CAIIB - FINANCIAL MANAGEMENT – MODULE - A
MODEL QUESTIONS
1)What is sampling for groups with
considerable variation within but similar to
each other called ?
a) cluster
b) stratified
c) systematic
d) random
2)What are sampling groups which are very
similar within but dissimilar without
are called ?
a) cluster
b) stratified
c) systematic
d) random
3)In which of the situations would σ¯x = σ not be
the correct formula for
Sampling
√n
a) infinite population
b) finite population with
replacement
c) finite population without
replacement
d) none of the above
4) What does the Central tendency
theorem state ?
a) as the sample
size increases the sampling distribution of the mean will approach normality irrespective of
the shape of the population distribution
b) the mean of
the sampling distribution of the mean will equal the population mean even if the population is
not normal
c) uses of
sample statistics to make inferences of the the population parameters without knowledge of the of the
frequency distribution
d) all of the above
5) What variation does moving average method eliminate.?
a) seasonal
b)
Cyclical
c)
Irregular
d) secular trend
6)
What Stream of cash flows continue indefinitely ?
a) perpetuity,
b) annuity
c) futurity
d) none of the above
7)
What is the difference between real & nominal cash flows due to ?
a) compounding
b) discounting
c) annuity
d) inflation
8)
On what is the magnitude of discount rate dependent upon ?
a) inflation
b) preference or consumption
c) risk
d) all of them
9) While positive cash flows are good
for an enterprise what do negative cash
flows indicate.
a) losses
b) a or c or d
c) investments
d) cash crunch
10)
Of what is sinking fund an
example of ?
a) perpetuity
b) annuity
c) gratuity
d) none of the above
11) What is a scatter diagram ?
a)
diagram which scatters all
elements of the variable.
b)
A graphic representation of
the relationship of the variables
c)
Helps plot observed values
d)
b& c
12)
In what range does correlation
coefficient lie ?
a.
0 to +1
b.
-1 to 0
c.
-1 to +1
d.
> 1
13)
Point estimate is often insufficient. Why ?
e.
decision is inversely proportional to the
number of estimates
f.
difficult to pinpoint the correct single
estimate
g.
because it does not provide the extent of
error
h.
a &
c
14) If a standard
error of a statistic is less than that of another then what is the
former is said to be.
a ) efficient
b) unbiased
c) consistent
d) sufficient
15)
What is interest on a bond known as ?
i.
return
j.
yield
k.
coupon
l.
maturity value
16) Overstating the return on premium bonds
and understating the return on
discount bonds is generally true when
we use one of the following as an
indicator. Which one is it ?
a.
yield to maturity
b.
current yield
c.
rate of return
d.
discount rate
17) Yield to maturity is that rate
which makes the Present Value of the bond
payments equal to its buying price.
Which of the following is it.?
e.
coupon rate
f.
discount rate
g.
compound rate
h.
rate of return
18) What does the rate of return equal to if interest rates do not
change during the pendency of the bond ?
a.
yield to maturity
b.
coupon rate
c.
compounded rate
d.
current yield
19))
What is a survey of
parliamentarians, seeking their opinion on revision
of perks, called?
a)
biased sampling
b)
stratified sampling
c)
random sampling
d)
systematic sampling
20)
How is stratified sampling carried out?
a)divide the population
into homogenous groups
and select equally but randomly.
b) assigning numbers to
the population & selecting the
numbers
c) sample is made up of
elements which are say 10th from the previous
selection
d)population divides itself into groups and we select equally but randomly
from each
21) Why do sampling errors
occur ?
a) differences
between sample and population
b)
differences among samples
themselves
c) choice
of elements of sampling
d) all of the above
22) If σxˉ= standard error of mean,
σ = standard deviation of the mean, n =
sample size, N = population
size, µ = population mean, sample mean = xˉ
What is the
standard error of the mean for finite populations ?
a) σxˉˉ = σ.
√n
b) σx¯ = σ √(N-n)
√n
√(n-1)
c) z = x¯ µ
σx¯
d)σxˉ= σ√(N-n)
√n
23) Which variation does moving average
method eliminate?
a.
Seasonal
b.
Cyclical
c.
