SAMPLE MCQ

Q.1. The value is arrived by discounting the incremental cash flows at an appropriate
discount rate.
a. Book value
b. Present Value
c. Market value
d. Liquidation value
Q.2. This merger refers to two to two firms operating in same industry or producing ideal
products combining together.
a. Horizontal
b. Vertical
c. Conglomerate
d. Concentric
Q.3. Combination of computer system manufacturer with a UPS manufacturer is an example
of this kind of merger
a. Horizontal
b. Vertical
c. Conglomerate
d. Concentric
Q.4. We gets Net present value by subtracting Premium from -------
a. Value creation
b. Acceleration
c. Synergies
d. Speculation
Q.5. It represents the price at which each individual asset can be sold in the event of
liquidation of business
a. Book value
b. Market value
c. Present Value
d. Liquidation value
Q.6. It is management of book debts
a. Factoring
b. Bills discounting
c. Bank credit
d. Commercial paper
Q.7. Number of equity shares of XYZ company Rs. 4,00,000 and Earning after tax is Rs.
12,00,000 then EPS will be
a. Rs. 3 per share
b. Rs. 4 per share
c. Rs. 6 per share
d. Rs. 5 per share
Q.8. Market price per share of Alpha Ltd. is Rs.35 and EPS is Rs. 7 per share then P/E ratio
will be
a. 5 times
b. 5.7 times
c. 6 times
d. 3.4 times
Q.9. It may be defined as an arrangement where one party grants another party the right to
use trade name
a. Alliance
b. Franchising
c. Slump sale
d. Joint venture
Q.10. Vertical mergers are those in which the participants are
a. in the same industry
b. in the different industries
c. in different phases of the value chain
d. in same phases of value chain
Q.11. It can also engage in a proxy fight
a. Friendly
b. hostile
c. bidder
d. acquisition
Q.12. It is a process of buying and selling of a company's asset that comprise of far grater
than half of the target company's consolidated assets
a. Asset restructuring
b. organisation restructuring
c. Internal reconstruction
d. Take over
Q.13. A firm can acquire a target firm by
a. purchasing asset of target
b. purchasing shares of target
c. Purchasing assets or shares
d. purchasing expenses
Q.14. ABC Ltd. Acquired substantial number of equity shares in XYZ Ltd. It is called as
a. Merger
b. Acquisition
c. Amalgamation
d. Absorption
Q.15. Declining positive EVA indicates that financial performance is ---- over time
a. Deteriorating
b. improving
c. remaining constant
d. decreasing
Q.16. Discounted cash flow valuation is based on expected future cash flows and -----
a. Discounted rates
b. future rates
c. interest rates
d. present rates
Q.17. ABC Ltd. Is a profit making company which is absorbed into another group of
company which is a loss company this case is
a. Hostile takeover
b. Horizontal merger
c. Reverse merger
d. Takeover
Q.18. This is the usual method of share exchange ratio
a. EPS
b. EVA
c. Take over
d. profit before tax
Q.19. An acquirer offer to buy shares directly from the shareholder is known as
a. poison pill
b. white knight
c. Tender offer
d. profit before tax
Q.20. Shares of P Ltd. and Q Ltd. are currently traded at Rs.100 and Rs. 25 respectively the
share swap ratio based on market price would be
a. 1 share for every 4 share
b. 4 share for every 1 share
c. 1 share for every 8 share
d. 8 share for every 1 share
Q.21. following is not a type of take over
a. Hostile
b. friendly
c. bail out
d. sold out
Q.22. This is not anti-takeover defences
a. Poison pill
b. Golden parachute
c. Greenmail
d. Red mail
Q.23. The type of Collateral kept for short term loan in working capital financing is
a. Real estate
b. plant and machinery
c. Stock of goods
d. Equity share capital
Q.24. It is not a usual type of lease arrangement
a. Sale and lease back
b. Goods on approval
c. Leverage lease
d. Direct lease
Q.25. It is not a advantage of corporate restructuring
a. To reduce cost
b. To make better use of talent
c. To merge with another company
d. negative investor reactions
Q.26. This value of all the incremental future cash flows can be termed as intrinsic value
a. Book value
b. Market value
c. Present Value
d. Liquidation value
Q.27. It is the purchase of by one company of the substantial part of the assets or the
securities of another target company
a. Merger
b. Acquisition
c. Takeover
d. Synergies
Q.28. This merger refers to combination of two or more firms which are related to eachother
in terms of customer groups, functions and technologies
a. Horizontal
b. Vertical
c. Conglomerate
d. Concentric
Q.29. It refers to expected cost savings, growth opportunities and other financial benefits that
