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

Which of the following is/are component(s) of capital asset pricing model (CAPM)?

• A) Market Rate of Return
• B) All of the above given options
• C) Beta
• D) Risk Free Rate of Return

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

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

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

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

Which of the following reflects the variability in portfolios return due to change in market return?

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

Coefficient of variation is a measure of relative dispersion (risk) per unit of:

• A) All of the above given options
• B) Expected volatility
• C) Expected risk
• D) Expected return

Which of the following is a shortcoming of using payback period to determine the acceptability of a project?

• A) It ignores cash flows during payback period of a project
• B) It takes into account cash flows after payback period of a project
• C) It ignores time value of money
• D) It takes into account times value of money

All are the techniques of capital budgeting EXCEPT:

• A) Payback period
• B) Internal Rate of return
• C) Profitability Index
• D) Net profitability value

What will be YTM of a 10 years Rs. 1000 face value bond which is paying a coupon of Rs. 100 and bond is currently selling at Rs. 950?

• A) 10.76%
• B) 12.25%
• C) 15%
• D) None of the given options

Securities issued to offer specified rate of return are classified as:

• A) Debt instruments
• B) All of the given options
• C) Interest-bearing instruments
• D) Debentures

Which of the following is a type of bond?

• A) All of the given options
• B) Maturity bond
• C) Zero coupon bond
• D) Coupon bond