Which of the following ratios measure, how a company finances its assets?

• A) Leverage ratio
• B) Price to sales ratio
• C) Debt coverage ratio
• D) Price to book value ratio

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

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

ARS Company’s total sales for the year 2009 are Rs.500,000. Sales returns are of Rs.50,000. What will be the value of net sales for the company?

• A) Rs.550, 000
• B) Rs.425, 000
• C) Rs.475, 000
• D) Rs.450, 000

Identify the correct formula for calculating the tax burden.

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

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

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

Which one of the following is correct formula for calculating operating margin?

• A) Net income/Net Sales
• B) Operating income/credit sales
• C) Operating income/Net Sales
• D) Net Profit/Net Sales

Which of the following take place at the expansion stage of the industry life cycle?

• A) Firm operations get more stable and dependable
• B) Costs get stable rather than decreasing or increasing
• C) No rapid growth in demand
• D) Sales growth decline as new products are developed

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

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

Market value for shares of Company A is Rs. 500, company is paying an annul dividend of Rs. 10 to shareholders whereas earning par share is Rs. 100. What will be its P/E ratio?

• A) 4.9
• B) 10
• C) 5.1
• D) 5

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

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

Which of the following ratios are of more concern for the shareholders?

• A) Liquidity and profitability
• B) Liquidity and leverage
• C) Profitability and leverage
• D) Profitability and activity

All of the following are the problems associated to the Dividend Discount Model, EXCEPT:

• A) This model requires constant earnings per share
• B) This model must estimate future dividends
• C) This model need infinite stream of dividends
• D) This model has uncertain dividend stream

All of the following steps are involved in estimating the earnings stream, EXCEPT:

• A) Estimating corporate sales
• B) Estimating corporate earnings before taxes
• C) Estimating corporate earnings after taxes
• D) Estimating corporate liabilities and assets

Which of the following is defined as a procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value?

• A) Bollinger bands
• B) Dividend Discount Model
• C) On Balance Volume
• D) Relative Strength Index

The higher the coupon on the bond:

• A) The higher is its reinvestment rate risk
• B) The higher is its reinvestment rate of return
• C) The lesser is its reinvestment rate of return
• D) The lesser is its reinvestment rate risk

If the Dow Jones Industrial Average stock splits 3 for 1 then what impact will this have on the index divisor?

• A) Index divisor remains constant
• B) Index divisor will incline
• C) Index divisor will decline
• D) Index divisor multiply

Which of the following is NOT true about January Effect anomaly?

• A) Stock returns are inexplicably high in January
• B) January effect is also called November through January effect
• C) Small firms tends to perform better in January
• D) Large firms tends to perform better in January