Busıness Fınance I (ENG) - Tüm Sorular
Ünite 1
Soru 1
Which of the following is not true for a company?
Seçenekler
A
Companies are isolated entities.
B
Companies mostly interact with their stakeholders.
C
The environment of a company contains institutional elements.
D
For the owners, the company is a venture.
E
Main stakeholders are owners, employees, suppliers, customers, and the community.
Açıklama:
Companies are not isolated entities.
Soru 2
- Owners
- Employees
- Lenders
- Customers
Seçenekler
A
I and II
B
I, II and III
C
II, III and IV
D
III and IV
E
I, II, III and IV
Açıklama:
Main stakeholders are owners, employees, suppliers, lenders, customers, and the community.
Soru 3
Which of the following stakeholder groups describe the company as a venture, with opportunities, threats, and responsibilities?
Seçenekler
A
Owners
B
Employees
C
Customers
D
Suppliers
E
Community
Açıklama:
For the owners, the company is a venture, with opportunities, threats, and responsibilities. For customers, the company is a supplier. For suppliers, it is a customer. For lenders, it is a way for their money to earn money. For employees it is primarily a workplace - a place they depend on for their livelihood, for fellowship and for a certain quality of life. For the community the company is an entity that enables it to provide security and service to all of its members.
Soru 4
Which of the following is not true for a financial company?
Seçenekler
A
It's main business activity is in financial areas.
B
A pension fund is a financial company.
C
It may serve as a financial intermediary.
D
It can act as a middleman between borrowers and lenders.
E
Machinery manufacturers are financial institutions.
Açıklama:
Machinery manufacturers are non-financial companies.A non-financial company may serve as a borrower and/or as a lender in a financial system.
Soru 5
........... is a kind of negotiable paper, showing claims on future cash flows of the issuer of the security.
Seçenekler
A
Security
B
Pension fund
C
Liability
D
Opportunity cost
E
Interest rate
Açıklama:
Security is a kind of negotiable paper, showing claims on future cash flows of the issuer of the security.
Soru 6
............. tells how much effort is required in order to produce goods and services.
Seçenekler
A
Production value
B
Customer value
C
Profit
D
Net income
E
Liquidity
Açıklama:
Production value tells how much effort is required in order to produce goods and services.
Soru 7
- Management of delivering of financial reports
- Management of standardizing journal entries
- Analysis of financial data
- Monitoring budgeting
Seçenekler
A
I and II
B
II, III and IV
C
I, II and IV
D
III and IV
E
I, II, III and IV
Açıklama:
Some examples are management of delivering of financial reports, management of standardizing journal entries, analysis of financial data, driving financial plans, monitoring budgeting, management of cash flows, developing department goals matching long-term company targets, valuation of investments, portfolio management, management of spending procedures, monitoring financial feasibility studies.
Soru 8
Which of the following is an example of an intangible asset?
Seçenekler
A
Bonds
B
Derivatives
C
Equipment
D
Plants
E
Patents
Açıklama:
Intangible asset is an identifiable non-monetary asset without physical substance. Examples of intangible assets include computer software, licences, trademarks, patents, films, copyrights and goodwill.
Soru 9
Which of the following refers to a situation where shareholders are liable for all of company debts with all of the company assets and their personal assets.
Seçenekler
A
Unlimited liability
B
Limited liability
C
Corporation
D
Joint stock company
E
Cooperative company
Açıklama:
Unlimited liability refers to a situation where shareholders are liable for all of company debts with all of the company assets and their personal assets.
Soru 10
Which of the following is not true for a joint stock company?
Seçenekler
A
It may be founded for all kinds of economic purposes and subjects.
B
The number of shareholders may be one to unlimited.
C
Shares may go public under the regulations of Capital Markets Board.
D
Right of management and power of attorney are on the board of directors.
E
Turkish Commercial Code has accepted only basic capital system for all Joint Stock Companies.
Açıklama:
Turkish Commercial Code has accepted two capital systems for all Joint Stock Companies: (1) basic capital and (2) registered capital.
Soru 11
Which of the following is NOT one of the financial decisions that people make in their daily lives?
Seçenekler
A
To lease or to buy a car?
B
How much to spend on down payment for a house?
C
Which bank to have a credit card?
D
Which products to buy?
E
Which major to choose at the university?
