MBA Investment Management — practice questions
120 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice MBA 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 financial market links savers and investors, performing what is known as its:The process by which allocation of funds is done through banks or markets is called:Which is one of the four functions of a financial market?By making financial assets easy to buy and sell, markets provide:Financial markets are classified on the basis of the:Instruments with a maturity of less than one year are traded in the:The money market has:Which is a major participant in the money market?A Treasury bill is an instrument of short-term borrowing by the:Treasury bills are also known as:A 91-day Treasury bill of face value 1,00,000 bought for 96,000 earns the investor:The difference between the issue price of a treasury bill and its redemption value is called:Treasury bills are available for a minimum amount of:A short-term unsecured promissory note issued by large creditworthy companies is:Using funds raised through commercial paper to meet floatation costs of a bigger issue is called:Short-term finance repayable on demand, with maturity of one day to fifteen days, used between banks, is:The interest rate paid on call money loans is known as the:Unsecured, negotiable, short-term bearer instruments issued by commercial banks are:A bill of exchange used to finance credit sales, drawn by the seller and accepted by the buyer, becomes a:A trade bill accepted by a commercial bank is known as a:Facilities and institutional arrangements through which long-term funds are raised form the:The SENSEX, the benchmark index of the BSE, is made up of how many actively traded stocks?The art and science of managing a firm's money so that it can meet its goals is:Making sure the firm has cash on hand to pay bills as they come due is:Short-term investments that can be turned into cash easily are called:A firm sells its accounts receivable outright at a discount to raise money quickly. This is:A bank tells a firm the most it may borrow unsecured over the coming year. That agreement is a:A guaranteed version of that arrangement, where the bank commits the funds will be available, is a:A financially strong corporation issues an unsecured short-term IOU. That instrument is:Credit a seller gives a buyer between delivery and payment is called:A business loan with a maturity longer than one year is a:A long-term loan made against real estate as collateral is a:Analysing long-term projects and picking those with the best returns is:Investments in land, buildings and machinery expected to serve beyond a year are:The chance that a firm cannot make scheduled interest and principal payments on its debt is:The principle that a higher risk should bring the chance of a greater return is the:A security representing an ownership interest in a corporation is:An equity security whose dividend is fixed when it is issued is:Payments made to stockholders out of a corporation's profits are:The amount borrowed by the issuer of a bond, also called par value, is the:Bonds issued by states, cities and counties are called:New securities are sold to the public for the first time in the:Already-issued securities are bought and sold between investors in the:A firm that pools investors' money to buy a selection of securities is a: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: