the seasonal needs of the business through long term debt
• B) Financing the short term needs of the business through short term debt
• C) Financing the short term needs of the business through long term debt
• D) Financing the long term needs of the business through short term debt

Which of the following costs are associated with inventory?

• A) Inventory purchase price
• B) Holding costs
• C) All of the given options
• D) Re-order costs

Which of the following is correct formula for per-unit contribution margin?

• A) Sales / Contribution margin per unit
• B) Fixed cost / Contribution margin per unit
• C) Sales per unit - Variable cost per unit
• D) Total contribution margin/ Sales

Which of the following statement is TRUE, if contribution margin is positive?

• A) Profit will only occur if the contribution margin is less than the fixed expenses
• B) Both profit and loss can occur
• C) Profit will occur
• D) Loss will occur if the contribution margin is higher than fixed expenses

Which of the following risks best explains portfolio returns?

• A) Systematic risk
• B) Diversification
• C) Economic factors
• D) Specific risk

The variability in portfolio returns that can be avoided through diversification is termed as:

• A) Systematic risk
• B) Coefficient of variation
• C) Standard deviation
• D) Unsystematic risk

Which of the following is/are types of inventory?

• A) Finished goods
• B) All of the given options
• C) Work in process
• D) Raw material

Unsystematic risk is also known as:

• A) Unavoidable Risk
• B) Controllable Risk
• C) Market risk
• D) Undiversifiable Risk

Assume that ABC Company is following hedging approach and is planning for new capital investment in Plant and Equipment. In such circumstance, which of the following form of finance is most appropriate?

• A) Accounts payable
• B) Common stock equity
• C) Trade credit
• D) 6-month bank notes