Açıklama:
In a modern economy, everyone probably experiences financial decision-making on a daily basis. The frequency and number of financial transactions and complexity of decisions of course may change from person to person. Regardless of financial knowledge and expertise level, we try to decide for example on which products to buy, whether to lease or to buy a car, from which bank to have a credit card, or how much to spend on down payment for a house and how much loan to borrow and for how long.
In our daily lives people try to decide on which products to buy, whether to lease or to buy a car, from which bank to have a credit card, or how much to spend on down payment for a house and how much loan to borrow and for how long. Which major to choose at the university is not a finacial decision, so E is the correct answer.
In our daily lives people try to decide on which products to buy, whether to lease or to buy a car, from which bank to have a credit card, or how much to spend on down payment for a house and how much loan to borrow and for how long. Which major to choose at the university is not a finacial decision, so E is the correct answer.
Soru 12
Which of the following is the best option to complete the sentence below?
Institutional elements, economic system, business system, financial system are the elements that ............... contains.
Institutional elements, economic system, business system, financial system are the elements that ............... contains.
Seçenekler
A
financial decision-making
B
a larger sized enterprise
C
an annual turnover
D
an environment of a company
E
a modern economy
Açıklama:
Companies are not isolated entities. They mostly interact with their stakeholders, as well as they are integrated into a society at various points. The environment of a company contains a number of different elements, such as institutional elements, economic system, business system, financial system, etc., interacting with, and being nested in each other.
Institutional elements, economic system, business system, financial system are the elements that an environment of a company contains. Other options are not related, therefore D is the correct answer.
Institutional elements, economic system, business system, financial system are the elements that an environment of a company contains. Other options are not related, therefore D is the correct answer.
Soru 13
Which of the following are the main stakeholders of a company?
Seçenekler
A
Owners - Employees - General managers
B
Employees - Suppliers - CEO
C
Lenders - Customers - Owners
D
Lenders - Employees - Financial system
E
Suppliers - Competitors - Borrowers
Açıklama:
Members of these elements are called as interest groups, or stakeholders. Main stakeholders are owners, employees, suppliers, lenders, customers, and the community. Competitors, government, and some other members may be added to the list.
Main stakeholders are owners, employees, suppliers, lenders, customers, the community, competitors and the government. Illegal entities, CEO, General managers, Borrowers are not related to the question, so C is the correct answer.
Main stakeholders are owners, employees, suppliers, lenders, customers, the community, competitors and the government. Illegal entities, CEO, General managers, Borrowers are not related to the question, so C is the correct answer.
Soru 14
Which of the following is the best option to complete the sentence below?
............... can be described as a company with a main business activity in financial areas.
............... can be described as a company with a main business activity in financial areas.
Seçenekler
A
A financial company
B
Financial intermediary
C
A non-financial company
D
Securitydeposit
E
Interest rate
Açıklama:
A financial company can be described as a company with a main business activity in financial areas.
A financial company is a company with a main business activity in financial areas. Therefore A is the correct answer.
A financial company is a company with a main business activity in financial areas. Therefore A is the correct answer.
Soru 15
Which of the following is the best option to complete the sentence below?
Ultimate borrowers, ultimate lenders, financial intermediaries, financial instruments, and legal and administrative rules are ............... .
Ultimate borrowers, ultimate lenders, financial intermediaries, financial instruments, and legal and administrative rules are ............... .
Seçenekler
A
five crucial financial intermediaries
B
five factors for the cycle of money
C
five ways to give security deposit
D
five important issues about interest rate
E
five core components of a financial system
Açıklama:
Five core components of a financial system are ultimate borrowers, ultimate lenders, financial intermediaries, financial instruments, and legal and administrative rules.
Ultimate borrowers, ultimate lenders, financial intermediaries, financial instruments, and legal and administrative rules are five core components of a financial system, therefore the correct answer is E.
Ultimate borrowers, ultimate lenders, financial intermediaries, financial instruments, and legal and administrative rules are five core components of a financial system, therefore the correct answer is E.
Soru 16
Which of the following is the best option to complete the sentence below?
...............is an institution in a financial system that acts as a middleman between borrowers and lenders.
...............is an institution in a financial system that acts as a middleman between borrowers and lenders.
Seçenekler
A
Financial intermediary
B
Financial system
C
Financial company
D
Non-financial company
E
Financial institution
Açıklama:
Financial intermediary is an institution in a financial system that acts as a middleman between borrowers and lenders. A is the correct answer. Other options are not related to the definition.
