Project Finance

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Project Finance

LIST OF ATTEMPTED NEW PATTREN QUESTIONS AND ANSWERS -2010-

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1) Question – ________ ratios are calculated to measure the financial risk
as well as the ability of using debts for the benefit of its shareholders.
Correct Answer – Leverage
2) Question – These factors are to be considered under environmental trends
Correct Answer –
A) Pollution control
B) Corporate governance
C) Auditing norms
3) Question – These factors are to be considered under environmental trends
Correct Answer –
A) Identify the specific activities and milestones
B) Determine the proper sequence of the activities
C) Construct a network diagram

4) Question – There are two basic variations of fixed-rate bonds, they are
Correct Answer –
A) Original issue deep discount bonds
B) Floating rate bonds

5) Question –According to Indian stamp Act, in case of doubt, the collector

can decide the eligible stamp duty on an instrument.
Correct Answer – TRUE
6) Question –_______ recognizes the value of giving subordinates feedback on
their performance wherever possible.
Correct Answer – Coach
7) Question – The ___________ is usually conducted as a follow-up to the general
audit.
Correct Answer – Detailed Audit
7) Question – The organizational structure is not risky if the technology is simple
and the project is small.
Correct Answer – Task Force oriented Organization structure
9) Question – In this country, the price for power is generally the ‘ avoided cost’ of
the purchasing utility in connection with such power.
Correct Answer – USA
10) Question – Periodically evaluating and monitoring cost performance
is the step implemented by project management to estimate cost.
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Correct Answer – TRUE
11) Question – Under the component of nature of industry and products, the
promoters have to give industry, product, licensed capacity, installed capacity , actual
production and proposed capacity.
Correct Answer – TRUE
12) Question – Correct Answer
A) Equity holders - want the equity as low as possible
B) Lenders - want the size of equity to be as large as possible
C) Venture Capital - Ready to bear risk and provide finance
D) Bills Discounting Facilities Ensuring prompt payment of the deferred installment
13) Question – According to this committee’s recommendations, The Indian
Telegraph Act 1885 be replaced with a new legislation
Correct Answer – Rakesh Mohan committee
14) Question – Name, age and addresses of promoters along with his/their
qualification, past experience and business and industrial background are furnished in
this component of the application form for project finance
Correct Answer – Management, Capital structure and Borrowing Powers

LIST OF ATTEMPTED NEW PATTREN QUESTIONS AND ANSWERS -2010-

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1) Question - ___________ audit are designed to examine the operation of a firm’s

management system. Correct Answer – Management
2) Question – These components are covered in the history and constitution
component of the application from of project loan
Correct Answer –
C) Whether it is a new/expansion/modernization/diversification project
D) Brief history about the changes in effective control in management
E) Is the MRTP Act application to the company
3) Question – The following is necessary for cash budgeting system
Correct Answer – Profit and Loss account, Fund-flow statement
4) Question – This statement include items and their movements capable of affecting
the cash position of the concern i.e., involving receipt of payment of cash
Correct Answer – Cash flow
5) Question – All projects may not need all the data mentioned in the format of the
application form
Correct Answer – FALSE
6) Question – Marketing problems like lack of distribution and service network leads
to failure of project.
Correct Answer – TRUE
7) Question – According to this committee, Special purpose Vehicles should be able to
vary their capital, they should be easy to wind up and should be tax-transparent
Correct Answer – Rakesh Mohan Committee
8) Question – There is no standard rule to decide acceptability of the length of
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working capital cycle or stocking pattern of any component.
Correct Answer – TRUE
9) Question – Large and lumpy investment are not the characteristics of
infrastructure project financing.
Correct Answer – FALSE
10) Question – These are cost incurred for generating revenue and are therefore
related to the operations of a business enterprise.
Correct Answer – Expenses
11) Question – ________ Expenses vary directly in proportion to production.
Correct Answer – Variable
12) Question – In pledge and hypothecation, the bank has to right to sell and sue for
balance or sue for money and keep the goods as collateral security.
Correct Answer – Variable
13) Question – The adoption of the right methods and means towards the right ends
is
Correct Answer – Ethics
14) Question – These are the advantages of lease
Correct Answer –
A) Mo margin required – 100% financing
B) Creation of working capital
C) Avoidance of loan covenants, fast and flexible financing

15) Question – Presently, this systems is not followed

Correct Answer – Working Capital Demand Loan system
16) Question – Analysis of these statements for several years may reveal desirable or
undesirable trends in the profit earning capacity of a business enterprise
Correct Answer – Profit and Loss
17) Question – The number of airports / airstrips in India are
Correct Answer – 449
18) Question – _________ enables organization to meet cost and quality
expectations of customers / society.
Correct Answer – Ethicality
19) Question – These attractions are found in high-risk projects
Correct Answer –
A) New invention or improved technology or skill
B) Exploitation of human resources
C) Large scale potential for product / service

20) Question – These are considered as best scenarios

Correct Answer –
A) High demands
B) High selling price
21) Question – According to lender’s perspective, these are assessed in political risk
Correct Answer –

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A) Insurance
B) Buy-out clauses
22) Question – In this type of a project, creation of productive facilities from the
manufacture of new products are implemented
Correct Answer – Diversification project
23) Question – Correct Answer
A) Pay-back method useful where the emphasis is on
B) Net Terminal surplus method Uses the concept of
C) Excess present value method Uses the concept of discounting
D) In the internal rate of return method sum of the discounted cash flow
24) Question – In case of ___________ , the bank does not lay out any funds.
Correct Answer – Deferred payment Guarantees.

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