First Round ( preliminary Round) Time: 10.30 am to 11.

30 am Place:Room-2 Number of candidates: 2

Guidelines:
The participants should assemble in the specified hall before 15 minutes of scheduled time. The round contains 2 sub round 30 questions for 25 minutes. Fund flow statement for 30 minutes. (no use of calculator for both). The results will be announced within 15 min after the completion of first round.

1. A statistical measure of the degree to which two variables (e.g., securities' returns) move together. a. Coefficient of variation C. Covariance b Variance

d. Certainty equivalent

2. An "aggressive" common stock would have a "beta" a. Equal to zero c. Equal to one b. Greater than one d. Less than one

3. According to the capital-asset pricing model (CAPM), a security's expected (required) return is equal to the risk-free rate plus a premium

a. Equal to the security's beta. b. Based on the unsystematic risk of the security. c. Based on the total risk of the security. d. Based on the systematic risk of the security.

4. Which of the following would NOT improve the current ratio?

a. Borrow short term to finance additional fixed assets. b. Issue long-term debt to buy inventory. c. Sell common stock to reduce current liabilities. d. Sell fixed assets to reduce accounts payable.

5. A company can improve (lower) its debt-to-total assets ratio by doing which of the following?

a. Borrow more. b. Shift short-term to long-term debt. c. Shift long-term to short-term debt. d. Sell common stock.

6. Uses of funds include a (an):

a. Decrease in cash. b. Increase in any liability. c. Increase in fixed assets. d. Tax refund

7. Spontaneous financing includes

a. Accounts receivable. b. Accounts payable. c. Short-term loans. d. A line of credit.

8. Marketable securities are primarily

a. Short-term debt instruments.

b. Short-term equity securities. c. Long-term debt instruments. d. Long-term equity securities.

9. Time consumed in clearing a check through the banking system.

a. Processing float b. Deposit float c. Collection float d. Availability float

10. Concentration banking

a. Increases idle balances. b. Moves excess funds from a concentration bank to regional banks. c. Is less important during periods of rising interest rates. d. Improves control over corporate cash.

11. Costs of not carrying enough inventory include:

a. Lost sales. b. Customer disappointment. c. Possible worker layoffs.

d. All of these.

12. Inventory is in the possession of a third party under which of the following methods?

a. Floating lien

b. Terminal warehouse receipts c. Chattel mortgage d. Trust receipts

14. All of the following influence capital budgeting cash flows EXCEPT:

a. Accelerated depreciation. b. Salvage value. c. Tax rate changes. d. Method of project financing used.

15. A profitability index of .85 for a project means that:

a. The present value of benefits is 85% greater than the project's costs. b. The project's NPV is greater than zero. c. The project returns 85 cents in present value for each current dollar invested. d. The payback period is less than one year.

16. The investment proposal with the greatest relative risk would have

a. The highest standard deviation of net present value. b. The highest coefficient of variation of net present value. c. The highest expected value of net present value. d. The lowest opportunity loss likelihood.

17. What is the ideal ratio for asset test ratio? a. 1:2 C. 1:1 b. 2:1 d. 1:3

18. What should be treated for (+)(-) a. O/S expenses at end of the year----------------B. Beginning of the year------------------------------C. Prepaid expenses at the end of the year-------------D. Income received beginning of the year----------------19. Which account holder may prepare BRS? a. SBM c. Demat account b. Current account d. R D account

20. Which of the following is not under A/C concepts? A. legal aspect C. dual aspect b. accounting aspects d. fictitious aspect

21. What is the substitute name of contribution? A. Net margin C. total margin b. Average model d. gross margin

22. Which of the following is not included in incremental A flows? A. opportunity cost b. sunk cost

c. Charging in working capital

d. inflation effect

23. Which of the following sources of funds has an implicit cost of capital? A. equity share capital C. debentures b. preference share capital d. Retained earnings

24. Cost of equity share capital is more than cost of debt because; A. face value of debentures is more than face value of shares B. equity shares have higher risk than debt C. equity shares are easily saleable D. all of the three above 25. in case of Net Income Approach, when the debt proportion is increased, the cost of debt: a. Increase, b. Decreases, c. Constant, d. None of the above 26. If a company issues new share capital to redeem debenture, then; a. OL will increase b. FL will increase

c. OL will decrease d. FL will decease 27. R B I have launched a new website to give awareness about Indian Fake Currency Notes is, A. WWW.Paisa bolta hai.com B. WWW.Indian Fake Money.com C. www.your money your risk.com D. www.Indian Fake Money.com

28. Which of the fallowing is an example of systematic risk? Risk of non-availability of a major raw material to a company maki9ng aluminum bars Death of the finance manager fo a company providing financial services Unexpected entry of a multi-national company in the tea industry Reduction of tax rate by the government.

29. which fo the following decreases working capital? Payment of fundsto the holders of commercial paper on maturity Issue of partly convertible debentures Discounting bills receivable

 Redemption of preference shares

30.Which of the following is not a feature of an optimal capital structure? Profitability Liquidity Flexibility Control

PART-B

Fund flow statement Following are the balance sheet of global limited for the Liabilities Equity capital Profit and loss a/c Reserve fund 5% debenture Mortgage loan Creditors Bank O D Bills payable Rupees 09- 10 100000 8000 20000 50000 20000 20000 25000 7000 Rupees 10-11 150000 12000 30000 10000 40000 15000 25000 10000 Assets Good will Machinery Building Debtors Stock Cash Preliminary exp Rupees 09- 10 25000 45000 60000 55000 40000 15000 10000 Rupees 10-11 21000 65000 80000 67000 35000 17000 7000

Total

250000

292000

Total

250000

292000

Other information Deprecation on machinery and building for the current year amounted to Rs 16000 and 18000 respectively. A part of machinery coasting Rs 15000 (WDV rs 11000) was sold for Rs 13000. A part of building casting Rs 10000 (a cumulative deprecation 6000) was sold for Rs 5500. Interest no investment Rs 1000. Dividend paid Rs 30000. Income tax paid Rs 11000. You are required to prepare: Statement of changes in working capital. Adjusted profit and loss account. Fund flow statement.

Working note
Statement of changes in working capital Particular Current assets Debtors Stock Cash Current liabilities Creditors Rupees Rupees

5000

5000

BOD Bills payable Total Calculation of operating profit Adjusted profit and loss account Particular To non-fund and nonoperating expenses Good will written off Preliminary expenses written off Depreciation on machinery Deprecation on building Income tax paid To appropriations Dividend paid Transfer to reserve Total Amount Particular By balance b/d By non-fund and nonoperating incomes Profit on sale of machinery Profit on sale of building Amount

By operating profit Total

Fund flow statement

Source Operating profit Sale of machinery Interest on investment Mortgage loan borrowed Issue of equity share for cash Amount Applications Amount Machinery purchased Building purchased Dividend paid Income tax paid Redemption of debenture Net increase in working

capital Total Total