Busıness Fınance I Final 12. Deneme Sınavı
Toplam 20 Soru1.Soru
What is the most risky working capital financing policy?
Conservative policy |
Dividend policy |
Aggresive policy |
Progressive policy |
Hedging policy |
Aggressive policy, as the name suggests, is specified as the most risky working capital financing policy as a higher proportion of current assets including permanent ones is financed by the short-term debt. To apply such a policy, the company should ensure that the receivables are supposed to be collected on time and payments to the creditors are easily made as late as possible.
2.Soru
These are the materials which are needed for smooth running of the manufacturing process.
What kind of inventory is defined above?
Raw Material |
Work in Progress |
Consumables |
Finished Goods |
Spares |
Inventories can be classified into five major categories:
Raw Material: It is the basic and the most important part of inventories. These are goods directly or used in the production process, and the expenses incurred for the procurement of raw materials are reflected to the cost per unit of product. - Work in Progress: These include those materials which have been committed to production process but have not yet been completed. - Consumables: These are the materials which are needed for smooth running of the manufacturing process. - Finished Goods: These are the final output of the production process. - Spares: It is also a part of inventories which includes small spares and parts.
The correct answer is C.
3.Soru
Which of the followings is a component of current liabilities?
Prepaid expenses |
Outstanding expenses |
Sundry deptors |
Accounts receivable |
Inventories |
Outstanding expenses are current liabilities. The other options are current assets.
4.Soru
Which of the following ratios are computed and expressed as follows?
? = Annual Dividends per Share / Current Market Price
Dividend Yield |
Dividend Payout Ratio |
Sustainable Growth Rate |
Return-on-Equity (ROE) |
Return-on-Assets (ROA) |
Dividend Yield ratio is computed and expressed as follows :
Dividend Yield = Annual Dividends per Share / Current Market Price
Therefore, the correct answer is A.
5.Soru
"It is a model describing the relationship between the systematic risk of a security, namely beta, and expected returns." Which notion below belongs to the given definition?
Capital-Asset-Pricing Model |
Security Market Line |
Systematic risk |
Efficient Markets Hypothesis |
Risk free return |
Capital-Asset-Pricing Model is a model describing the relationship between the systematic risk of a security, namely beta, and expected returns. As long as the market risk premium is positive, higher beta value bring higher returns.
6.Soru
Generally, there exists a strong positive relationship between the size of the company and the working capital needs.What is this factor affecting the level of working capital called?
Nature of business |
Volume of business |
Length of period of manufacture |
Use of manual labor or mechanization |
The proportion of the cost of raw materials to total cost |
Volume of business: Generally, there exists a strong positive relationship between the size of the company and the working capital needs. The size of a company is defined in terms of sales volume and/or asset size. Whatever the terms of reference of size, increase in size generates higher activity level, larger amount of production, inventory, sales, ending up with higher amounts of raw materials and suppliers credits. The correct answer is B.
7.Soru
Unexpected returns are the result of new unexpected information arriving to the market during a period.
Which of the following could not be an example of unexpected information?
News of a large accident at the factory. |
Announcement of a new facility being built |
Announcement of the latest growth rate of the economy |
Large swings in the value of the national currency |
Yearly inflation rate |
Unexpected returns are the result of new unexpected information arriving to the market during the period. Some examples of relevant new information arriving to the market could be things like:
• Announcement of the latest growth rate of the economy • Large swings in the value of the national currency • Announcement of a new contract to sell large quantity of products to another country • News of a large accident at the factory • Announcement of a new facility being built that will significantly increase the production capacity of the company
8.Soru
Which method is mostly preferred for the preparation of proforma balance sheets?
Ratio method |
Sales percentage method |
Regression method |
Latest use method |
Product analysis method |
Percentage of Sales Method: Firstly, the accounts mostly affected by the changes in the sales volume are determined. Amongst these accounts are inventories, cash on hand and banks, as well as trade receivables. Typically equity and affiliate accounts are not directly affected from the changes in sales volume. The method can be applied in the means of daily sales or sales percentage approach. Sales Percentage Method is the mostly preferred method.
9.Soru
Which of the following is one of the types of costs incurred in the course of receivables management?
Overhead allocation |
Capital Cost |
Direct materials cost |
Danger level cost |
Direct labor cost |
Capital Cost: It is a fact that selling on credit creates a financing requirement for the company for the period between the date of sale of goods to the customer and the date of payment made by the customer as it should keep making payments to the employees, suppliers of raw materials, etc. Thus, a company in the course of expanding sales through receivables incurs additional capital costs.
10.Soru
Suppose that a bond pays coupons semi-annually and has a coupon rate of 15% with a maturity of 5 years. A bond investor is expected to receive 10 (2 x 5 years) coupon payments, each paying 7.5 (15/2) over the five-year period and receive par value after 10 periods. Then, the value of this semi-annual coupon paying bond is …
52, 7585 |
53, 9162 |
54,2760 |
107,0345 |
107,1888 |
Suppose that a bond pays coupons semi-annually and has a coupon rate of 15% with a maturity of 5 years. A bond investor is expected to receive 10 (2 x 5 years) coupon payments, each paying 7.5 (15/2) over the five-year period and receive par value after 10 periods. Then, the value of this semi-annual coupon paying bond is 107,1888, so the correct answer is E.
11.Soru
Which of the followings arises on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts?
Which of the followings arises on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts?
Administrative Cost |
Capital Cost |
Delinquency Cost |
Default Cost |
Shortage Cost |
Delinquency Cost: This type of cost arises on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts.
12.Soru
I. Transaction motive
II. Precautionary motive
III. Austerity motive
Which of these can be motivations of holding cash for companies?
I only |
II only |
I and II only |
II and III only |
I, II and III |
Only two of them can be motivations of holding cash which are transaction and precautionary motives.
13.Soru
According to Standard & Poors, which of the following ratings indicates the bonds with the lowest default risk?
AAA |
BBB |
CCC |
CC |
D |
According to Standard & Poors, AAA rated bonds are the safest, have lowest default risk whereas those that are rated BB or lower are expected to have high default risk and considered as junk bond. Junk bonds are required to provide very high yield in order to attract investors to invest in these bonds. Therefore, the correct option is A.
14.Soru
Which type of cost arises on account in relation with the delay in payment of
receivables by the customer when they fall due and become doubtful debts?
Default cost |
Capital cost |
Delinquency cost |
Credit investigation and supervision cost |
Collection cost |
Delinquency Cost: This type of cost arises on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts. Some sanctions can be applied such as blocking of company’s funds for a period of time until the payment is realized, costs associated with the collection of overheads and legal expenses.
15.Soru
Which of the following can be considered as an unsystematic risk?
Infliation |
Decleration of international trading bans |
Currency slumps |
Stock Exchange System Fails |
Idiosyncratic risks of the companies |
Examples of economy wide systematic risks are things like changes in inflation, exchange rates, declaration of wars, etc. On the other hand, company or security specific (idiosyncratic) risks are referred to as unsystematic risks.
16.Soru
Which of the following is expected to yield more based on the historical data for the U.S. Economy over the period of 1926-2017?
U.S. Small Stocks |
U.S. Large Stocks |
U.S. Long Term Corporate Bonds |
U.S. Long Term Government Bonds |
U.S. Treasury Bills |
The average returns (U.S. 1926-2017)
U.S. Small Stocks 16.5%
U.S. Large Stocks 12.1%
U.S. Long Term Corporate Bonds 6.3%
U.S. Long Term Government Bonds 6.0%
U.S. Treasury Bills 3.4%
According to the data above, U.S. Small Stocks are expected to yield more.
17.Soru
"Assuming that you bought 1 share of stock at an initial price of T200, at the end of the year the dividend paid is T30, and market price is T220" What would your total TL be at the end of the year?
50 |
150 |
200 |
420 |
130 |
Total investment C0 = 200 x 1= T200
Capital gain (220 − 200) x 1= T20
Dividend T30
20+30:50
18.Soru
- Price-earnings (P/E) ratio
- Market value-to-book value (MV/BV) ratio
- Price-to-sales ratio
- Price-to-cash flows ratio
- PEG, defined as the P/E ratio divided by the growth rate of earnings
Which of the above are the common ratios used as comparables in the context of valuation by comparables?
I and II |
I, III and IV |
II, III and IV |
I, III, IV and V |
I, II, III, IV and V |
Compared to bonds, there are uncertainties about cash flows of stocks and several assumptions have to be made. It can be assumed that the stocks of similar companies should be priced in a similar way because investors are prepared to pay similar price for each lira of assets or earnings. It is called valuation by comparables. The common ratios used as comparables are price-earnings (P/E) ratio, market value-to-book value (MV/BV) ratio, price-to-sales ratio, price-to-cash flows ratio and PEG, defined as the P/E ratio divided by the growth rate of earnings.
As also understood from the information given, all of the ratios given in the options are the common ratios used as comparables in the context of valuation by comparables, so the correct answer is E.
19.Soru
______________is/are realized by the sale of goods. In certain businesses, sales are made quickly and in order to materialize the final product the inventories of raw materials are used quickly so new purchases have to be made.
Turnover of the goods |
Terms of credit |
Price level change |
Short term financial options |
Seasonality of product demand |
Turnover of working capital: Turnover of the working capital is realized by the sale of goods. In certain businesses, sales are made quickly and in order to materialize the final product the inventories of raw materials are used quickly so new purchases have to be made. In this manner, a small amount of money invested in stocks will result in sales of much larger amount.
20.Soru
I-The larger the amount of inventories, the more the working capital requirement is
II-Larger working capital will be required in labor intensive industries than in the highly mechanized ones
III-The larger the amount of inventories, the more the working capital requirement is
IV-There exists a strong negative relationship between the size of the company and the working capital needs
Which of the statements above are true?
I, II and IV |
II, III and IV |
I, II and III |
I,III and IV |
II and III |
The relationship between the size of the company and the working capital needs is strongly positive, not negative. Thus only IV is false, all other statemens are true.
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