FINFUNDA

What is the main advantage of using the internal rate of return (IRR) method for capital budgeting?

• It considers the time value of money.

• It is easy to calculate and interpret.

•   It accounts for inflation.

• It is not affected by the choice of discount rate.

What is the difference between financial leverage and operating leverage?

• Financial leverage uses debt, while operating leverage uses fixed costs

• Operating leverage uses debt, while financial leverage uses fixed costs.

• Financial leverage magnifies returns, while operating leverage magnifies risk.

• Operating leverage magnifies returns, while financial leverage magnifies risk.

What is the Modigliani-Miller theorem?

• The theory that a firm's capital structure does not affect its value in a perfect market

• The theory that diversification can eliminate all risk.

• The theory that the CAPM accurately predicts expected returns.

• The theory that inflation has no impact on investment decisions.

What is the difference between value investing and growth investing?

• Value investors buy undervalued stocks, while growth investors buy stocks with high growth potential.

•   Value investors focus on quantitative factors, while growth investors focus on qualitative factors.

•    Value investors have a long-term investment horizon, while growth investors have a short-term horizon.

•    All of the above.

  What is Modern Portfolio Theory (MPT)?

• The theory that diversification can reduce risk without sacrificing return.

• The theory that markets are efficient and cannot be beaten.

• The theory that asset prices follow a random walk.

• The theory that beta is the only measure of risk that matters.

What is the difference between a long-only fund and a hedge fund?

• Long-only funds can only buy assets, while hedge funds can use short selling and leverage.

• Long-only funds are passively managed, while hedge funds are actively managed.

• Long-only funds have lower fees than hedge funds.

• All of the above.

What is the difference between alpha and beta?

•     Alpha measures an investment's excess return compared to the market, while beta measures its volatility relative to the market.

• Alpha measures an investment's risk, while beta measures its return

• Alpha is a measure of past performance, while beta is a measure of future performance.

• There is no difference; they are the same.

  What are the different valuation methods used in mergers and acquisitions (M&A)?

• Discounted cash flow (DCF), comparable company analysis, and precedent transactions.

• Market capitalization, enterprise value, and book value.

•   Return on equity (ROE), return on assets (ROA), and earnings per share (EPS).

•    All of the above.

"Banking for a brighter tomorrow" belongs to which financial institution?

• SUN CANYON BANK

• Standard Chartered Bank

• Yes Bank

• RBL Bank

What is the Black-Scholes model?

•    A model that values stock options based on factors like price, volatility, and time to expiration.

• A model that predicts future stock prices.

• A model that measures the creditworthiness of companies.

• A model that analyzes the performance of mutual funds.