Soru 17
What is the term for 'the movement of money from lenders to borrowers, and back from borrowers to lenders' in a financial system?
Seçenekler
A
Economic growth
B
Global funding
C
Cycle of money
D
Interest rate
E
Financial management
Açıklama:
Money in a financial system simultaneously flows in many various directions. The movement of money from lenders to borrowers, and back from borrowers (users of funds) to lenders (savers of funds) in a financial system is called the cycle of money.
The cycle of money in a financial system means the simultaneously flow in many various directions. The movement of money from lenders to borrowers, and back from borrowers (users of funds) to lenders (savers of funds) in a financial system. Therefore the correct answer is C.
The cycle of money in a financial system means the simultaneously flow in many various directions. The movement of money from lenders to borrowers, and back from borrowers (users of funds) to lenders (savers of funds) in a financial system. Therefore the correct answer is C.
Soru 18
Which of the following is the best option to complete the sentence below?
...............tells how much effort is required in order to produce goods and services.
...............tells how much effort is required in order to produce goods and services.
Seçenekler
A
Net income
B
Interest rate
C
Funding value
D
Production value
E
Customer value
Açıklama:
Production value tells how much effort is required in order to produce goods and services.
The amount of effort required in order to produce goods and services could be described as production value. Therefore the correct answer is D.
The amount of effort required in order to produce goods and services could be described as production value. Therefore the correct answer is D.
Soru 19
Which of the following is the best option to complete the sentence below?
............... is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues.
............... is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues.
Seçenekler
A
Financial manager
B
Global finance
C
Net income
D
Customer value
E
Financial performance
Açıklama:
Financial performance is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firm’s overall financial health over a given period of time, and can be used to compare similar firms across the same industry or to compare industries or sectors in aggregation.
The subjective measure of how well a firm can use assets from its primary mode of business and generate revenues is called a financial performance. Therefore E is the correct answer and other options are not related with the definition.
The subjective measure of how well a firm can use assets from its primary mode of business and generate revenues is called a financial performance. Therefore E is the correct answer and other options are not related with the definition.
Soru 20
Which of the following is the best option to complete the sentence below?
............... covers subjects related to decision-makings of company managers, trying to maximise shareholder wealth at given external circumstances at local, regional, international, and global levels of geographical dispersion.
............... covers subjects related to decision-makings of company managers, trying to maximise shareholder wealth at given external circumstances at local, regional, international, and global levels of geographical dispersion.
Seçenekler
A
Business financial management
B
Free cash flow
C
Cash flows statement
D
Corporate governance
E
Financial decision-making
Açıklama:
Business financial management covers subjects related to decision-makings of company managers, trying to maximize shareholder wealth at given external circumstances at local, regional, international, and global levels of geographical dispersion.
Business financial management covers subjects related to decision-makings of company managers, trying to maximise shareholder wealth at given external circumstances at local, regional, international, and global levels of geographical dispersion. Therefore the correct answer is A. Other options are not related.
Business financial management covers subjects related to decision-makings of company managers, trying to maximise shareholder wealth at given external circumstances at local, regional, international, and global levels of geographical dispersion. Therefore the correct answer is A. Other options are not related.
Soru 21
If the book value of a company is TL 800,000 and the book value of its liabilities is 500,000, what is the shareholder value of the company?
Seçenekler
A
TL 1,300,000
B
TL 300,000
C
TL 500,000
D
TL 250,000
E
TL 400,000
Açıklama:
The shareholder value is the difference between the book value of the company and the book value of its liabilities. Hence the shareholder value of the company is TL 800,000-TL 500,000=TL 300,000
Soru 22
Managers may prefer greater levels of consumption and less intensive work, which conflicts with the interests of the saheholders. What type of agency costs does this agency problem generate?
Seçenekler
A
Equity agency costs
B
Horizontal agency costs
C
Vertical agency costs
D
Agency costs of debt
E
Agency costs of governance
Açıklama:
Vertical equity agency costs stem from owners delegating managers (agents) to maximize their benefits in return of a financial return (compensation). Agency theory assumes
this relationship does not work properly because personal interests of managers sometimes do not allign with interests of shareholders.
this relationship does not work properly because personal interests of managers sometimes do not allign with interests of shareholders.
Soru 23
People prefer to receive the same sum amount of money today rather than some time in the future based on the following facts EXCEPT FOR......
Seçenekler
A
They can reinvest the money they receive today to have more money in the future.
B
Money received today can earn interest.
C
There is uncertainty about receiving the money in the future.
D
They can buy more goods and services with that money in the future.
E
The purchasing power of people may decline due to inflation.
Açıklama:
Due to inflation, they cannot buy more goods and services with the same amount of money in the future.
Soru 24
Which of the following statements about risk and return is FALSE?
Seçenekler
A
Most people love risk
B
Most people prefer to maximize the risk of their investments
C
The greater the perceived risk, the smaller the return required by the investors
D
Risk is the likelihood that we will realize a return below or above the return we expect
E
Risks arise because of uncertainty
Açıklama:
The greater the perceived risk, the greaster the return required by the investors, since people need to be compensated for the additional risks they undertake.
Soru 25
The corporate governance approach of the Turkish Commercial Code is based on four pillars that have universal characteristics within the context of corporate governance. Which of the following choices presents those pillars correctly?
Seçenekler
A
full transparency, fairness, accountability, responsibility
B
survival, profitability, stakeholder approach, shareholder rights
C
audit, minority shareholders, agency problems, agency costs
D
business ownership, risk management, corporate policy, shareholder wealth
E
freedom, equality, shareholder rights, corporate strategy
Açıklama:
full transparency, fairness, accountability, responsibility
The corporate governance approach of the Turkish Commercial Code is based on four pillars that have universal characteristics within the context of corporate governance. Those pillars are
The corporate governance approach of the Turkish Commercial Code is based on four pillars that have universal characteristics within the context of corporate governance. Those pillars are
Soru 26
Which of the following choices is an example of a finance-related unethical behavior which causes the reputation of the company to detoriate?
Seçenekler
A
Selling unhealthy products
B
Forcing employees to work in unsafe conditions
C
Conteminating the environment
D
Spreading false information about competitors
E
Providing false information to investors such as overstated profits
Açıklama:
Providing false information to investors such as overstated profits is an example of a finance-related unethical behavior, which causes the reputation of the company to detoriate.
Soru 27
The shareholder value based on the value of expected future cash flows adjusted for time and risk is defined as the ............... , which is in fact the present value of the future
cash flows that the company expects to generate.
cash flows that the company expects to generate.
Seçenekler
A
Market value
B
Book value
C
Intrinsic value
D
Liquidation value
E
Market capitilization
Açıklama:
The shareholder value based on the value of expected future cash flows adjusted for time and risk is defined as the INTRINSIC VALUE , which is in fact the present value of the future cash flows that the company expects to generate.
Soru 28
Suppose the current assets of a company are TL 250,000, while its fixed assets are TL 450,000. If the total liabilities of the company are 500,000, how much is the owners' equity?
Seçenekler
A
TL 100,000
B
TL 150,000
C
TL 200,000
D
TL 250,000
E
TL 300,000
Açıklama:
Total assets are TL 700,000 (TL 250,000+TL 450,000) as we add current assests and fixed assets. Since total assets equal total liabilites and owners' equity, we subtract total lianbilities from total assets to calculate owners' equity, which is TL 200,000 (TL 700,000-TL 500,000)
Soru 29
What is the main objective of corporations?
Seçenekler
A
To survive
B
To grow
C
To make profits
D
To expand internationally
E
To maximize the wealth of the shareholders
Açıklama:
Corporations are founded for a reason, which is called as “main objective” in business academic jargon. Owners’ (shareholders’) main motive for taking all risks and starting up a business is assumed to beincreasing their wealth as much as possible, in technical words, maximizing wealth.
Soru 30
Which of the following is not one of the core components of a financial system?
Seçenekler
A
Inflation
B
Ultimate borrowers
C
Ultimate lenders
D
Financial instruments
E
Administrative rules
Açıklama:
Financial system is one of the most influential external elements in the environment companies operate in. A financial system consists of five core components. They are borrowers, lenders, financial intermediaries, financial instruments, and legal and administrative rules.
Soru 31
Which of the below act as a middleman between borrowers and lenders?
Seçenekler
A
Ultimate borrowers
B
Ultimate lenders
C
Financial instruments
D
Financial intermediaries
E
Legal rules
Açıklama:
Financial intermediary is an institution in a financial system that acts as a middleman between borrowers and lenders.
