Generally, net working capital is defined as:

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

Which of the following is/are motives of holding cash?

• A) Transactional
• B) Speculative
• C) All of the given options
• D) Precautionary

Systematic risk is also known as:

• A) Avoidable Risk
• B) Diversifiable Risk
• C) Controllable Risk
• D) Undiversifiable Risk

Gross working capital can further be classified according to:

• A) Rate of return and financing method
• B) Time and financing method
• C) Time and rate of return
• D) Time and components

The time period between ordering and receiving inventory order is known as:

• A) Carrying time
• B) Lead time
• C) Over time
• D) All of the given options

Assume that the market risk premium is 15%, risk free rate of return is 5% and beta of an asset X is 0.2. What will be the expected return of asset X under CAPM?

• A) 2%
• B) 8%
• C) 6%
• D) 5%

Which of the following risks best explains portfolio returns?

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

Lead time is defined as:

• A) Length of time between ordering and receiving inventory order
• B) Length of time before stock out
• C) Time before production is assumed
• D) Length of time it takes to order inventory

Keeping in mind the concept of market portfolio, which of the following statement is false?

• A) The market portfolio contains both systematic and unsystematic risk
• B) The market portfolio includes all risky assets in the world
• C) The market portfolio lies on the security market line
• D) The market portfolio lies on the capital market line

If the trade discount of “2/10 net 30” is missed, then the rational manager should make the payment at which point of time?

• A) On the final due date
• B) Should delay the payment even after the final due date
• C) As soon as possible
• D) None of the given option

The beta of the risk free asset is:

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

The ratio of standard deviation (SD) to mean of the distribution is known as:

• A) Covariance
• B) Correlation
• C) None of the above given options
• D) Coefficient of variation

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 is not an inventory?

• A) Consumable tools
• B) Equipment
• C) Raw material
• D) Semi-finished goods

Which of the following statement is true in regards to “2/15 net 30”?

• A) A 2% discount will be given if payment is made within 30 days
• B) A 15% discount will be given if payment is made within 15 days
• C) A 2% discount will be given if payment is made within 15 days
• D) A 15% discount will be given if payment is made within 30 days

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

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

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

According to Capital asset pricing model, the overpriced stocks have:

• A) Zero Beta
• B) Negative Alpha
• C) Positive Alpha
• D) Negative Beta

Which of the following is/are the component(s) of return?

• A) Interest
• B) Additional amount on investment
• C) All of above given options
• D) Dividend

Generally, gross working capital is defined as:

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