ACC501 Subjective MCQ's

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Question No: 10 ( Marks: 1 ) - Please choose one

____________ is a kind of bond that allows the holder to force the issuer to buy the bond back at a

stated price.

.

Convertible bond

.

Floating rate bond

.

Income bond

. Put bond

Question No: 11 ( Marks: 1 )

A _____________ is responsible for managing cash and raising finances for the business.

Question No: 12 ( Marks: 1 )

Current ratio and quick ratio of a firm will be equal if its current assets do not contain

___________________.

Question No: 13 ( Marks: 1 )

Coupon rate has a floor and a ceiling. These upper and lower rates are also called

________________.

Question No: 14 ( Marks: 1 )

______________ is that part of the indenture or loan agreement that limits certain actions which a

company might wish to take during the term of the loan.

Question No: 15 ( Marks: 1 )

The relationship between the real and nominal returns is described by the ____________.

Question No: 16 ( Marks: 3 )

Discuss the significance of financial statements.

Question No: 17 ( Marks: 3 )

What is underwriting contract? Discuss in detail.

Question No: 18 ( Marks: 3 )

How much an investor has to invest a lump sum amount in order to have Rs.3 million in 20 years

from now if the rate of interest is 16 % compounded quarterly?

Question No: 19 ( Marks: 3 )

Draw a time line for the annuity due of Rs.900 for 6 years. Also, describe the relationship between

an ordinary annuity and annuity due with the help of equation.

Question No: 20 ( Marks: 3 )

Mr. Martin is considering the purchase of land for Rs.650, 000, which may be sold for Rs.850, 000

in 7 years. If the discount rate is 16% compounded quarterly, will this be a good investment?

Question No: 21 ( Marks: 10 )

Mr. Imran has Rs.150, 000 in cash that he can deposit in any of four savings accounts in four

different banks for a 7 year period. Bank A compounds interest on an annual basis; Bank B

compounds interest twice each year; Bank C compounds interest each quarter and Bank D

compounds interest on daily basis. All four banks have a stated annual interest rate of 12%.

Required:

a. What amount would Mr. Imran have at the end of 7th year in each bank?

b. What effective annual interest rate would he earn in each of the four banks?

c. On the basis of your findings in a and b, which bank should Mr. Imran deal with? and

Why?

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