NPTEL Course

Financial Management
Assignment I

1. The concept of financial management is mainly concerned with:

a. Arrangement of funds
b. Efficient management of every business
c. All aspects of acquiring and utilizing financial resources for firms’ activities
d. None of the above
2. Term structure of interest rates depicts the relationship between:
a. Between the rates of interest on all securities
b. Between the interest rate on a security and its time to maturity
c. Between the yield on a bond and its default rate.
d. Between the yield on a bond and market interest rate.
3. What are the three broad areas of financial decisions in an organization?
a. Capital budgeting, working capital management and capital structure
b. Capital budgeting, working capital management and dividend decisions
c. Working capital management, capital structure and dividend decisions
d. None of the above
4. The long-term goal of financial management is to:
a. Distribute the maximum dividends to the shareholders
b. maximizing the earnings per share
c. maximizing the profit of the firm
d. maximizing the value of the firm's common stock
5. The role of financial manager has become challenging due to:
a. LPG policy implemented after 1990s
b. Traditional business practices
c. Simple accounting procedures
d. Manual maintenance of records
6. The market price of a share of common stock is determined by:
a. the respective companies
b. the government
c. shareholders
d. the investment markets
7. The decision area of working capital management is concerned with:
a. revenue expenses of the firm
b. long term assets and liabilities
c. short term assets and liabilities
d. All of the above
 8. Wealth of the shareholders or firm's value is represented by:
a. the number of shareholders a firm has
b. the book value of the firm's assets less the book value of its liabilities
c. the market price per share of the firm's common stock.
d. the amount of salary paid to its employees
9. As per the norms, the debt-equity ratio of a firm should be:
a. 2:1
b. 1:2
c. 1.5:1
d. 3:1
10. Wealth maximization is considered as the most feasible goal of financial management
as it takes into account:
a. Amounts of returns expected
b. Timing of anticipated returns
c. Risk associated with uncertainty of returns
d. All of the above
11. A(n) _______ would be an example of an agent, whereas a(n) would be an example
of a principal
a. manager; owner
b. manager; shareholder
c. bondholder; accountant
d. bondholder; shareholder
12. Types of capital budgeting decision does not include:
a. Diversification
b. Procurement of funds
c. Replacement
d. Expansion
ANSWER KEY
1(c) 2(b) 3(a) 4(d) 5(a) 6(d)
7(c) 8(c) 9(a) 10(d) 11(b) 12(b)