Welcome to your International Navodaya Chamber of Commerce (INCOC) Platform ! Subject: Advanced Financial 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. What is the main advantage of the NPV method over the IRR method? Considers time value of money Easier to calculate Assumes reinvestment at WACC Accounts for non-cash expenses None 2. Which of the is an example of a non-discounting technique in capital budgeting? Internal Rate of Return Net Present Value Payback Period Profitability Index None 3. If a project has a profitability index less than 1, it indicates: Positive NPV Negative NPV IRR > Cost of capital High profitability None 4. The real options approach in capital budgeting deals with: Time value of money Adjusting for inflation Flexibility in decision-making Calculating tax shields None 5. Sunk costs in project evaluation are: Considered relevant costs Irrelevant for decision-making Future cash outflows Incremental costs None 6. Which of the following is a characteristic of futures contracts? Customized contracts Mark-to-market daily Non-tradable on exchanges No collateral required None 7. The Black-Scholes model is used to value: Futures contracts Options Bonds Equity shares None 8. A call option gives the buyer the right to: Sell an asset at a predetermined price Buy an asset at a predetermined price Exchange an asset at market price Borrow funds for purchasing an asset None 9. Hedging can be achieved by: Speculating on market movements Taking offsetting positions in derivatives Concentrating investments in a single asset Ignoring currency fluctuations None 10. What does the gamma measure in options trading? Sensitivity of delta to price changes Sensitivity of option price to time decay Sensitivity of option price to volatility changes Sensitivity of delta to interest rate changes None 11. Which is a key characteristic of a horizontal merger? It involves companies in unrelated industries It combines companies at the same stage of production It merges companies with different supply chain levels D. It only applies to financial institutions It only applies to financial institutions None 12. The free cash flow to the firm (FCFF) is discounted at: WACC Cost of debt Cost of equity Risk-free rate None 13. The value of synergy in a merger is calculated as: Combined value - Individual values Purchase price - Book value NPV of merged firms IRR of combined cash flows None 14. Which method is most commonly used to value high-growth startups? Dividend Discount Model DCF Method Market Multiple Approach Asset-Based Valuation None 15. A white knight strategy in corporate takeovers involves: Using poison pills to avoid a takeover Finding a friendly buyer to prevent a hostile takeover Buying back shares from the market Issuing additional debt to deter acquirers None 16. Exchange rate fluctuations are least impacted by: Interest rate differentials Trade deficits Political stability Historical price movements None 17. What is the purchasing power parity theory based on? Interest rate differences Inflation rate differences Trade surplus/deficit Government interventions None 18. In foreign exchange markets, a swap transaction involves: Buying and selling currencies at different rates Arbitrage between two markets Hedging against exchange rate risk Two simultaneous transactions with different settlement dates None 19. Translation exposure occurs when: Foreign operations are consolidated into domestic accounts A firm imports raw materials Exchange rates remain stable Forward contracts are used None 20. Which of the following is a common technique to hedge transaction exposure? Currency Swaps Leading and Lagging Futures Contracts All of the above None 21. Which restructuring method involves issuing shares to current shareholders to create a new company? Demerger Spin-off Buyback DLeveraged buyout None 22. A reverse merger occurs when: A private company merges with a public company Two companies exchange their equity shares A company repurchases its shares A merger is undone after completion None 23. Which type of restructuring is typically undertaken during bankruptcy? Spin-off Financial Restructuring Merger Horizontal Acquisition None 24. Golden parachutes are used to: Reward executives during financial success Discourage hostile takeovers Reduce capital structure costs Increase dividend payouts None 25. Which of the following is not a financial engineering tool? Convertible Bonds Equity Carve-Outs Asset Securitization Cash Flow Budgeting None 26. Residual theory of dividend suggests that dividends are paid: Before investment opportunities are considered Only if there are excess earnings after funding investments To maximize EPS As a fixed percentage of profits None 27. Which of the following results in no outflow of cash for a company? Interim Dividend Scrip Dividend Final Dividened Special Dividend None 28. In the context of dividend policies, signaling theory suggests that: High dividends reduce shareholder wealth Dividends convey information about future prospects Dividend payments are irrelevant to investors Investors prefer capital gains over dividends None 29. If a company has a low debt-to-equity ratio, its dividend policy is likely to be: Aggressive Conservative Random Irrelevant None 30. Which of the following is a constraint on dividend policy? Stability of earnings Market conditions Debt covenants All of the above None 31. The Pecking Order Theory suggests that companies prefer funding in the following order: Debt → Equity → Retained Earnings Equity → Debt → Retained Earnings Retained Earnings → Debt → Equity . Retained Earnings → Equity → Debt None 32. Systematic risk is also referred to as: Unsystematic risk Diversifiable risk Market risk Specific risk None 33. Which is not a component of working capital? Accounts Payable Cash Fixed Assets Inventory None 34. Economic Value Added (EVA) is calculated as: Net Profit - Taxes Operating Profit - Cost of Capital Total Revenue - Operating Costs Gross Profit - Depreciation None 35. A zero-based budgeting approach involves: Setting the budget to zero and justifying every expense Basing the budget on last year’s expenses Incremental increases in budget each year Reducing budgets by a fixed percentage None 36. Operating leverage measures the sensitivity of: Profits to changes in debt levels EBIT to changes in sales Net income to tax rates Sales to changes in fixed costs None 37. The debt capacity of a firm depends on: Interest rate trends Firm’s profitability Debt-equity ratio All of the above None 38. Which is an example of indirect financing? Issuing bonds in the capital market Borrowing from a bank Issuing equity in the stock market Selling goods on credit None 39. The Altman Z-score predicts: Company growth Bankruptcy risk Dividend payout Tax liability None 40. A company’s stock beta is 1.2. If the market return is 12% and the risk-free rate is 5%, the expected return is: 14.4% 15.4% 13.4% 16.4% 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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