Why is the effect of inflation on present value important?
Correct answer C. It reduces the real value of cash flows received in the future
Subject / 495 questions
Finance MCQs
Page 21 of Finance multiple-choice questions with answers. Tap an option to check yourself.
Page 21 of 25
Which formula gives the present value of a single cash flow?
Correct answer C. CF1 / (1+r)^n
Which of the following is NOT a symptom of overtrading?
Correct answer D. Low inventory turnover ratio
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The yield to maturity of a bond is the same as what?
Correct answer A. The bond's internal rate of return
Which group makes broader use of accounting information?
Correct answer D. Financial analysts
What is the difference between the selling price and the cost of inventory called?
Correct answer C. Markup
Which factors must be considered in international business?
Correct answer D. All of the given options
If you save Rs. 850 for 4 years at an interest rate of 10%, what will its future value be?
Correct answer D. Rs. 1,244
Which measure shows how much profit a company earns on the money invested by its shareholders?
Correct answer C. Return on Equity
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A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000. What is the total value of its assets?
Correct answer D. Rs. 800,000
Which statement about debt is true?
Correct answer D. Unpaid debt can result in bankruptcy or financial failure.
If you save Rs. 5,000 in a bank at 8% interest compounded annually, what will it be worth after 4 years?
Correct answer A. Rs. 6,802
Which statement about bond ratings is true?
Correct answer C. Bond ratings represent an independent assessment of the creditworthiness of bonds.
Which of the following ratios is NOT one of the asset management ratios?
Correct answer B. Return on Assets
A firm has paid Rs. 150,000 in dividends out of a net income of Rs. 250,000. What is its retention ratio?
Correct answer C. 40%
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What is the most important item that can be extracted from a firm’s financial statements?
Correct answer B. Cash Flow
Which statement is the accountant’s snapshot of a firm’s accounting value on a particular date?
Correct answer B. Balance sheet
When the market’s required return on a bond is much lower than its coupon rate, how is the bond selling?
Correct answer B. Premium
Mr Y and Mr Z plan to pool their capital to run a business together. Which type of business organisation will they form?
Correct answer B. Partnership
Standard Corporation sold fully depreciated equipment for Rs. 5,000. How will this transaction appear on the cash flow statement?
Correct answer C. Investing activity