WorksheetsADVANCED FINANCIAL MANAGEMENT - II M.COM - QUIZ II
Total questions: 20
Worksheet time: 10mins
What is foreign exchange exposure?
The risk of loss due to changes in interest rates
The risk of loss due to changes in foreign exchange rates
The risk of loss due to changes in commodity prices
The risk of loss due to changes in stock prices
Which of the following is a characteristic of a multinational corporation (MNC)?
Operations in only two countries
Domestic sales only
Operations and value-creation activities in multiple countries
Single currency transactions only
What is a eurobond?
A bond issued by European countries only
A bond denominated in euros
A bond issued in a currency different from the country where it's issued
A bond traded exclusively in European markets
In international finance, what does political risk primarily refer to?
Risk of war between trading nations
Risk of government actions affecting business operations
Risk of currency devaluation
Risk of trade sanctions
Which of the following best describes a forward contract?
An agreement to exchange currencies at a future date at a predetermined rate
An immediate exchange of currencies at the current market rate
A contract that gives the right but not obligation to exchange currencies
A long-term loan denominated in foreign currency
What is dividend policy?
A policy that only deals with cash payments to shareholders
The decision about retaining earnings for reinvestment
The framework for determining how much and when to pay dividends to shareholders
A regulatory requirement for public companies
Which of the following is a characteristic of a stable dividend policy?
Paying a fixed percentage of earnings each period
Regular dividend payments with minimal fluctuations
No regular pattern of dividend payments
Paying all excess cash as dividends
Which of the following is a disadvantage of stock dividends?
They require cash outflow
They increase the number of shares outstanding
They reduce earnings per share
They are taxed immediately
Which factor is NOT typically considered in setting dividend policy?
Legal restrictions
Company's growth opportunities
Competitors' stock prices
Available cash flow
What is a stock repurchasing?
When investors buy more shares from the market
When a company buys back its own shares from the market
When employees exercise stock options
When new shares are issued to the public
What is capital budgeting?
The process of evaluating long-term investment projects
The process of preparing annual operating budgets
The allocation of working capital
The management of current assets
Which of the following is NOT a capital budgeting technique?
Net Present Value (NPV)
Internal Rate of Return (IRR)
Current Ratio
Payback Period
What does a positive NPV indicate?
The project will lose money
The project will break even
The project will add value to the firm
The project needs more investment
. In capital budgeting, the Internal Rate of Return (IRR) is:
The discount rate that makes NPV equal to zero
The average return over the project's life
The minimum required rate of return
The maximum possible return
A project's profitability index is calculated as:
Present value of cash inflows divided by initial investment
Future value of cash flows minus initial investment
Total cash flows divided by project life
Annual profit divided by initial investment
What is working capital?
Long-term assets minus long-term liabilities
Current assets minus current liabilities
Total assets minus total liabilities
Fixed assets minus current liabilities
Which of the following is NOT a component of working capital management?
Inventory management
Cash management
Capital structure decisions
Accounts receivable management
The cash conversion cycle is:
The time between cash payment and cash collection
The time taken to convert raw materials into finished goods
The time between inventory purchase and cash collection from sales
The time between ordering and receiving inventory
What is the primary goal of working capital management?
To maximize current assets
To minimize current liabilities
To ensure optimal balance between liquidity and profitability
To eliminate the need for short-term financing
Which of the following is a spontaneous source of financing?
Bank Overdraft
Trade credit
Commercial paper
Short-term loans
