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 short-term financial decision? Capital budgeting Working capital management Dividend payout decision Raising of long-term debt None 2. Financial management primarily aims to: Maximize profits Minimize operating costs Maximize shareholder wealth Ensure social responsibility None 3. The term "financial intermediary" refers to: A government agency An entity that connects borrowers and savers A type of stock exchange An audit firm None 4. The present value of ₹10,000 receivable after 5 years at an annual discount rate of 10% is: ₹6,210 ₹6,775 ₹9,000 ₹5,000 None 5. The annuity formula is used to calculate: Future value of a lump sum Present value of uneven cash flows Value of equal cash flows received over a period Compound interest None 6. Retained earnings are considered cost-free because: They do not involve cash outflows They are not subject to taxes They have an implicit opportunity cost No explicit payments are made None 7. In the calculation of WACC, weights are based on: Book values of equity and debt Historical costs of capital Market values of equity and debt Past dividend policies None 8. The accounting rate of return (ARR) is calculated using: Cash inflows only Net income and initial investment Discounted cash flows Payback period None 9. Which of the following methods considers the time value of money? Payback period Internal Rate of Return (IRR) Accounting Rate of Return (ARR) Average Cost Method None 10. A mutually exclusive project selection means: Only one project can be accepted Both projects can be accepted simultaneously Projects are independent of each other Both projects must be rejected None 11. Operating leverage affects: Financial risk Operating risk Total debt ratio Cost of equity None 12. Financial leverage is advantageous if: Cost of debt is higher than the return on investment Cost of debt is lower than the return on equity Cost of equity is greater than operating costs Cost of debt equals cost of equity None 13. High operating leverage indicates: High fixed costs in the cost structure Low contribution margin High variable costs in the cost structure Low financial risk None 14. According to Gordon's model, a higher retention ratio results in: Higher market value of shares Lower market value of shares Lower market value of shares Fluctuating market value of shares None 15. Bird-in-hand theory suggests that: Retained earnings are more valuable than dividends Dividends are more valuable than retained earnings Investors are indifferent to dividends and retained earnings Dividends should only be declared under surplus profits None 16. What does "systematic risk" refer to? Risk that can be diversified away. Risk that affects the entire market or economy Risk related to a specific industry Risk associated with an individual asset None 17. The market portfolio under CAPM includes: Risk-free securities All risky securities Only equity instruments Only fixed-income securities None 18. The Sharpe ratio measures: Total risk of the portfolio Excess return per unit of standard deviation. Excess return per unit of beta. Market return relative to risk-free rate. None 19. In cash budgeting, the primary concern is: Long-term asset financing Liquidity management Profit margin analysis Capital structure decisions None 20. Which component of working capital is considered spontaneous? Cash Marketable securities Accounts payable Bank loans None 21. A conservative working capital policy aims to: Minimize risk and maximize return Maximize risk and minimize liquidity Minimize liquidity and maximize risk Maximize liquidity and minimize risk None 22. Exchange rate risk can be mitigated by: Investing in domestic assets Hedging with forward contracts Ignoring currency fluctuations Increasing foreign debt None 23. The primary function of a credit rating agency is to: Determine profitability of firms Assess the creditworthiness of borrowers Reduce borrowing costs Provide short-term financing None 24. Zero-based budgeting starts with: Previous year's budget Zero Incremental growth assumptions None of the above None 25. Financial risk arises due to: Fixed operational costs Variable costs Use of debt in capital structure Preference dividends None 26. The quick ratio excludes which component? Inventory Cash Accounts receivable Marketable securities None 27. A higher inventory turnover ratio indicates: Higher carrying costs Efficient inventory management Higher inventory levels Poor sales performance None 28. A company adopts just-in-time (JIT) inventory management to: Increase inventory levels Reduce holding and ordering costs Increase production time Stabilize sales revenue None 29. Which of the following is not a component of working capital? Cash Accounts receivable Land and buildings Inventory None 30. High dividend payout indicates: The company is reinvesting in profitable projects The company has limited investment opportunities The company is under financial stress The company is in its growth phase None 31. Which measure is used to evaluate the systematic risk of a stock? Alpha Beta Standard deviation Variance None 32. A portfolio with a correlation coefficient of 0 between assets will: Have the same risk as individual assets Reduce total portfolio risk Increase total portfolio risk Eliminate all systematic risk None 33. If the expected return of a stock is 12% and the risk-free rate is 5%, the risk premium is: 7% 5% 17% 12% None 34. A currency is said to be overvalued if: Its value is less than its purchasing power parity (PPP) value Its value is greater than its PPP value It depreciates against other currencies It matches the PPP value None 35. A forward contract is an agreement to: Borrow funds at a fixed interest rate Buy or sell an asset at a predetermined price on a future date Exchange equity shares between companies Invest in a foreign country None 36. Leverage affects: Only the profitability of a firm Risk and returns of a firm Only operational efficiency The firm’s tax rate None 37. In financial terms, arbitrage refers to: Taking advantage of price differences in two markets Speculative trading in financial instruments Long-term investment in a growing market Borrowing funds at low interest rates None 38. What does a high-interest coverage ratio indicate? Poor liquidity position Strong ability to meet interest obligations Over-leveraged position High operating costs None 39. If a firm's DFL (Degree of Financial Leverage) is 2, a 10% change in EBIT will result in a change in EPS of: 20% 5% 10% 15% 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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