VU Final Term Past Papers
72 solved final term past paper MCQs for ACC501 (Business Finance) at Virtual University, each with the correct answer marked. Use them to learn the VU question style and test your recall. An independent study tool — not affiliated with VU.
Prefer a summary first? Read the ACC501 final term handout.
Q1. The process of planning and managing a firm’s long-term investments is called :
Q2. Return on Equity (ROE) = _________ x Total Assets Turnover x Equity Multiplier
Q3. The ____________ is the rate where NPV (Net Present Value) equals to zero.
Q4. ______________ is adopted to permit minority participation.
Q5. Which one of the following statements projects future years’ operations in a summarized format ?
Q6. The direct and indirect costs associated with going bankrupt or experiencing financial distress, are known as :
Q7. You earn a 7% real return. If the inflation rate is 5 percent, what is your nominal return ?
Q8. Sole Proprietorship is a business created as a distinct legal entity owned by one or more individuals or entities.
Q9. The term discounting is associated with Future Value concept whereas the term compounding is associated with Present Value concept.
Q10. Constant Growth Stock is a share of common stock in a company with a constant rate of dividend.
Q11. Portfolio is the group of assets (stocks and bonds) held by an investor.
Q12. The accounting definition of income is:
Q13. Which of the following would not improve the current ratio?
Q14. The concepts of present value and future value are:
Q15. Which of the following is a special case of annuity, where the stream of cash flows continues forever?
Q16. Which of the following is an unsecured bond for which no specific pledge of property is made?
Q17. Which of the following type of return refers to the percentage change in the amount of money you have?
Q18. When real rate is _____, all interest rates will tend to be _____.
Q19. Which of the following is the extra yield that investors dem and on a taxable bond as a compensation for the unfavorable tax treatment?
Q20. In which type of the market, previously issued securities are traded among investors ?
Q21. An investment w ill be ___________ if the IRR doesn’t exceed s the required return and ___________ otherwise.
Q22. IRR and NPV rules always lead to identical decisions as long as :
Q23. A project whose acceptance does not prevent or require the acceptance of one or more alternative projects is referred to as :
Q24. Finding Net Present Value comes under which type of capital budgeting criteria ?
Q25. ___________ Cost is an outlay that has already occurred and hence is not affected by the decision under consideration.
Q26. Which of the following is the overall return the firm must earn on its existing assets to maintain the value of the stock ?
Q27. Mr. A, as a financial consultant, has prepared a feasibility report of a project for XYZ Company that the company is planning to undertake. He has suggested that the project is feasible. The consultancy fee paid to Mr. A will be considered as:
Q28. Which one of the following typically applies to preferred stock but not to common stock?
Q29. You must own which of the following to vote against a merger proposal from another corporation?
Q30. Which of the following strategy belongs to flexible policy regarding financing of current assets ?
Q31. Which of the following is known as the group of assets such as stocks and bonds held by an investor ?
Q32. Which of the following is referred as the ratio of the standard deviation of a distribution to the mean of that distribution ?
Q33. Suppose a firm borrow s Rs. 800,000 at 7%. What w ill be the after -tax interest rate if tax rate is 34%?
Q34. The cost of common equity for a firm is:
Q35. Which of the following is the difference between current assets and current? Liabilities?
Q36. A business owned by a single person is known as:
Q37. In a common-size balance sheet, all items are shown as a percentage of:
Q38. A company's ability to meet long-term obligations can be estimated by using which of the following set of ratios?
Q39. According to Du Pont Identity, ROE is affected by which of the following?
Q40. Which of the following is a series of constant cash flows that occur at the end of? each period for some fixed number of periods?
Q41. A portion of profits, which a company distributes among its shareholders, is known as:
Q42. Given two bonds identical but for maturity, the price of the longer-term bond will change _ _ _ _ _ _ _ _ that of the shorter-term bond, for a given change in market interest rates.
Q43. When corporations borrow, they generally promise to: I. Make regular scheduled interest payments II. Give the right of voting to bondholders III. Repay the original amount borrowed (principal) IV. Give an ownership interest in the firm
Q44. Which of the following allows a company to repurchase part or all of the bond? issue at a stated price?
Q45. Which of the following is a measure of accounting profit relative to book value? Net Present Value Profitability Index Internal Rate of Return Average Accounting Return Average Accounting Return
Q46. Which of the following type of risk influences a large number of assets ? Systematic Risk Unsystematic Risk Diversifiable Risk Asset-specific risk The true risk of an investment is the unanticipated or surprising part of the return.
Q47. Which of the following refers to a conflict of interest between principal and agent?
Q48. Which of the following term refers to the ease and quickness with which assets can be converted to cash?
Q49. Product costs do NOT include which of the following?
Q50. Which of the following can be computed by using the information only from balance sheet?
Q51. Which of the following is CORRECT regarding the present value discount factor?
Q52. How much must be deposited at 8% each of the next 20 years to have Rs. 10,296.44?
Q53. What will be the value of a Rs. 1,000 face-value bond with an 8% coupon rate at 8% required rate of return?
Q54. Which of the following statement is FALSE regarding debt?
Q55. The relationship between real and nominal returns is described by the:
Q56. Investors demand a higher yield as compensation to the risk of possible default. This extra premium is called:
Q57. For which type of stocks, the dividends grow at a constant rate?
Q58. In which type of voting, each shareholder is entitled one vote per share times the number of directors to be elected?
Q59. In which of the following procedure of voting for a company's directors, each shareholder is entitled to one vote per share ?
Q60. Which of the following is the price that the dealer wishes to pay for a share ?
Q61. Which of the following measures the present value of an investment per dollar invested ?
Q62. Which of the following set of cash flows should be considered in the decision at hand?
Q63. Over the past four years, a company has paid dividends of Rs. 1.00, Rs. 1.10, Rs. 1.20 and Rs. 1.30 respectively. This pattern is expected to continue into the future. This is an example of a company pay a dividend that grows:
Q64. Which of the following statement is INCORRECT regarding Average Accounting Return?
Q65. Which of the following M&M propositions states that it is completely irrelevant how a firm chooses to arrange its finances ?
Q66. Which of the following activities decreases cash ?
Q67. Which of the following describes how a product moves through the current asset accounts ?
Q68. Which of the following is the time between sale of inventory and collection of receivables ?
Q69. Which of the following statement(s) is (are) true regarding Return on Investment?
Q70. Suppose a firm borrows Rs. 800,000 at 7%. What will be the total interest bill per year if tax rate is 34% ?
Q71. Which one of the following motives refers to the need for holding cash as a safety margin to act as a financial reserve? S
Q72. Standard deviations for Investment A and Investment B are 19% and 28% respectively. This indicates that: