Busıness Fınance I Final 5. Deneme Sınavı
Toplam 20 Soru1.Soru
[(1+ nominal interestrate)/(1+ Inflation rate)] -1
What will the equation give us?
Nominal interest rates |
Yield curve |
Return rate |
Risk rate |
Real interest rate |
Real interest rate=[(1+ nominal interestrate)/(1+ Inflation rate)] -1
2.Soru
Which of the following is true about Transaction Motive ?
Holding cash or near cash to meet routine cash requirements of a company to finance transactions in the normal course of business. |
Holding cash or near cash as a cushion to meet unexpected contingencies such as flood, strikes. |
The situations in which there occurs extra ordinary opportunities for the companies to quickly take advantage. |
In order to be able to utilize the cash discount provided by a supplier, certain amount of cash can be made available as a strategy. |
The length of time it takes the inventories are sold and the proceedings are collected in cash from customers. |
The companies hold cash by different types of motivations: - Transaction Motive explains holding cash or near cash to meet routine cash requirements of a company to finance transactions in the normal course of business such as purchasing raw materials, paying expenses, taxes, dividends etc. - Precautionary Motive explains holding cash or near cash as a cushion to meet unexpected contingencies such as flood, strikes etc. - Speculative motive explains the situations in which there occurs extra ordinary opportunities for the companies to quickly take advantage. For example, in order to be able to utilize the cash discount provided by a supplier, certain amount of cash can be made available as a strategy
3.Soru
I. It is also named as matching policy.
II. The fixed and permanent current assets are financed through long-term sources.
III. It aims to minimize the risks associated with the financing of the current assets.
Which of the statements above are true about Hedging Policy?
Only I |
I, II and III |
I and III |
I and II |
II and III |
As the name implies, conservative policy aims to minimize the risks associated with the financing of the current assets.Hedging policy, which is also named as matching policy, proposes a strategy by which the fluctuating part of the current assets are financed by the current liabilities. Consequently, the fixed and permanent current assets are financed through long-term sources.The correct answer is D.
4.Soru
- Expected return of a portfolio is simply the weighted average of the returns of securities
- The variance of a portfolio is a function of the individual security return variances
- The variance of a portfolio is a function of the covariance
between them - There is a positive relationship with both
the variances and covariance - Similar to the calculation of standard deviation of a single security, the square root of the variance would be the standard deviation of the portfolio
between them
the variances and covariance
How many of the above statements are true?
1 |
2 |
3 |
4 |
5 |
All statements are true.
5.Soru
Suppose that you are planning to invest in a stock that will pay $8 as dividend and its price will be $250 next year. Assume that this stock is correctly priced in the market and its market price is $245. What is the expected rate of return?
%5.3 |
%4.6 |
%3.5 |
%6.4 |
%5 |
r = (Div1 + P1 - P0)/D0
r= 8+ (250-245) /245 =0.053 = %5.3
6.Soru
Even though coupon interest rates are fixed, bond values still fluctuate with the changes in market
interest rates. Which one of the following is the main reason for this?
calculation errors |
fluctuations on the interest rate in the market |
market failures |
transaction fees |
intermediation commissions |
Even though coupon interest rates are fixed, bond values still fluctuate with the changes in market
interest rates. Bonds exhibit interest rate risk, which is the risk that the return from the bond will change according to changes in the interest rates.
7.Soru
Historically, which of the following investments has provided the smallest average return?
Treasury bills |
Treasury bonds |
Corporate bonds |
Small company stocks |
Large company stocks |
In another study covering a more recent period, the Ibbotson SBBI 2018 study examines the U.S. Market for 1926-2017. They show that $1 invested continuously for 91 years would have grown to $7.353 if invested in stocks of large companies, or even better, $36.929 if invested in stocks of small companies. Over the same period, funds invested in long term government bonds grew to a modest $143 and treasury bills ($21) barely beat out inflation ($14). We can also see from the figure that the higher returns of stocks comes together with significantly higher variability in the returns that can be observed by the larger, sharp movements in the lines.
8.Soru
1. The risk-free return is the return on securities that always yield their expected returns, regardless of the economic environment
2. The risk free return is usually approximated with the returns from very short-term government securities
3. The risk-free asset has variability in zero variance and zero correlation and covariance with any asset
4. The Capital Market Line (CML) is the line that connects the risk-free asset with the
risk free rate
Which of the above statements are turue?
1 and 2 |
1 and 3 |
2 and 3 |
3 and 4 |
1 and 4 |
The risk-free asset has no variability or risk resulting in zero variance and zero correlation and covariance with any asset.
The Capital Market Line (CML) is the line that connects the risk-free asset with the
market portfolio, where the line is just tangent to the efficient frontier on an expected return/standard deviation graph.
9.Soru
"Higher activity level, larger amount of production, inventory, sales, ending up with higher amounts of raw materials and suppliers credits." is about ____________which is one of the factors affecting the level of working capital.
Nature of business |
Inventory level for raw materials |
Volume of business |
Length of period of manufacture |
Use of manuel labor |
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.
10.Soru
- Coupon payments are the periodic payments received by bondholders until the bond matures.