Irregular
d)
secular trend
24) Why is a discount rate
used to calculate net present value?
a) money has value
b) money has enhancing value
c) money has diminishing value
d) money has constant value
25) What does
net present value give?
a) future values of present cash
flows
b) present value of present cash
flow
c)
present value of future cash flows
d) future values of future
cash flows
26) What is repayment of
entire loan principal at the end of the loan period
called ?
a) balloon payment
b) compounded payment
c) annuity
d) term payment
27) What is the rule of 72 ?
a) 12 times table
b) rule for calculating future cash
flows
c) rule for compounding present
cash flows
d) rule for knowing how quickly money
doubles
28) If prices double, what happens to real
value of rupee?.
a) remains same
b) doubles
c) halves
d) changes in unlike proportions
29) Which method which helps draw a
line between the set of scattered points
e)
regression method
f)
correlation method
g)
least square method
h)
least fit method
30) Out of the following,
which 3
measures are used in correlation analysis:
a)standard
error, b)covariance, c)standard deviation, d)coefficient of correlation, e) coefficient
of determination.
1) a, b, c
2) a, c, e
3) b, d, e
4) b, c, e
31)The value of a statistic
tends towards the value of the population as size
increases. What is it said to be ?
a)
sufficient
b)
consistent
c)
efficient
d) unbiased
32) In a normal distribution 95.5% of all the
sample statistics are within
_____standard errors of the
population parameter
a)
± 5%
b)
± 2.25%
c)
± 3%
d) none of the above
33) ‘As the output
increases, the productivity per worker increases.’ What
relationship does it lead to ?
a) direct linear
relationship
b) curvilinear
relationship
c) inverse relationship
d)none of the above
34) If the maturity of a
bond is long into the future the interest
rate is
higher. Why?
a)longer term maturity is more sensitive
to price fluctuation than shorter
term
b) the attractiveness of longer term is related to interest only
c)
longer term bonds are generally issued by institutions of lesser rating
d)
longer term maturity is less sensitive to fluctuation than shorter term
35) What is a zero coupon
bond?
a)
there is gain only in price
b) gain in coupon
c)
no gain at all
d) none
of these
36) If coupon =
C , face value = F , current
price = P, discount rate = R ,
balance period = 3 ,then which of the following is yield to maturity
a)
C + P-F
P(1+R)³
b) ∑C
+ F
∑(1+R)²
(1 + R)³
c) C
P
d) F
P(1+R)³
37) A company manufactures Radios(x) and
Tape recorders(y). Cost of
making
radio & tape recorder is Rs. 225 and Rs. 375 respectively. The
company works in 2
shift totaling 14 hrs. The production
and assembly
time for a radio is 2hrs
while that for tape recorder is 3 hrs.
The radio sells
for Rs.250 while the tape recorder sells for
Rs.410. The company spends an
amount of Rs. 75,000 per
day on production. Maximize the
production in
terms of optimum number of
radios and tape recorders. Pick the correct
constraint equation from the choice given against each type.
i) capacity constraint a) 3x + 2y ≤ 14
(machine
time)
b) 2x + 3y ≤ 14
c) 2x + 3y ≥14
d) 3x + 2y ≥14
ii) financial constraint a) 250x +
410y ≤ 75000
(amount
available) b) 3x + 5y ≤ 75000
c) 3x
+ 5y ≤ 1000
d) 3x + 5y ≥ 1000
iii) non – negativity a) x > 0 ; y > 0
(minimum number) b) x = 0 ; y =
0
c) x ≤ 0 ; y ≤ 0
d) a & b
iv) objective function a) P
= 25x + 35y
(to maximize profit)
b) P = 20x + 35y
c) P = 25x + 30y
d) P = 20x + 35y
38)A firm makes chairs (x) and
tables(y). Each table costs Rs.400 in material
and Rs.150 in labor . each
chair costs Rs.175 in material and
Rs.75 in labor.
The price of table and chair is Rs.625
and Rs. 300 respectively. The firm has
12 hours of time per day.
The production time for each table and chair is 4
hrs,
1.5 hrs respectively. The firm has liquidity of Rs.7000 per day to pay for
the material and labor. The objective
is to maximize the production for the
firm by optimizing the production of tables
and chairs.
Pick out the correct
option for each of the constraint equation.
a) capacity
constraint
: a) 4x + 1.5y ≤ 12
(machine time)
b) 1.5x + 4y ≤ 12
c)
4x + 1.5y ≥ 12
d) 1.5x + 4y ≥ 12
b) financial constraint : a) 5x
+ 11y ≤ 7000
(amount available) b) 5x +
11y ≥ 700
c) 12x + 25y ≤ 7000
d) 12x + 25y ≥ 7000
c) non – negativity : a) x ≥ 0 ;
y ≥ 0
(minimum number)
b) x = 0 ; y = 0
c) x < 0 ; y < 0
d) b & c
d) objective
function :a) P = 75x + 50y
(To maximize profit) b) P = 50x + 75y
c) P = 55x + 75y
d)
P = 75x + 50y
39)
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An amount of Rs.1,15,000 is expected to
be received one year from today at an interest rate (discount rate) of 10%
per year. What is its present value ?