occur as a result of the combination of two companies
a. Value creation
b. Acceleration
c. Synergies
d. Speculation
Q.30. The maximum price at which a business can be acquired is the
a. Fair value
b. Salvage value
c. Replacement value
d. Economic value
Q.31. Price Earnings Ratio is calculated as
a. Market price per share divided by Earnings per share
b. Market price per share multiplied by Earnings per share
c. Market price per share minus earnings per share
d. Market price per share Plus Earnings per share
Q. 32. Number of equity shares of XYZ company Rs. 5,00,000 and Earning after tax is Rs.
15,00,000 then EPS will be
a. Rs. 3 per share
b. Rs. 4 per share
c. Rs. 6 per share
d. Rs. 5 per share
Q.33. Market price per share of Alpha Ltd. is Rs.33 and EPS is Rs. 6 per share then P/E ratio
will be
a. 5.5 times
b. 5.7 times
c. 6 times
d. 3.4 times
Q.34. Such parties work together for a single project for a finite period of time
a. Strategic Alliance
b. Joint venture
c. Disinvestment
d. Franchising
Q.35. One of the following is not a common motive for a merger or acquisition
a. Operating synergy
b. Financial synergy
c. raising the cost of capital
d. buying undervalued assets
Q.36. In such takeover situation, the target company is happy about the arrangement
a. Friendly
b. hostile
c. merger
d. acquisition
Q.37. It is the most aggressive approach to financing working capital
a. long term debt for permanent inventory build up
b. short term debt for short term needs
c. short term funds for seasonal needs
d. short term debts for long term needs
Q.38. ABC Ltd. market value of share is Rs. 20 and EPS is Rs. 5 then the P/E ratio will be
a. Rs. 3 per share
b. Rs. 4 per share
c. Rs. 6 per share
d. Rs. 5 per share
Q.39. This is not a type of Demerger
a. Spin-off
b. Spilt-off
c. Spilt-up
d. Spin-up
Q.40. Higher EVA implies ----- bonuses to employees
a. lower
b. higher
c. same
d. moderate
Q.41. Using this company can evaluate the project performance and decide and decide
whether to execute the project or not.
a. Intrinsic Value
b. fundamental value
c. Economic Value added
d. Salvage value
Q.42. Shares of A Ltd. and B Ltd. are currently traded at Rs.100 and Rs. 20 respectively the
share swap ratio based on market price would be
a. 5/1
b. 1/5
c. 4/1
d. 1/4
Q.43. This is not a type of takeover
a. Tender offer
b. friendly
c. proxy fight
d. poison pill
Q.44. Internal reconstruction requires
a. Special resolution passed at General meeting
b. Special resolution passed at Board meeting
c. Ordinary resolution passed at General meeting
d. Ordinary resolution passed at Board meeting
Q.45. This is not the motives behind the mergers and acquisition
a. Synergies
b. Rapid growth
c. Market power
d. Job losses
Q.46. Following is not a benefit of synergy
a. Revenue enhancement
b. cost reductions
c. Technology progress
d. No tax benefit
Q.47. This is not the disadvantages of corporate restructuring
a. Loss of assets
b. Employee Uncertainty
c. Decreased public image
d. Quality management
Q.48. It is a liability of bank
a. Treasury Bills
b. Commercial papers
c. Junk Bonds
d. Certificate of deposits
Q.49. For a Lessor lease is a
a. Working capital decision
b. Financing decision
c. Dividend decision
d. Investment decision
Q.50. It is an arrangement where one party grants another party the right to use trade name as
well as certain system and process
a. Franchising
b. Joint venture
c. merger
d. Takeover