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. Which of the following is an agency cost? Cost of capital Cost incurred to align management and shareholder interests Tax liabilities of the firm Dividend payout None 2. Peecking order theory suggests that firms prefer financing through: Debt over equity Equity over debt Internal funds first, debt second, and equity last Convertible debentures None 3. Which of the following does NOT influence a firm’s capital structure decision? Corporate tax rate Debt covenants Dividend payout ratio Business risk None 4. Double taxation refers to: Taxation of debt and equity returns Taxation of corporate income and shareholder dividends Taxation in two different countries Taxation on gross and net income None 5. Hedging a portfolio using futures involves: Speculating on market direction Arbitrage between spot and futures markets Offsetting potential losses in the portfolio Eliminating unsystematic risk None 6. Currency risk is also known as: Systematic risk Exchange rate risk Interest rate risk Market risk None 7. A company with a high fixed cost structure is exposed to: Financial risk Operating risk Liquidity risk Default risk None 8. The beta of a portfolio can be reduced by: Diversifying with low-beta stocks Increasing exposure to high-beta stocks Adding more debt to the portfolio Speculating on derivatives None 9. When using NPV, a project is acceptable if the NPV is Greater than zero Equal to zero Less than zero None of the above None 10. Which of the following is a non-discounted cash flow technique? Payback period Net present value (NPV) Internal rate of return (IRR) Profitability index (PI) None 11. Sensitivity analysis is used to assess: Capital costs The impact of changes in key variables on a project’s NPV Depreciation methods Dividend payout ratios None 12. Goodwill in an acquisition is defined as: The difference between market and book value of assets The excess of purchase price over the fair value of net assets The residual value of the firm Intangible benefits from the merger None 13. Poison pill strategy is used to: Ensure shareholder approval Defend against hostile takeover Increase synergy benefits Reduce transaction costs None 14. A vertical merger involves firms: At different stages of production Operating in the same geographic area Producing substitute products Operating in unrelated industries None 15. EVA (Economic Value Added) is calculated as: EBIT × (1 - Tax rate) - Capital charge Net income - Cost of equity Revenue - Operating expenses ROE × Total assets None 16. Walter’s model assumes that: Retained earnings are reinvested at the firm’s cost of capital b) Dividend policy does not affect the valuation of the firm Dividend policy does not affect the valuation of the firm The firm’s rate of return equals its cost of equity Retained earnings are reinvested at the firm’s internal rate of return None 17. Declaration of interim dividend requires approval from: Board of directors Shareholders in a general meeting Company registrar Creditors None 18. The purchasing power parity theory links: Inflation rates with interest rates Exchange rates with inflation rates Spot rates with forward rates Trade balances with capital flows None 19. Translation risk refers to: Risk of changes in foreign currency transactions Risk of converting foreign subsidiaries’ financial statements Risk of fluctuating interest rates Risk of stock price changes None 20. A currency swap is primarily used to: Speculate on interest rate changes Manage exchange rate exposure Hedge against default risk Trade equities None 21. The Sharpe ratio is calculated as: Excess return divided by standard deviation of the portfolio Excess return divided by the beta of the portfolio Portfolio return divided by risk-free return Alpha divided by standard deviation None 22. A portfolio is efficient if: It has the highest return for a given level of risk It minimizes risk without considering returns It has the highest beta coefficient It is uncorrelated with market fluctuations None 23. Systematic risk in CAPM is represented by: Alpha Beta Standard deviation Covariance None 24. The Treynor ratio measures performance based on: Total risk Systematic risk Diversifiable risk Business risk None 25. The cash conversion cycle is calculated as: Inventory days + Receivable days - Payable days Inventory days + Payable days - Receivable days Receivable days + Payable days - Inventory days Inventory days + Payable days + Receivable days None 26. Trade credit is classified as: Short-term financing Long-term financing Equity financing Non-financial liabilities None 27. Just-in-time (JIT) inventory system is designed to: Minimize holding costs Increase cash flow Maximize inventory levels Reduce supplier dependence None 28. Factoring services typically exclude: Collection of receivables Financing against receivables Credit risk assessment Management of inventory None 29. The payoff of a call option at expiration is: Max (Strike price - Spot price, 0) Max (Spot price - Strike price, 0) Strike price + Spot price Spot price - Premium paid None 30. A collar strategy in derivatives involves: Buying a call and a put option Buying a put and selling a call option Buying a call and selling a put option Buying a put and selling a call option with the same expiry None 31. Futures contracts are standardized in terms of: Quantity, quality, and settlement Premium, quantity, and quality Delivery date, premium, and interest rate Underlying asset, price, and risk-free rate None 32. Arbitrage in financial markets means: Risk-free profit from price differences High-risk speculative trading Hedging against market volatility Managing portfolio risk None 33. Which of the following is NOT a method of managing exchange rate risk? Forward contracts Currency options Swaps Stock splits None 34. An appreciation of the domestic currency will: Increase exports Decrease imports Reduce the cost of foreign goods Reduce foreign exchange reserves None 35. The spot rate is: The agreed-upon rate for a future transaction The exchange rate for immediate delivery The interest rate on currency loans The price of currency options None 36. The interest rate parity condition ensures: No arbitrage opportunities exist between forward and spot rates Spot and forward rates are equal Interest rates are identical globally Forward premiums are constant over time None 37. Free Cash Flow to Equity (FCFE) is: Cash flow available to equity shareholders after debt servicing Net income after taxes and depreciation Cash inflow from operating activities Total revenue less expenses None 38. Discounted Cash Flow (DCF) valuation is most appropriate for: Firms with volatile earnings Firms with predictable cash flows High-growth startups Mature firms with limited cash flow visibility None 39. The market value of equity is equal to: Book value of equity Total assets minus total liabilities Number of shares outstanding × Market price per share Total revenue minus operating costs None 40. A firm’s intrinsic value is derived using: Historical accounting data Expected future cash flows discounted at an appropriate rate Market price of similar firms Current asset valuation 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!