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40)
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What is the two-year discount factor at a discount rate
of 10% per year ?
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41)
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What is the opportunity cost of capital
for a risky project ?
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42)
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If the one year discount factor is
0.8333, what is the discount rate (interest rate) per year?
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43)
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If the present value of a cash flow
generated by an initial investment of Rs.100,000 is Rs.120,000, what is the
NPV of the project?
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44)
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The following statements regarding the
NPV rule and the rate of return rule are true with one exception. Which one
is it :
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45)
|
What is the concept of compound
interest:?
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46) If there is a indirect
relationship between rainfall & yield of crops
then
a) yield is higher
if rainfall is less
b) yield is lower if
rainfall is less
c) yield is higher if
rainfall is higher
d) none of the above
47) If a = 2 , b = 1 ,
independent variable = 4 then dependent variable
for an estimating
line is
a) 2
b) 4
c) 6
d) none of the above
48) If the estimating equation is Y = a – b X
which of the
following is true
a) the y intercept is b
b) slope of line is
negative
c) there is inverse
relationship
d) all of these
e) b & c
49) The value of r2 is
0.49 then coefficient of correlation is
a) 0.49
b) 0.7
c) 0.07
d) cannot be
determined
50) If the
dependent variable increases with the independent
variable then
the coeff. of correlation is
a) 0 to -1
b) 0 to – 0.5
c) 0 to -2
d) none of these
51) The method of least squares finds the best
fit line that
_______ the error between
observed &
estimated points on the line
a) maximises
b) minimizes
c) reduces to zero
d) b & c
52) If sign of r is
negative then it indicates
a) direct relationship between X & Y
b) indirect relationship between
X & Y
c) inverse relationship between X & Y
d) b or c
53) For Y = a - b X we say that relationship between
Y and X is
a) direct &
linear
b) indirect & linear
c) indirect
& curvilinear
d) direct &
curvilinear
54) In the
relationship between height and educational qualification
a) the height is
independent and education is dependent variable
b) the height is
dependent and education is independent variable
c) there is
inverse relationship between the two
d) none of the above
55) In given Qrtly.
data the first step in computing seasonal index is
calculating
a)
4 qtr moving average
b)
discard highest and lowest
values
c)
4 qtr. Moving total
d)
none of the above
56)For a data of 8
half year periods
the code for the 7th half is
a)
2
b)
3
c)
6
d)
5
57)When coding for odd
number of periods
The following
is done
a)
subtract each value from the
smallest value
b)
subtract each value from the
highest value
c)
subtract each value from the
middlemost term
d)
none of the above
58)A time series of
annual data will contain which
of the following components
e)
secular trend
f)
cyclical fluctuation
g)
seasonal variation
h)
a & c
i)
a & b
59)Removing the
highest & lowest actual-to-moving average
values when
computing seasonal index for annual data reduces
j)
extreme cyclical variations
k)
secular trend
l)
seasonal variations
m)
all of these
60) the repetitive
movement around a trend line
in a 4- month
period is best described by
n)
seasonal variation
o)
secular trend
p)
cyclical fluctuation
q)
irregular variation
61) the result of
discarding extreme values before averaging
is called
________ .
r)
residual mean
s)
modified mean
t)
extreme mean
u)
none of the above
62) For a given year if
an adjusted seasonal index is > 100 then
for some other
period it is
v)
< 100
w)
> 100
x)
= 100
y)
none of the above
63)
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Present Value is defined as:
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64)
|
If the interest rate is 15%, what is the
2 year discount factor?
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65)
|
An annuity is defined as
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66)
|
If the present value of the cash flow X
is Rs.200, and the present value cash of the
flow Y is Rs.150, than the present value of the combined cash flow is:
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67)
|
What is the present value annuity due factor
of Re.1at a discount rate of 15% for 15 years?
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68)
|
An investment at 12% nominal rate
compounded monthly is equal to an annual rate of:
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69)
|
A 5-year Govt. bond with a compound rate
of 8% has a face value of 1000. What is the annual interest payment?
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70)
|
If the present value of Rs.444 to be paid at the end of one year isRs.
400, what is the one year discount factor?
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71)
|
If you invest Rs.100,000 today at 12%
interest rate for one year, what is the amount you will have at the end of
the year?
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