Soru 32
Which of the following tells how much effort is required to produce goods and services?
Seçenekler
A
Liquidity
B
Production value
C
Net income
D
Customer value
E
Profit
Açıklama:
Production value tells how much effort is required in order to produce goods and services. For example, if a company spends 100TL for raw materials and spends extra 80TL for labor in order to produce a product, then the production value is 180TL.
Soru 33
Which of the following is false about financial managers?
Seçenekler
A
They are the decision-makers in companies.
B
They make a cost benefit analysis when making decisions.
C
They are assumed to behave in rational manner.
D
They are the owners of a company's shares.
E
They have treasury and control tasks .
Açıklama:
Financial managers are decision-makers in companies, serving to the best interest of companies that they are working for. Best interest of companies means best interest of company owners, who are called as shareholders. The degree to which best interest of shareholders are satisfied is usually reflected in outcomes of managers' decisions.
Soru 34
Computer software, licenses, trademarks, patents and copyrights are the examples of ________.
Seçenekler
A
capital budget
B
tangible assets
C
intangible assets
D
debt financing
E
capex
Açıklama:
Assets are items of value owned by a company. A real asset is a physical asset whose value is coming from its substance and properties, while financial assets are non-physical assets whose value comes contractual claim. Bonds, stocks, derivatives etc. Tangible asset is an asset with a physical substance. Examples include cash, equipment, and plants. Intangible asset is an identifiable non-monetary asset without physical substance. Examples of intangible assets include computer software, licenses, trademarks, patents, films, copyrights and goodwill.
Soru 35
Which one defines the distribution of parts of the profit of a company to its shareholders?
Seçenekler
A
Capital budget
B
Primary market
C
Financial structure
D
Share
E
Dividend
Açıklama:
Financial managers should decide on how much of their profits to pay out to shareholders in the form of dividends, and how much to retain to finance company’s future investments and growth. It is a strategic decision involving a trade-off between the payment of dividends to shareholders and retention of earnings to finance investments. Dividend policy is the approach the company takes in determining how much and how dividend to pay out to shareholders.
Soru 36
Which of the following is not true about the key financial concepts?
Seçenekler
A
Cash refers to immediate spendable funds.
B
Fund is a short-term asset in forms of currencies and coins.
C
Fund is a short-term or long-term liability for a company.
D
Finance means money in very broad terms.
E
Cash equivalent is a-short term investment such as treasury bills.
Açıklama:
The term finance means money in very broad terms. Cash refers to immediate spendable funds such as currencies and coins. Cash equivalent is a short-term (less than three months) investment such as treasury bills. Cash and cash equivalents are the most convenient assets of a company, and they can be immediately used for current consumption. Although the term fund is sometimes used same with cash, it has a different meaning. Fund refers to money, which is preserved for a specific objective whether in the form of cash, credit, cheque, or other resources. The main difference between cash and fund is that cash is a short-term asset, whereas fund is a short-term or long-term liability for a company.
Soru 37
Which of the following is the likelihood of unanticipated changes having impact on profitability?
Seçenekler
A
Risk
B
Cash flow
C
Free cash flow
D
Balance sheet
E
Income statement
Açıklama:
In finance, risk refers to the likelihood that we will receive a return on an investment that is different from the return we expect to make. Thus, risk includes not only the bad outcomes (returns that are lower than expected “downside risk”), but also good outcomes (returns that are higher than expected “upside risk”). We consider both when measuring risk.
Soru 38
Which of the following includes the conflicts between shareholders and creditors?
Seçenekler
A
Horizontal equity agency costs
B
Corporate governance
C
Agency costs of debt
D
Equity agency costs
E
Vertical equity agency costs
Açıklama:
Agency costs of debt are arising from conflicts between shareholders and creditors. It increases with an increase in debt usage since shareholders benefit from the excess debt while creditors suffer. Shareholders benefit because debt often lead managers to work harder to protect their reputation, to prevent bankruptcy, and to protect their control on the company decisions. Creditors suffer because their risk level is increased with the excess debt.
