Project Finance & Types of Financing – Financial and Strategic Management MCQ

Students should practice Project Finance & Types of Financing – CS Executive Financial and Strategic Management MCQ Questions with Answers based on the latest syllabus.

Project Finance & Types of Financing – Financial and Strategic Management MCQ

Question 1.
Project appraisal by financial institution takes into consideration
(A) Promoter’s capacity and competence
(B) Project
(C) Economic Aspects
(D) All of above
Answer:
(D) All of above

Question 2.
A project would normally be under¬taken if its net present value is:
(A) Negative
(B) Exactly the same as the NPV of existing projects
(C) Positive
(D) Zero
Answer:
(C) Positive

Question 3.
The project planning activities and goals include defining:
1. The specific work to be performed and goals that define and bind the project.
2. Estimates to be documented for planning, tracking, and controlling the project.
3. Commitments that are planned, documented, and agreed to by affected groups.
4. Project alternatives, assumptions, and constraints.
Select the correct answer from the options given below.
(A) 1,2, 3 and 4
(B) 2, 3 and 4
(C) 1 and 3 only
(D) 1 and 4 only
Answer:
(A) 1,2, 3 and 4

Question 4.
Which of the following is not one of the three fundamental methods of firm valuation?
(A) Discounted Cashflow
(B) Income or earnings – where the firm is valued on some multiple of accounting income or earnings.
(C) Balance sheet – where the firm is valued in terms of its assets.
(D) Market Share
Answer:
(D) Market Share

Question 5.
The promoter’s capacity and competence should be examined with reference to –
(A) Their management background, traits as entrepreneurs, business
(B) Industrial experience, and past performance in other concerns,
(C) Their integrity and reputation, market standing, and legal competence.
(D) All of the above
Answer:
(D) All of the above

Question 6.
External sources of finance do not include:
(A) Leasing
(B) Debentures
(C) Retained earnings
(D) Overdrafts
Answer:
(B) Debentures

Question 7.
Which of the following is a drawback to a business that issues debentures?
(A) Lenders do not have any voting rights.
(B) There is the dilution of control.
(C) There is a dilution of ownership.
(D) The value of liabilities increases.
Answer:
(A) Lenders do not have any voting rights.

Question 8.
Internal sources of finance do not include:
(A) Better management of working capital
(B) Ordinary shares
(C) Trade credit
(D) Retained earnings
Answer:
(B) Ordinary shares

Question 9.
Technical feasibility implies to mean____
(A) Appraisal of the project by a team of experts drawn from different disciplines.
(B) The adequacy of the proposed plant and equipment to produce the product within the prescribed norms.
(C) Working plan for implementation of project proposal after investment decision by a company has been taken.
(D) To ensure before taking in hand a project whether or not the proposed project is viable.
Answer:
(B) The adequacy of the proposed plant and equipment to produce the product within the prescribed norms.

Question 10.
The project is viable when BCR is –
(A) One
(B) One or more than one
(C) Two
(D) Two or more than two
Answer:
(B) One or more than one

Question 11.
Financial aspects of the project are judged with reference to____
(A) Availability of land and site.
(B) Availability of servicing facilities like machine shops, electric repair shops, etc.
(C) NPV, Benefit-Cost Ratio, Internal Rate of Return, Sensitivity & Risk Analysis
(D) Availability of workforce as per required skill and arrangements proposed for training-in-plant and outside.
Answer:
(C) NPV, Benefit-Cost Ratio, Internal Rate of Return, Sensitivity & Risk Analysis

Question 12.
The objective of economic apprais¬al is to –
(A) Examine the project from the entire economy’s point of view
(B) Determine whether the project will improve the economic welfare of the country
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 13.
The social analysis consists of –
(A) Measurement of the distribution of the income due to the project.
(B) Identification of the impact on the objectives of the basic needs of the society.
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 14.
The UNIDO guidelines provide a comprehensive framework for –
(A) Appraisal of projects and examine their desirability and merit by using different yardsticks in a step-wise manner
(B) Appraisal of the project regarding the chance of getting government subsidy.
(C) Adequacy of the proposed plant and equipment to produce the product within the prescribed norms.
(D) All of the above
Answer:
(A) Appraisal of projects and examine their desirability and merit by using different yardsticks in a step-wise manner

Question 15.
____ are those which are creat¬ed by combining the features of equity with bond, preference, and equity.
(A) Mixed instruments
(B) Baby bond
(C) Hybrid instruments
(D) Hypothetical instruments
Answer:
(C) Hybrid instruments

Question 16.
Zero-Coupon Bonds are bonds is-sued at and redeemed at par.
(A) Face value to discount
(B) Discount to face value plus premium
(C) Par to the discounted value
(D) Discount to face value
Answer:
(D) Discount to face value

Question 17.
A lowers the interest rate risk by neutralizing the inflation risk.
(A) Carrot and stick bond
(B) Capital indexed bonds
(C) Commodity bonds
(D) Dual convertible bond
Answer:
(B) Capital indexed bonds

Question 18.
Derivatives include a variety of financial contracts, including
(1) Futures
(2) Forwards
(3) Swaps
(4) Options
Select the correct answer from the options given below.
(A) (1) & (4)
(B) (2) & (3)
(C) (2), (4) & (1)
(D) (3), (1), (4) & (2)
Answer:
(D) (3), (1), (4) & (2)

Question 19.
_____means any instrument in the form of a depository receipt created by a Domestic Depository in India against the underlying equity shares of a company incorporated outside India.
(A) Global Depository Receipt (GDR)
(B) American Depository Receipt (ADR)
(C) Indian Depository Receipt (IDR)
(D) Any of the above
Answer:
(C) Indian Depository Receipt (IDR)

Question 20.
IDR is an instrument denominated in___
(A) Foreign currency
(B) Indian Rupees
(C) Partly in (A) and partly in (B)
(D) Either (A) or (B)
Answer:
(B) Indian Rupees

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