41
A contract that requires the investor to sell securities on a future date is called a
A)
short contract
B)
long contract
C)
hedge
D)
micro hedge
Answer & Solution
Answer: Option
A
42
Which of the following statements is/are incorrect?
A)
Retained earnings as a source of financing is most useful for a new company
B)
The terms 'permanent working capital' and 'core current assets' have synonymous meanings
C)
Both A and B
D)
None of the above
Answer & Solution
Answer: Option
A
43
When supplier extend credit to the buyer, it is called
A)
trade credit
B)
instalment credit
C)
Both A and B
D)
None of these
Answer & Solution
Answer: Option
A
44
The degree of super-leverage would be calculated by
A)
Adding a degree of operating leverage (DOL) and degree of financial leverage (DFL)
B)
Dividing DOL with DFL
C)
Multiplying DOL and DFL
D)
Subtracting DOL from DFL
Answer & Solution
Answer: Option
C
45
Forward contracts are risky because they
A)
Are subject to lack of liquidity
B)
Are subject to default risk
C)
Hedge a portfolio
D)
Both A and B are true
Answer & Solution
Answer: Option
D
46
When domestic currency appreciates, it benefits . . . . . . . . and harms . . . . . . . .
A)
domestic exporters, domestic importers
B)
domestic exporter, foreign importer
C)
domestic importer, foreign exporter
D)
domestic importer, domestic exporter
Answer & Solution
Answer: Option
D
47
Match the following.
List-I List-II
a. Depreciation funds
1. Its use has increased in recent years due to use of trade squeeze
b. Provision for taxation
2. Some authors do not accept them as a source of funds, but it is not reasonable
c. Accrued expenses
3. It can be used during the intermittent period
d. Trade credit
4. The firm can postpone the payment of expenses for short periods
A)
a-4, b-3, c-2, d-1
B)
a-2, b-3, c-4, d-1
C)
a-3, b-1, c-4, d-2
D)
a-4, b-1, b-2, d-3
Answer & Solution
Answer: Option
B
48
The beta factor is a measure of systematic risk. It means the element of risk cannot be avoided by
A)
Consolidation
B)
Diversification
C)
Mergers and acquisitions
D)
Aggregation
Answer & Solution
Answer: Option
B
49
A company might prefer to raise more debt capital rather than equity capital for:
A)
it may help in minimization its tax expenses
B)
it reduces the risk of bankruptcy
C)
it is a reassure its shareholders
D)
the company may get more owners
Answer & Solution
Answer: Option
A
50
All of the following are types of financial instruments except
A)
currency forward contracts
B)
swap agreements
C)
currency futures contracts
D)
money market hedge
Answer & Solution
Answer: Option
D