Soru 39
- Accounting fraud
- Insider trading
- Overrated profits
- Understated costs
Seçenekler
A
Only I
B
Only III
C
II,III,IV
D
II,IV
E
I,II,III,IV
Açıklama:
Business ethics refers to a company’s attitude and conduct toward its employees, customers, community, and stockholders. Financial management, together with accounting, is one of the most relevant departments in corporations when it comes to business ethics. Financial information and financial transactions of corporations are expected to be in a non-misleading manner. Accounting fraud, holding back value relevant information, insider trading, overstated profits, understated costs, and conspiracies are examples of finance-related unethical behavior.
Soru 40
All of the followings are a component of financial system, except...
Seçenekler
A
Labor
B
Borrowers
C
Lenders
D
Financial instruments
E
Financial intermediaries
Açıklama:
Labor is not a component of financial system.
Soru 41
Which one of the following is a determinant factor in the cycle of money?
Seçenekler
A
Sales
B
Profits
C
Interest rate
D
GDP growth rate
E
All of above
Açıklama:
Interest rate is a determinant factor in the cycle of money because it serves as an revenue of return for lenders, and item of cost for borrowers. Decision makers base their calculations on the interest rate.
Soru 42
I. Treasury
II. Control
III. Marketing
Which of these can be seen as a task of a financial manager?
II. Control
III. Marketing
Which of these can be seen as a task of a financial manager?
Seçenekler
A
I only
B
II only
C
I and II only
D
II and III only
E
I, II and III
Açıklama:
A financial manager has two different tasks in business organizations: (1) treasury and (2) control.
Soru 43
I. Investing decisions
II. Financing decisions
III. Dividend decisions
Which of these can be seen a decision-making process a financial manager should make?
II. Financing decisions
III. Dividend decisions
Which of these can be seen a decision-making process a financial manager should make?
Seçenekler
A
I only
B
II only
C
I and II only
D
II and III only
E
I, II and III
Açıklama:
Financial decision-making includes three kinds of company decisions; investing, financing, and decisions about dividends with balancing benefits and costs for the good of company they are working at.
Soru 44
All of the followings are forms of business companies defined in Turkish Commercial Code, except...
Seçenekler
A
Sole proprietorship
B
Unlimited liability company
C
Limited liability company
D
Joint stock company
E
Cooperative company
Açıklama:
Five forms of business companies are defined in the code, which are (1) unlimited liability company, (2) special partnership (these two types of companies are considered as a proprietorship), (3) limited liability company, (4) joint stock company (these twotypes of companies are considered as a corporation), and (5) cooperative company.
Soru 45
A short-term investment such as treasury bills is called...
Seçenekler
A
Fund
B
Cash
C
Finance
D
Cash equivalent
E
Money
Açıklama:
Cash equivalent is a short-term (less than three months) investment such as treasury bills.
Soru 46
I. Reinvestment opportunities
II. Uncertainty of future
III. Effects of inflation
IV. Lack of money supply
Which of these explains why there is a concept of time value of money?
II. Uncertainty of future
III. Effects of inflation
IV. Lack of money supply
Which of these explains why there is a concept of time value of money?
Seçenekler
A
I and II only
B
I, II and III only
C
II, III and IV only
D
I, II and IV only
E
I, II, III and IV
Açıklama:
e concept of time value of money suggests that people prefer cash sooner than later. There are three explanations behind this way of thinking: (1) reinvestment opportunities, (2) uncertainty of future, and (3) effects of inflation.
Soru 47
The estimated value, which is calculated by present value of future cash ows that company expects to generate is...
Seçenekler
A
Book value
B
Intrinsic value
C
Shareholder value
D
Market value
E
Company value
Açıklama:
Intrinsic value is the estimated value, which is calculated by present value of future cash flows that company expects to generate.
Soru 48
A system of rules, practices and processes by which a company is managed defines...
Seçenekler
A
Agency theory
B
Agency cost of dept
C
Financial system
D
Corporate governance
E
Financial analysis
Açıklama:
Corporate governance can be defined as the system of rules, practices and processes by which a company is managed.
Soru 49
which of the followings refer to equity market's ability to observe a corporation's operations?
Seçenekler
A
Corporate governance
B
Agency problems
C
Business ethics
D
Corporate accountability
E
Corporate transparency
Açıklama:
Corporate transparency refers to equity market’s ability to observe a corporation’s operations.
Soru 50
Which institution in a financial system acts as a middleman between borrowers and lenders?
Seçenekler
A
Financial intermediary
B
Financial manager
C
Shareholder
D
Regulatory
E
Financial supervisor
Açıklama:
Financial intermediary is an institution that acts as a middleman between borrowers and lenders. Correct answer is A.
