Past Paper of ACC501

FINALTERM  EXAMINATION

Fall 2009

ACC501- Business Finance (Session - 1) 

Question No: 1      ( Marks: 1 ) - Please choose one

Which of the following refers to a conflict of interest between principal and

agent?

Management Conflict

Interest Conflict

Agency Problem

None of the given options

Question No: 2      ( Marks: 1 ) - Please choose one

Which of the following term refers to the ease and quickness with which assets

can be converted to cash?

Analysis

Structuring

Budgeting

Liquidity

Question No: 3      ( Marks: 1 ) - Please choose one

Product costs do NOT include which of the following?

Raw material

Direct labor

Manufacturing overhead

Administrative expenses

Question No: 4      ( Marks: 1 ) - Please choose one

Which  of  the  followin g  can  be  com puted  by  using  the  in form ation  on ly  from

balance sheet?

Equity multiplier

Inventory turnover

Receivable turnover

Return on equity

Question No: 5      ( Marks: 1 ) - Please choose one

Which of the following is CORRECT regarding the present value discount factor?

It is always greater than 1.0

It decreases as the discount rate increases

It is equal to zero when discount rate is zero

It increases as the time period increases

Question No: 6      ( Marks: 1 ) - Please choose one

H ow  m uch  m ust  be  deposited  at  8 %  each  of  the  n ext  20  years  to  have  Rs.

10,296.44?

Rs. 225

Rs. 341

Rs. 410

Rs. 452

Question No: 7      ( Marks: 1 ) - Please choose one

In  order  to com pare different  investm en t opportun ities (each  with  the sam e risk)

with interest rates reported in different manners you should:

Convert each interest rate to an effective annual rate

Convert each interest rate to a monthly nominal rate

Convert each interest rate to an annual nominal rate

Compare the published annual rates

Question No: 8      ( Marks: 1 ) - Please choose one

You  have  Rs.  1,0 0 0  to  in vest.  You  have  2  choices;  first  is  the  savings  accoun t  A,

which  earns  8 .75  percen t  com poun ded  ann ually  an d  secon d  is  the  savings

accoun t  B,  which  earns  8 .50  percen t  com pounded  m on thly.  Which  accoun t

should you choose and why?

Account A; because it has a higher effective annual rate

Account B; because it has a higher effective annual rate

Account A; because it has the higher quoted rate

Account B; because the quoted rate is higher

Question No: 9      ( Marks: 1 ) - Please choose one

What  will be the  value  of a  Rs. 1,0 0 0  face-value bon d  with  an  8 % coupon  rate  at

8% required rate of return?

More than its face value

Less than its face value

Equal to its face value

Cannot be determined without more information

Question No: 10      ( Marks: 1 ) - Please choose one

Which of the following statement is FALSE regarding debt?

Debt is not an ownership interest in the firm.

Unpaid debt can result in bankruptcy or financial failure.

Debt provides the voting rights to the bondholders.

Corporation s paym en t of in terest on debt is fully tax deductible.

Question No: 11      ( Marks: 1 ) - Please choose one

The relationship between real and nominal returns is described by the:

M&M Proposition

Capital Asset Pricing Model

Fisher s Effect

BCG Matrix

Question No: 12      ( Marks: 1 ) - Please choose one

In vestors  dem an d  a  higher  yield  as  com pensation  to  the  risk  of possible  default.

This extra premium is called:

Default risk premium

Taxability premium

Interest rate risk premium

Inflation risk premium

Question No: 13      ( Marks: 1 ) - Please choose one

For which type of stocks, the dividends grow at a constant rate?

Zero Growth Stocks

Constant Growth Stocks

Non-Constant Growth Stocks

None of the given options

Question No: 14      ( Marks: 1 ) - Please choose one

In which type of voting, each shareholder is entitled one vote per share times the

number of directors to be elected?

Straight Voting

Statutory Voting

Cumulative Voting

None of the given options

Question No: 15      ( Marks: 1 ) - Please choose one

In which of the following procedure of voting for a company's directors, each

shareholder is entitled to one vote per share ?

Straight Voting

Proportional Voting

Cumulative Voting

None of the given options

Question No: 16      ( Marks: 1 ) - Please choose one

Which of the following is the price that the dealer wishes to pay for a share ?

Simple Price

Bid Price

Strike Price

Complex Price