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 primary goal of financial management? Maximization of profits Maximization of shareholder wealth Minimization of costs Ensuring liquidity None 2. Which of the following is a capital budgeting technique? Payback Period Inventory Turnover Ratio Current Ratio Dividend Payout Ratio None 3. The weighted average cost of capital (WACC) is: The cost of the company’s equity only The cost of the company’s debt only The average cost of equity and debt weighted by their proportions in the capital structure The cost of retained earnings only None 4. What is the primary purpose of sensitivity analysis in capital budgeting? To analyze the effect of cost reduction To test the project under different scenarios To estimate the cost of capital To measure profitability None 5. In financial management, "leverage" refers to: The use of fixed costs in the cost structure The use of borrowed funds to finance assets Both a and b None of the above None 6. Beta is used in: Capital Asset Pricing Model (CAPM) Dividend Discount Model Black-Scholes Model Net Present Value Method None 7. Which of the following strategies is NOT a way to manage risk? Hedging Diversification Speculation Insurance None 8. The formula for Value at Risk (VaR) includes: Standard deviation and confidence level Payback period Weighted average cost of capital Debt-to-equity ratio None 9. Currency swaps are used to manage: Interest rate risk Currency risk Operational risk None of the above None 10. The Black-Scholes Model is primarily used for: Bond valuation Option pricing Stock valuation Portfolio management None 11. In a decision tree analysis, a “node” represents: A choice or decision point A financial statement The cost of capital A discount factor None 12. The Internal Rate of Return (IRR) is the rate at which: NPV equals zero Cost of equity is maximized Debt-equity ratio is minimized Cash flows are discounted to zero None 13. An annuity refers to: A series of equal cash flows over equal time intervals A single lump sum received at a future date A series of cash flows at irregular intervals A perpetual cash flow None 14. The profitability index (PI) is defined as: NPV divided by initial investment IRR minus the discount rate Initial investment divided by NPV Total cash inflows divided by total cash outflows None 15. Financial leverage measures: The proportion of fixed costs in total costs The impact of fixed financial costs on the earnings per share The company's ability to manage current assets Cash flow stability None 16. Which of the following is NOT a limitation of the Net Present Value (NPV) method? It ignores the time value of money It assumes cash flows are reinvested at the discount rate It requires an estimate of the cost of capital It may not capture non-financial benefits of projects None 17. Dividend policy affects: The capital structure of the company Shareholder wealth Both a and b d) Neither a nor b Neither a nor b None 18. The Modigliani-Miller theorem assumes: No taxes and transaction costs Market inefficiency Differing investor preferences High market volatility None 19. Which ratio is most relevant to a company's liquidity? Current Ratio Debt-to-Equity Ratio Earnings Per Share Price-to-Earnings Ratio None 20. A “rights issue” is: A public offering of shares An offering of shares to existing shareholders An issue of bonds None of the above None 21. Exchange rate fluctuations primarily affect: Domestic bonds International trade transactions Local taxation laws None of the above None 22. The Fisher Effect relates to: Interest rates and inflation Currency swaps Dividend payouts Equity financing None 23. Purchasing Power Parity (PPP) theory explains: Exchange rate determination Stock price volatility Dividend policies Bond yields None 24. Eurobonds are issued: In a currency different from the currency of the country where they are issued In the domestic market By European governments only None of the above None 25. A forward contract is a tool for: Hedging risk Speculation Leveraging equity None of the above None 26. A leveraged buyout (LBO) refers to: Buying shares from the open market Acquisition of a company using a significant amount of borrowed funds Investing in government securities A merger of two companies None 27. In mergers and acquisitions, “synergy” refers to: Cost savings due to economies of scale Increased tax liabilities Reduced market share None of the above None 28. Horizontal mergers occur between companies: In different industries At different stages of production In the same industry None of the above None 29. The poison pill strategy is used to: Prevent hostile takeovers Increase dividends Manage cash flows Improve cost management None 30. A spin-off is: The sale of a company's assets The creation of a new independent company from an existing division A hostile acquisition strategy None of the above None 31. An ideal capital structure minimizes: Cost of capital Debt-equity ratio Dividend payout Operating costs None 32. The “payback period” is a measure of: Profitability Risk Liquidity Time to recover investment None 33. A bond’s yield to maturity (YTM) measures: Current yield Total expected return if held to maturity Dividend payout ratio None of the above None 34. Gearing ratio measures: Profitability Leverage Liquidity Efficiency None 35. The efficient market hypothesis (EMH) suggests that Investors cannot consistently outperform the market Stocks are always overvalued or undervalued. Technical analysis can predict stock price movements. Markets react slowly to new information None 36. A call option gives the holder the right to: Buy the underlying asset Sell the underlying asset Both a and b None of the above None 37. Dividend irrelevance theory is proposed by: Modigliani and Miller Fisher Sharpe Black and Scholes None 38. CAPM assumes: Markets are efficient Investors are risk-averse Diversification eliminates unsystematic risk All of the above None 39. The operating cycle measures: Time taken to convert raw material into cash Debt repayment schedule Profitability trends None of the above None 40. A zero-coupon bond: Pays no periodic interest Pays annual dividends Is always risk-free None of the above None 1 out of 4 Great job on taking the INCOC Test! 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