Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Financial Management and Strategic ManagementTotal Number of Question: 40Time: 41 MinutesPlease check your email after completion of test for result.All the best... Name Phone No Email State 1. Which of the following is a key decision area in financial management? Human resource planning Capital budgeting Market segmentation Taxation policies None 2. What is the primary objective of financial management? Profit Maximization Wealth Maximization Cost Reduction Revenue Optimization None 3. The cost of equity capital is calculated using: CAPM IRR NPV Payback period None 4. If a company issues new equity shares, the flotation cost will: Increase the cost of capital Decrease the cost of capital Have no impact on the cost of capital Be added to profits None 5. Which of the following is NOT a capital budgeting technique? Payback period Net Present Value (NPV) Profitability Index Operating leverage None 6. A project with an NPV of zero indicates: No profits or losses Returns equal to the cost of capital Negative returns High risk None 7. The primary objective of working capital management is to: Minimize operating expenses Maximize shareholder wealth Ensure liquidity for day-to-day operations Reduce the cost of debt None 8. Working capital is calculated as: Total assets - total liabilities Current assets - current liabilities Current Fixed assets - current liabilities Current assets - long-term liabilities None 9. The relationship between risk and return is: Directly proportional Inversely proportional Unrelated Linear None 10. Diversification helps in: Increasing unsystematic risk Reducing systematic risk Reducing unsystematic risk Eliminating all risks None 11. Financial leverage arises when a firm: Uses fixed operating costs Uses fixed financial costs Issues equity shares Reduces its working capital None 12. Which ratio measures financial leverage? Debt-to-equity ratio Current ratio Gross profit margin Inventory turnover ratio None 13. The dividend payout ratio is calculated as: Dividend / Earnings Dividend / Sales Dividend / Total assets Dividend / Net worth None 14. A high retention ratio indicates that: Most of the earnings are distributed as dividends Most of the earnings are reinvested in the business The company has high debt The company is not profitable None 15. Which of the following is a short-term source of finance? Term loan Debentures Trade credit Equity shares None 16. Venture capital is typically associated with: Large, established businesses Early-stage startups Debt financing Asset financing None 17. The formula for calculating the present value of a single cash flow is: PV=FV(1+r)nPV = \frac{FV}{(1 + r)^n}PV=(1+r)nFV PV=FV×(1+r)nPV = FV \times (1 + r)^nPV=FV×(1+r)n PV=FV+rnPV = FV + r^nPV=FV+rn None 18. Which method considers the time value of money? Payback period Accounting rate of return Net present value Average rate of return None 19. The break-even point is achieved when: Total cost = Total revenue Fixed cost = Variable cost Contribution = Variable cost Net profit = Fixed cost None 20. Break-even analysis is used to determine: Optimum production quantity Minimum number of products to cover costs Maximum profit margin Material wastage percentage None 21. Contribution per unit is calculated as: Selling price - Variable cost Selling price - Fixed cost Fixed cost / Number of units Variable cost / Number of units None 22. The optimal capital structure of a firm is the one that: Maximizes the firm's EBIT Minimizes the WACC Maximizes the firm's fixed assets Reduces the firm's operating leverage None 23. If a company raises debt, the financial risk: Decreases Remains the same Increases Becomes negligible None 24. Which of the following is NOT a determinant of the capital structure? Cost of debt Cost of equity Nature of assets Profitability index None 25. Gearing ratio is a measure of: Profitability Liquidity Leverage Activity None 26. The Pecking Order Theory suggests that firms prefer financing in the following order: Debt, retained earnings, equity Equity, debt, retained earnings Retained earnings, debt, equity Retained earnings, equity, debt None 27. A high degree of financial leverage implies: High business risk High operating risk High earnings volatility due to debt financing High profitability None 28. Factoring is a method of managing: Fixed assets Inventory Accounts receivable Accounts payable None 29. The Cash Conversion Cycle is the time taken to: Collect cash from sales Convert raw materials into finished goods Complete the operating cycle from inventory to cash Turn profits into retained earnings None 30. Which of the following is NOT a component of working capital? Accounts receivable Inventory Plant and machinery Accounts payable None 31. Beta measures: Total risk of a stock Systematic risk of a stock Unsystematic risk of a stock Variability of returns None 32. If the beta of a stock is greater than 1, it indicates: The stock is less volatile than the market The stock is as volatile as the market The stock is more volatile than the market The stock has no systematic risk None 33. The intrinsic value of a bond is determined by: Present value of future cash flows Face value of the bond Coupon rate Market price None 34. If the required rate of return is less than the coupon rate, the bond will be priced: At par At a discount At a premium Below par None 35. According to the Modigliani and Miller theory, in a world without taxes and market imperfections, the dividend policy: Does not affect the firm's value Increases the firm's value Reduces the firm's value Maximizes shareholders' wealth None 36. A company paying dividends consistently is considered: Risky for investors A high-growth company Stable and reliable Not profitable None 37. Operating leverage arises when: A firm has high fixed operating costs A firm relies on external debt A firm pays consistent dividends A firm invests in short-term securities None 38. Which type of leverage measures the impact of fixed costs on the EBIT? Operating leverage Financial leverage Combined leverage Contribution leverage None 39. Combined leverage is the product of: Contribution margin and EBIT Operating leverage and financial leverage c EBIT and net profit Fixed cost and variable cost None 40. Exchange rate risk refers to: Changes in interest rates Changes in foreign currency value Changes in domestic market conditions Variability in operating costs None 1 out of 4 Great job on taking the INCOC Test! We appreciate your interest in test.Look out for results and future opportunities.Stay Connected !! Your quiz time is about to finish. 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