Identify the option that best describes the simple rule of a journal entry.
Sum of Debits = Sum of Credits
Sum of Debits > Sum of Credits
Sum of Debits < Sum of Credits
None of the given options
When bonds are issued, under which of the following category the value of the bond appears?
Short term loan
Long term loan
What is the present value of Rs. 3,500,000 to be paid at the end of 50 years if the correct risk adjusted interest rate is 18%?
Who or what is a person or institution designated by a bond issuer as the official representative of the bondholders?
The value of the bond is NOT directly tied to the value of which of the following assets?
Real assets of the business
Liquid assets of the business
Fixed assets of the business
Long term assets of the business
The current yield on a bond is equal to ________.
Annual interest divided by the current market price
The yield to maturity
Annual interest divided by the par value
The internal rate of return
With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs. 20,000 initial investment?
Independent projects refer to:
One can invest in one of the projects and not in both
Cash flows of the two projects are not linked to each other
Cash flows of the two projects are linked to each other
None of the given options
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
Real asset market
Which of the following refers to the cost of taking up one option while sacrificing the other?
Company ABC is analyzing some projects amongst which one project will be selected. In your opinion which project is best for the company?
Project W with pay back period of 6.55 years
Project X with pay back period of 3.75 years
Project Y with pay back period of 4.08 years
Project Z with pay back period of 5 years
Why we need Capital rationing?
Because, there are not enough positive NPV projects
Because, companies do not always have access to all of the funds they could make use of
Because, managers find it difficult to decide how to fund projects
Because, banks require very high returns on projects
All are the advantages of sole proprietorship, except:
Easiest and least expensive to form
Limited liability ownership
Single person receives all incomes/ profits
Easy to dissolve business; if required
What additional risk exists if investor invests in foreign bonds?
Additional cost involve due to cross boundaries arrangements
Bonds are dominated in currency other then investor’s home currency
Foreign governments are not much reliable due to different laws
Market risk of foreign government is fluctuating drastically
Identify the component(s) of working capital management.
Current assets and current liabilities
Fixed assets and long-term liabilities
The formula to calculate future value of an amount using simple interest is:
F V = PV (1+ i * n)
F V = PV (1 + i) n
F V = PV x (e) i x n
F V = PV /(1 + i) n
How can a company improve (lower) its debt-to-total asset ratio?
By borrowing more
By shifting short-term to long-term debt
By shifting long-term to short-term debt
By selling common stock
Nominal Interest Rate is also known as:
Effective interest Rate
Annual percentage rate
Periodic interest rate
Required interest rate
When the bond approaches its maturity, the market value of the bond approaches to which of the following?
While calculating the YTM, bond that sells at price other then par, YTM is equal to interest yield plus
Negative or positive capital margin
Negative or Positive capital gain
Negative or Positive capital premium
Negative or Positive capital discountDOWNLOAD SOLUTION HERE