RBI GRADE B | SEBI GRADE A 2019

Finance (Theory)

MCQ Series
Lecture – 18

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 Question

Q1. Interest Coverage Ratio is a measure to assess ______________ ?

A. Degree of Indebtedness
B. Ability to Service the Debt
C. Both A and B
D. Neither A nor B

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 Explanation
Interest Coverage Ratio

• Interest Coverage Ratio is a measure to assess Ability to Service the Debt.

• The interest coverage ratio is a debt ratio and profitability ratio used to determine
how easily a company can pay interest on its outstanding debt.
• The interest coverage ratio may be calculated by dividing a company's earnings
before interest and taxes (EBIT) during a given period,
• by the company's interest payments due within the same period.
 Question

Q1. Interest Coverage Ratio is a measure to assess ______________ ?

A. Degree of Indebtedness
B. Ability to Service the Debt
C. Both A and B
D. Neither A nor B

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 Question

Q2. Which of the following is equal to the value of Total Assets?

A. Total Liability - Shareholder Capital

B. Total Liability + Shareholder Capital
C. Long Term Debt - Current Liabilities + Shareholder Capital
D. Long Term Debt + Current Liabilities + Shareholder Capital
E. Both B and D

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 Explanation
The Basic Accounting Equation
 Question

Q2. Which of the following is equal to the value of Total Assets?

A. Total Liability - Shareholder Capital

B. Total Liability + Shareholder Capital
C. Long Term Debt - Current Liabilities + Shareholder Capital
D. Long Term Debt + Current Liabilities + Shareholder Capital
E. Both B and D

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 Question

Q3. What describes the gross margin ratio?

A. Liquidity Ratio
B. Leverage Ratio
C. Coverage Ratio
D. Profitability Ratio
E. None of the above.

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 Explanation
Gross Margin Ratio

• It is one of the profitability ratio, that measures

gross profit margin in relation to the sales.
• It reflects the efficiency with which
management produces each unit of product.
• Higher value means either you have an
advantage to sell at higher price or you are
managing you cost properly.
• Lower value indicates either you are selling at
lower price or you are the not managing your
cost properly.
 Question

Q3. What describes the gross margin ratio?

A. Liquidity Ratio
B. Leverage Ratio
C. Coverage Ratio
D. Profitability Ratio
E. None of the above.

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 Question

Q4. Cost of Carry model involves which of the following parameters for the
future price calculations?

A. Expected Return
B. Cost of Carry
C. Spot Price
D. Both A and C only
E. All A, B, and C.

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Explanation
Cost of Carry Model

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 Question

Q4. Cost of Carry model involves which of the following parameters for the
future price calculations?

A. Expected Return
B. Cost of Carry
C. Spot Price
D. Both A and C only
E. All A, B, and C.

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 Question

Q5. SDR is a monetary unit of the reserve assets of which of the following
entity?

A. Reserve Bank of India

B. World Bank
C. Asian Development Bank
D. Asian Infrastructure Investment Bank
E. None of the above.

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 Explanation
Special Drawing Rights

• SDR refers to an international type

of monetary reserve currency,

• Created by IMF in 1969,

• That operates as a supplement to

the existing money reserves of the
member countries.

• SDR essentially is an artificial

currency, built from a basket of
important national currencies.

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 Question

Q5. SDR is a monetary unit of the reserve assets of which of the following
entity?

A. Reserve Bank of India

B. World Bank
C. Asian Development Bank
D. Asian Infrastructure Investment Bank
E. None of the above.

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 Answers to MCQs

Answers:
Q1 : B
Q2 : E
Q3 : D
Q4 : E
Q5: E

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 Query
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