Return on equity depends on the product of all of the following, EXCEPT:

• A) Profit margin on sales
• B) Market value per share
• C) Total asset turnover
• D) Financial leverage

The Standard Industrial Classification codes have how many divisions?

• A) 15
• B) 9
• C) 13
• D) 11

When inflation and interest rates are low, P/E ratios tend to be.

• A) Low
• B) Minimum
• C) High
• D) Average

Which of the following stage of the industry life cycle offers the highest potential returns and greatest risk?

• A) Stabilization stage
• B) Expansion stage
• C) Pioneering stage
• D) Declining stage

Which of the following statement(s) is(are) true for Expansion Stage of Industry's life cycle?

• A) Considerable investment funds are attracted
• B) Firm operations become more stable and dependable
• C) Financial policies are firmly established
• D) All of the given options

Which of the following is the formula of expected future growth rate?

• A) g =IRR / (1-Liquidity ratio)
• B) g =ROE * (1- Payout ratio)
• C) g =ROI / (1- Leverage ratio)
• D) g =NPV * (1- Debt ratio)

One of the main objectives of the income statement is to determine:

• A) Profits or losses of company
• B) Total cash outflow and inflow
• C) Total assets of the company
• D) Debt and equity ratio of the company

What will be the effect on intrinsic value if the risk premium and required rate of return rises?

• A) It will have no effect
• B) It will rise
• C) It will fall
• D) It will fluctuate

Identify the correct formula for calculating the tax burden.

• A) Sales/Income taxes payable
• B) Net Income/Pre-tax Income
• C) EBIT/Income tax expense
• D) Pre-tax Income/EBIT

Which of the following are the required inputs of the present value approach?

• A) Retained earnings and dividends paid out ratio
• B) Expenses paid in cash and dividends disbursed
• C) Earnings in valuing stocks and stock-in-trade
• D) Discount rate and the expected cash flows

Which of the following is NOT true about expansion stage?

• A) Dividends are often become payable
• B) Financial policies are firmly established
• C) Marketplace is full of competitors
• D) Firm operations are more stable, dependable

Changes in Government rules and regulation will adversely affect which of the following industry?

• A) Defensive industry
• B) Growth industry
• C) Cyclic industry
• D) None of the given options

Which of the following is correct formula for calculating P/E ratio?

• A) Face value per share / Earnings per Share
• B) None of given options
• C) Market value per share / Total Earnings
• D) Market value per share / Earnings per Share

Which of the following ratios shows how much a company pays out in dividends each year relative to its share price?

• A) Dividend coverage ratio
• B) Dividend earned ratio
• C) Dividend yield ratio
• D) Dividend per share

Which of the following considers the size of the company and needs no adjustment for stock splits?

• A) Price weighting index
• B) Equal weighting index
• C) Capitalization weighting index
• D) Base weighting index

Which of the following equations assume a linear relationship between price and yield?

• A) Immunization equation
• B) Yield to maturity equation
• C) Duration equation
• D) Convexity equation

Which of the following is NOT true about bondholder?

• A) Don’t know the bond issuer
• B) Knows interest rates
• C) Knows the principal payment
• D) Knows future cash flows

Which of the following tests is often used to test the weak form of market efficiency?

• A) Runs test
• B) Accounting changes
• C) Stock splits
• D) Insider transactions

Which of the following statement is FALSE regarding bond duration?

• A) Duration is shorter than maturity for all bonds except zero coupon bonds
• B) Duration is equal to maturity for zero coupon bonds
• C) Duration is measured in years
• D) Duration is directly related to coupon yield

All of the following are the features of money market securities EXCEPT:

• A) Long term
• B) Liquid
• C) Issued by Government and private firms
• D) Negotiable