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. The primary objective of financial management is to: Maximize profits Maximize the wealth of shareholders Ensure liquidity Minimize costs None 2. Agency costs arise due to: Conflicts between shareholders and management Poor working capital management Inadequate liquidity Depreciation of fixed assets None 3. Which of the following is an example of a non-cash expense? Interest on loans Depreciation Dividend payment Rent expense None 4. The Dupont analysis breaks ROE into which three components? Gross profit margin, operating income margin, net profit margin Asset turnover, profit margin, equity multiplier Current ratio, quick ratio, debt ratio Dividend payout, retention ratio, equity capital None 5. Which ratio indicates the number of times inventory is converted into sales? Gross profit ratio Inventory turnover ratio Current ratio Asset turnover ratio None 6. The marginal cost of capital refers to the: Cost of new funds raised Cost of retained earnings Average cost of all capital Weighted average cost of capital None 7. If a company's cost of debt is 8% and the tax rate is 30%, the effective cost of debt i 8% 2.4% 5.6% 10.4% None 8. Which of the following is NOT considered a relevant cash flow in capital budgeting? Opportunity costs Sunk costs Incremental cash flows Salvage value None 9. The payback period method ignores: Initial investment Cash flows beyond the payback period Total project costs Project profitability None 10. According to the Trade-off Theory, a firm should: Use maximum equity to minimize risk Use debt until the marginal benefit equals the marginal cost Avoid using debt financing Focus solely on retained earnings None 11. The Modigliani and Miller Proposition II suggests that: The value of a leveraged firm is higher than an unleveraged firm b) Cost of equity increases with leverage Capital structure is irrelevant in a world without taxes Debt financing reduces the cost of equity None 12. In the Walter Model, if the return on investment (r) is greater than the cost of equity (Ke), the firm should: Distribute all profits as dividends Retain all earnings Maintain a stable dividend policy Borrow additional funds for investment None 13. A stock dividend: Increases the total wealth of shareholders Reduces the company’s retained earnings Reduces the par value of shares Represents a cash outflow None 14. Diversification reduces: Systematic risk Unsystematic risk Total risk Beta None 15. In portfolio management, correlation between two assets that is -1 indicates: Perfect positive correlation No correlation Perfect negative correlation A high-risk portfolio None 16. A bond with a coupon rate lower than the current market rate will be sold: At a premium At a discount At par At book value None 17. Preference shares are preferred over equity because: They offer guaranteed dividends They have voting rights They have a fixed maturity They increase capital gains None 18. Which of the following is a direct quote in foreign exchange? USD/INR = 83.50 INR/USD = 0.012 EUR/USD = 1.10 GBP/USD = 1.25 None 19. Interest Rate Parity Theory links: Interest rates and spot exchange rates Spot rates and forward exchange rates Interest rates and inflation Inflation and exchange rates None 20. The purpose of managing receivables is to: Reduce inventory costs Increase the credit period Minimize bad debts Delay payments to creditors None 21. Cash budget helps in: Planning capital investments Managing liquidity Calculating profitability Estimating sales None 22. A high P/E ratio generally indicates: Low growth expectations High growth expectations High debt levels Low risk in investment None 23. When a company buys back its own shares, it results in: Reduction in the number of outstanding shares Increase in equity capital Increase in market capitalization Reduction in profitability None 24. Beta greater than 1 implies: Stock is less volatile than the market Stock is more volatile than the market Stock is risk-free Stock has zero correlation with the market None 25. A financial lease is also known as: Operating lease Capital lease Sale and leaseback Temporary lease None 26. Plowback ratio is the proportion of: Retained earnings to total profit Dividends paid to retained earnings Dividends paid to total equity Retained earnings to total equity None 27. If IRR is less than WACC, the project is: Accepted Rejected Evaluated further Deferred None 28. In financial analysis, sensitivity analysis evaluates: The impact of variables on the profitability of a project Historical performance of the firm Cost of financing the project Tax benefits of depreciation None 29. In CAPM, the risk-free rate is represented as: Beta Rf Market risk premium WACC None 30. Net working capital is defined as: Current liabilities - Current assets Current assets - Current liabilities Total assets - Total liabilities Fixed assets - Current liabilities None 31. Financial leverage measures: Operating risk of a firm Financial risk of a firm Liquidity of a firm Profitability of a firm None 32. Which of the following is NOT a financial management decision? Investment decision Dividend decision Financing decision Marketing decision None 33. The process of deciding the mix of equity and debt to finance the firm’s operations is known as: Dividend policy Working capital management Capital budgeting Capital structure decision None 34. What is meant by wealth maximization? Maximizing revenue Maximizing the value of shareholders’ wealth Minimizing costs Maximizing market share None 35. Which ratio indicates a company’s ability to pay short-term obligations? Debt-equity ratio Current ratio Inventory turnover ratio Price-to-earnings ratio None 36. An increase in the debt-equity ratio indicates: Higher financial leverage Higher liquidity Lower profitability Lower financial leverage None 37. Weighted Average Cost of Capital (WACC) considers the: Historical cost of funds Cost of retained earnings only Average cost of all sources of capital Market value of assets None 38. Which component of WACC does not require explicit payments? Debt capital Preferred capital Retained earnings Equity capital None 39. Cost of equity can be calculated using: Weighted average formula Capital Asset Pricing Model (CAPM) Profitability index Internal Rate of Return (IRR) None 40. Risk premium in CAPM is defined as: Beta multiplied by market risk Expected return minus risk-free rate Actual return minus expected return Risk-free rate minus market return 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. Few seconds left. 1 2 3 4 Time's upYou cannot switch tabs while taking this quiz!You are not allowed to switch tabs violation has been recorded.you cannot minimize full screen mode!You are not allowed to minimize full screen while taking this quiz, violation has been recorded.Access denied! To begin the quiz, please grant this quiz access to your camera.Time is Up!Time is Up!
