BBA Finance Investment Management — practice questions
88 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice BBA Finance Investment Management in the app →Money required for carrying out business activities is called:Financial management is concerned with the optimal procurement and:The primary aim of financial management is to maximise:The three broad financial decisions are investment, financing and:A long-term investment decision, such as buying a new machine, is called a:Decisions about levels of cash, inventory and receivables are:Two projects carry the same risk but return 10 and 12 per cent. Normally the firm picks:Shareholders' funds refer to equity capital and:Interest must be paid whether or not a firm earns profit, so debt brings:The cost incurred in raising funds is called:Debt is considered the cheapest source partly because interest is:A company afraid of a takeover bid, wanting no dilution of control, will prefer:The portion of profit distributed to shareholders is the:Companies with good growth opportunities generally pay dividends that are:Even a profitable company may not declare a dividend if it is short of:Investors generally view an increase in dividend as:Preparing a financial blueprint of a firm's future operations is:Financial planning is typically done for a period of:Financial plans made for a period of one year or less are called:Financial planning usually begins with the preparation of a:The mix between owners' funds and borrowed funds is called:The chance that a firm fails to meet its payment obligations is called:A sports shop spends 16,000 on a machine and expects inflows of 2,000, 4,000, 5,000, 5,000 and 5,000. Its paybOn that machine, the accumulated inflow at the end of year two is:At the end of year three, the accumulated inflow on that machine reaches:The principal advantage claimed for the payback method is its:The first shortcoming of the payback method is that it ignores the:A second disadvantage of that method is that it lacks a clearly defined:The method that fixes that flaw by discounting each inflow before adding it is the:Spending money today hoping for more money later means inflows and outflows occur in different:The measure that converts all a project's cash flows into today's rupees and nets them is the:The rate a firm should theoretically use when discounting for that measure is its:On the graph of that measure against discount rates, lower rates give a value that is:The discount rate at which that measure equals zero is the:In the worked example, that crossing point sits at about:The measure that divides the present value of benefits by the present value of costs is the:In that ratio, the numerator is the present value of the project's:When the net present value of a project is greater than zero, that ratio will be:Two machines that cannot both be bought, so only one may be chosen, are described as:In the comparison offered, the heavy-duty machine costs:The reason a firm might still prefer that costlier machine is that it will generate more:The payback measure is described as giving managers information about how long money will be:When using the payback method, a company must itself set a length of time as its:Compared with payback, both the net present value and the internal rate of return take account of:The amount a bond issuer repays at the end of the bond's term is its:The rate used to work out the periodic interest payments on a bond is the:The regular interest payment on a bond is found by multiplying the par value by the:The date on which a bond's term comes to an end is the:The discount rate that brings a bond's future cash flows to present value is the:A bond whose coupon rate exceeds its yield to maturity will sell:A bond whose coupon rate is below its yield to maturity will sell:When the coupon rate and the yield to maturity are identical, the bond sells:The safest category of bonds described, backed fully by the United States government, is:Bonds issued by cities, states and their agencies are called:Corporate bonds carry more risk than government bonds because companies cannot:Corporate bonds that make no regular coupon payments are:Bonds that can be exchanged for a set number of common shares are:Which three firms are named as the largest bond rating providers?Bonds in the top rating bands are described as:Investment-grade bonds are especially popular because many commercial banks and pension funds:Because bonds are fixed-income investments, they are exposed to risks that can hurt their:A bond paying 8% on a par value of 1,000 makes an annual coupon payment of:A bond paying 5% on a par value of 1,000 makes an annual coupon payment of:If a 1,000 par bond pays 6% annually in two equal instalments, each payment is:Coupon rates are always expressed in which terms, even when payments are more frequent?The yield column of a bond table shows the return an investor gets if the bond is:A share trading at 24 with earnings per share of 4 has a price to earnings ratio of:That ratio of 6 means investors are willing to pay how much for each unit of earnings?A share trading at 50 with earnings per share of 5 has a ratio of:A share trading at 90 with earnings per share of 6 has a ratio of:A ratio worked out with actual past earnings is described as a:A ratio built on projected future earnings is described as a:A common interpretation is that firms with high price to earnings ratios should be:By the same argument, stocks with low ratios should be:Analysing one company's ratio in isolation tells an analyst:The ratio comparing a company's market value with its book value is the:The multiple comparing market value with operating cash flow is the:The equity multiple used mainly when comparing cash returns across investment types is:The most common equity multiple in stock valuation, because it is simple to calculate, is the:A measurement of the total value of a company, used in merger decisions, is:Equity that offers preferential claims in ownership is:Unlike bonds, preferred stock has no:The word preferred refers to those shareholders receiving dividends before:Many firms issue preferred stock that can later be exchanged for ordinary shares. That is a:The steady dividend on preferred stock makes it seem more like:Because that dividend stream is constant, preferred stock is well valued using the:The three forms of market efficiency identified are strong, semi-strong and:In the weakest of those forms, prices already reflect all: