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CA Final Corporate Finance — practice questions — page 2

Explore 55 free Corporate Finance questions in CA Final Strategicfinancialmanagement. Open each question or exercise to read its content, reference answers and available explanation.

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Corporate Finance questions and exercises with answers

Showing questions 31–55 of 55.

Scenario analysis needs what of the inputs?Read the answer and worked solution →Which technique samples probability distributions of inputs thousands of times to build an NPV histogram?Read the answer and worked solution →Which two tools explicitly value management flexibility in a project?Read the answer and worked solution →A mine depends on gold prices and may be abandoned. Best tool?Read the answer and worked solution →The cash conversion cycle measures the time between which two events?Read the answer and worked solution →Inventory 45 days, receivables 30, payables 40. Cash conversion cycle?Read the answer and worked solution →A firm has current assets of 8 lakh and current liabilities of 5 lakh. What is its working capital?Read the answer and worked solution →A firm earns 24 on a capital employed of 200 in a year. What is its return on capital?Read the answer and worked solution →When is firm value enhanced?Read the answer and worked solution →With no NPV positive projects, surplus cash should?Read the answer and worked solution →What do growth stock holders expect on surplus cash?Read the answer and worked solution →Where dividends are taxed more heavily than gains, what may firms choose?Read the answer and worked solution →The bird in the hand argument says investors prefer what?Read the answer and worked solution →Which model supports a stable, smooth dividend payout?Read the answer and worked solution →A rise in dividend payout tends to signal what?Read the answer and worked solution →Under the Walter model, when should a firm retain earnings?Read the answer and worked solution →ROE is 15 percent, equity cost 12 percent. Walter model advice?Read the answer and worked solution →Acquisitions driven by a manager's wish for a larger company are known as what?Read the answer and worked solution →Why do stockholders favor riskier projects than bondholders do?Read the answer and worked solution →Which tool is seen as aligning management with stockholder interests?Read the answer and worked solution →Firms hedge market risk exposures mainly using what?Read the answer and worked solution →An investment bank helps a firm raise capital through which listings?Read the answer and worked solution →Which working capital technique converts debtors to cash?Read the answer and worked solution →Why is debt in the capital structure beneficial up to a certain point?Read the answer and worked solution →An optimal capital structure is one that does what?Read the answer and worked solution →

Worked practice questions

Scenario analysis needs what of the inputs?

  1. They must all be zero
  2. They must be identical
  3. They must be consistent
  4. They must be random
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Correct answer: C. They must be consistent

Each scenario sets global and company factors together, so the combination of inputs must make sense.

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Which technique samples probability distributions of inputs thousands of times to build an NPV histogram?

  1. Ratio analysis
  2. Sensitivity analysis
  3. Payback method
  4. Monte Carlo method
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Correct answer: D. Monte Carlo method

Monte Carlo simulation draws random but possible scenarios and values each one.

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Which two tools explicitly value management flexibility in a project?

  1. Payback and ROI ratios
  2. Trees and real options
  3. Sensitivity, scenarios
  4. WACC and CAPM tools
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Correct answer: B. Trees and real options

Decision trees model branching management choices, and real options treat them as call or put options.

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More Strategicfinancialmanagement topics

Mergers Acquisitions and Corporate RestructuringBusiness ValuationCapital BudgetingForeign Exchange Exposure and Risk ManagementInterest Rate RiskModern Portfolio TheoryPortfolio ManagementValuation (Finance)