ACC501 Midterm Solved MCQs

ACC 501 Solved MCQ'S For MID & Final Exam

Q1. Which of the following is an example of positive covenant?

Maintaining firm’s working capital at or above some specified minimum level Furnishing audited financial statements periodically to the lender

Restricting selling or leasing assets wrong question option d is negative and all is positive example Wrong, wrong, wrong question it is unfair discipline

Q2. AST Company’s debt-to-total assets ratio is 0.45. What is its debt -to-equity ratio?

1. 101
2. 220
3. 667

0.818 · Reference:(1-0.45=0.55) · =0.45/0.55=0.818

Q3. What amount a borrower would pay at the end of fourth year with a 4-year, 12%, interest-only loan of Rs. 8,000?

Rs. 1,360 Rs. 2,000 Rs. 5,625

Rs. 8,960

Reference: 8000*12/100=8960

Q4. What will be the price per share if there is a current dividend of Rs. 4.75, required rate of return of 12% and growth rate of 5%?

Rs. 30.19 Rs. 43.52 Rs. 56.53

Rs. 71.25 · Reference: D*1+g/r-g · 4.75*(1+0.5/4.75-0.5)=71.25

Q5. A given rate is quoted as 9 percent APR, but the EAR is 9.38 percent. What is the compounding period?

Semiannually Quarterly

Monthly

Daily

Reference:(1+APR/m)^m-1 · PR=9 · M=30 · (1+9/30)^30-1=9.38

6. Mr. Aslam owns 100 shares of a company and there are four directors to be elected. How much votes Mr. Aslamwould have as per cumulative voting

procedure?

100 votes 200 votes 300 votes

400 votes

Reference: 100*4=400

Q7. SNT Corporation has policy of paying a Rs. 6 per share dividend every year. If this policy is to continue indefinitely, what will be the value of a share of stock at a 15%required rate of return?

Rs. 30

Rs. 40

Rs. 50 Rs. 60

Reference: 6/0.15=40

Q8. Which of the following process can be defined as the process of generating earnings from previous earnings?

Discounting

Compounding

Factorization

Q9. Which of the following is the amount of cash we would get if we actually sell an asset?

Market Value

Book Value Intrinsic Value

10.

Q11. Which of the following financial statement shows both dollars and percentages in the report?

Balance Sheet

Common-Size Statement

Income Statement Relative Statement of Equity

12. in which form of Business, owners have limited libility.

sole proprietorship partnership

joint stock company

none of the above

13. Suppose the initial investment for a project is Rs. 16 million and the cash flows are Rs. 4 million in the first year and Rs. 9 million in the second and Rs. 5 million in the third. The project will have a payback period of:
14. 6 Years

3.1 Years

3. 7 Years
4. 1 Years

Q14. Which of the following is NOT a shortcoming of Payback Rule?

Time value of money is ignored It fails to consider risk differences Simple and easy to calculate

None of the given options pg 106

15. When a corporation wishes to borrow from public on a long-term basis, it does so by issuing or selling:

Debt securities or bonds pg 71

Common Stocks Preferred Stock

Q16. Treasury notes and bonds are examples of which of the following types of bonds?

17. When real rate is _____, all interest rates will tend to be _____.

Low; higher High; lower

High; higher pg 88

Q18. Which of the following statements is(are) CORRECT regarding a bond?

A bond is an evidence of debt issued by a corporation or a governmental body. A bond represents a loan made by investors to the issuer. When a corporation wishes to borrow from public on a long term basis, it does so by issuing or selling bonds.

19. Between the two identical bonds having different coupon, the price of the ________ bond will change less than that of ________ bond.

Higher-coupon; lower-coupon Lower-coupon; higher-coupon