- The annual coupon payment is equal to the coupon rate times the par value of the bond.
- Some bonds pay their coupons in more than one payment per year, such as semi-annually or quarterly.
- The coupon rate and maturity date are specified in bond’s indenture.
- The indenture is a contract between issuer and bondholder specifying the characteristics of the bond.
Which of the statements above about bonds are correct?
I and II |
I and V |
I, II and III |
I, II, III and V |
II, III, IV and V |
Bonds obligate the issuer to make specified payments to the bondholder on specified dates over a specified time period (maturity). These specified payments are in the form of coupon payments and par value. Par value (also called face value or nominal value) indicates how much the issuer will repay to the bondholder at maturity. Par value of Turkish bonds in general is 100 whereas US bonds typically have a par value of $1.000. The coupon rate of a bond determines the coupon (interest) payments. Coupon payments are the periodic payments received by bondholders until the bond matures. The annual coupon payment is equal to the coupon rate times the par value of the bond. Some bonds pay their coupons in more than one payment per year, such as semi-annually or quarterly. The coupon rate, maturity date and par value of the bond are specified in bond’s indenture. The indenture is a contract between issuer and bondholder specifying the characteristics of the bond.
As also understood from the information given, the statements in the options I, II, III and V are correct, so the correct answer is D. The statement in the option IV is not correct because of the fact that the coupon rate, maturity date and par value of the bond are specified in bond’s indenture.
11.Soru
Which of the following is one of the liabilities in working capital?
sundry creditor |
sundry debtors |
prepaid expenses |
cash in hand |
cash in banks |
12.Soru
Which of the following is not amongst the data set of financial planning?
Short and long term profit target |
Divisional financial report |
Internal control report |
Labor productivity report |
Worst Case Scenario |
the following operational and financial data is required for the financial planning process:
• Short and long term profit targets,
• Divisional financial reports,
• Transactions creating cash flow for the divisions and the company,
• Divisional proforma and realized budgets,
• Cost accounting data on product basis,
• Special financial analysis in relation with profitability by product, logistics costs and other expenditure,
• Analysis of security portfolio and subsidiaries,
• Labor productivity reports,
• Internal control reports
13.Soru
In vertical (or common size analysis), the items in the financial statements are expressed as a percentage of total .......(1)or .......(2). Which are the terms (1) and (2) completing the sentence?
Assets-Sales |
Assets-Liabilities |
Liabilities-Equity |
Net Income-Equity |
Current Assets_Current Liabilities |
Either sales or total assets are used as a denominator in vertical analysis.
14.Soru
Which of the following statements about Beta is wrong?
If Beta>1, the security has above average risk and returns are expected to be more extreme and in the same direction as the market |
If Beta=1, the security has average risk and returns are expected to be similar to the market |
If 1>Beta>0, the security has above average risk and returns are expected to be more extreme and in the same direction as the market |
If Beta=0, the security has below average risk |
If Beta<0, security has very low risk and returns are expected to move in opposite direction with the market |
If 1> Beta >0, then the security has below average risk and returns are expected to be more less extreme and in the same direction as the market.
15.Soru
Which of the followings is a method used for cash budget preparation?
Combined method |
Regression method |
Special purpose method |
Managerial assessment method |
Adjusted net profit method |
There are two main methods for preparation of cash budgets:
- Direct estimation of cash inflows and outflows
- Adjusted net profit method
The other methods mentioned in other options are for sales forecasting
16.Soru
I. There exist three time horizons.
II.. Short term is specified as maximum 12 months.
III. One of the first tasks is to determine total investment amount by bringing together all the approved projects of the individual divisions.
Which one/ones above is/are correct about the dimensions of financial planning?
Only I |
I-II |
I-III |
II-III |
I-II-III |
The first dimension of financial planning is the time horizon. There exist two time horizons.
17.Soru
I. Transaction cost
II. Cash holding cost
III. Total cash required
Which of these can be a component of Baumol's optimum cash balance formula?
I only |
II only |
I and III only |
II and III only |
I, II and III |
In the formulation all of them are used.
18.Soru
Suppose you can save ₺1,500 each month for the next 10 years in a retirement found. What would be the ending amount when you retire if the interest rate is 12%?
₺314,251 |
₺325,247 |
₺336,923 |
₺345,058 |
359,206 |
FV annuity=1500*(1+0.01)^120/0.01=345,058
19.Soru
In an efficient market, prices .... reflect .... available information.
Which of the word pairs below does correctly fill the blanks in the sentence given above?
semi - some |
partly - all |
fully - some |
does not - all |
fully - all |
In an efficient market, prices fully reflect all available information. Therefore the correct answer is E.
20.Soru
Which of the following is the term for the stocks of the companies that are using their profits and cash flows to support its investments, and as a result do not have resources to pay dividends.
Income Stocks |
Penny Stocks |
Blue-Chip Stocks |
Growth Stocks |
Preferred Stocks |
The stocks that pay no or very low dividends and still have prices that increase are called growth stocks. Rapidly growing companies require a lot of investments, growth stock companies usually are using their profits and cash flows to support these investments and as a result do not have resources to pay dividends. Therefore, the correct answer is C, Growth Stocks.
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