Soru 51
The process of making long-term decisions on investment projects is called what?
Seçenekler
A
Financial analysis
B
Capital budgeting
C
Corporate governance
D
Financial management
E
Financial structuring
Açıklama:
Process of making long-term decisions on fixed asset investments is called as capital budgeting. Capital budgeting concerns with the amount of, risk of, and timing of expected cash flows from a long-term investing opportunity. Decisions about capital budgeting include finding answers to problems such as which investment project to take, which alternative options to consider, etc.
Soru 52
Which of the following refers to money, which is preserved for a specific objective whether in the form of cash, credit, cheque, or other resources?
Seçenekler
A
Cash
B
Finance
C
Cash equivalent
D
Fund
E
Dividend
Açıklama:
Fund refers to money, which is preserved for a specific objective whether in the form of cash, credit, cheque, or other resources. D is the correct answer.
Soru 53
Which financial statement reports the success or failure of the company’s operations for a period of time by listing all information related to company’s income and costs during the period?
Seçenekler
A
Balance sheet
B
Dividend
C
Cash flow statement
D
Income statement
E
Liquidity statement
Açıklama:
Income statement reports the success or failure of the company’s operations for a period of time by listing all information related to company’s income and costs during the period. Income statement shows the amount of sales, all the costs incurred in making those sales and all the overhead costs incurred in running the operations of the company so it would be able to deliver on its promises to customers.
Soru 54
According to the Turkish Commercial Law, what is the minimum number of shareholder in order to establish a limited liability company?
Seçenekler
A
1
B
2
C
5
D
10
E
50
Açıklama:
Turkish Commercial Code allows the establishment of a singleshareholder Limited Liability Company. The number of shareholders ranges between one (single-shareholder) and 50.
Soru 55
What is the registered capital requirement for a Joint Stock Company according to Turkish Commercial Law?
Seçenekler
A
10.000
B
25.000
C
50.000
D
100.000
E
250.000
Açıklama:
The minimum capital requirement is 10.000 TL for a Limited Liability Company. The minimum capital requirement for a Joint Stock Company is 50.000 TL. If capital system of the company is registered capital, then the minimum registered capital requirement is 100.000 TL.
Soru 56
According to the accounting terms, the net increase in the owners' equity that results from company's operations is called what?
Seçenekler
A
Profit
B
Cash flow
C
Net income
D
Dividend
E
Cash equivalent
Açıklama:
We can find profit information at the bottom line of income statement of a company, as “net income”. In accounting terms, net income is the net increase in the owners’ equity that results from a company’s operations.
Soru 57
Which of the following does not take place in a balance sheet?
Seçenekler
A
Current assets
B
Owners' equity
C
Current liabilities
D
Fixed assets
E
Net income
Açıklama:
Net income can be found at the bottome of an income statement. That tells how much is period’s earnings after tax and interest expenses. That cannot be observed in a balance sheet.
Soru 58
.................. includes review to determine the current financial performance and condition of the business; an identification of any
particular financial problems, risks, constraints or limitations, and an assessment of financial strengths, weaknesses, opportunities, and threats.
Which of the following answers complete the sentence above correctly?
particular financial problems, risks, constraints or limitations, and an assessment of financial strengths, weaknesses, opportunities, and threats.
Which of the following answers complete the sentence above correctly?
Seçenekler
A
Financial planning
B
Financial control
C
Financial analysis
D
Financial decision-making
E
Financial monitoring
Açıklama:
Financial analysis includes review to determine the current financial performance and condition of the business; an identification of any particular financial problems, risks, constraints or limitations, and an assessment of financial strengths, weaknesses, opportunities, and threats.
Soru 59
What is the estimated value that is calculated by present value of future cash flows which the company expects to generate?
Seçenekler
A
Book value
B
Intrinsic value
C
Market value
D
Production value
E
Customer value
Açıklama:
Intrinsic value is the estimated value, which is calculated by present value of future cash flows that company expects to generate. If we base our understanding of shareholder value on intrinsic value, then the shareholder value would be value of expected future cash flows adjusted for time and risk.
Soru 60
What is the name of the institution in a financial system that acts as a middleman between borrowers and lenders?
Seçenekler
A
Liquidity
B
Financial intermediary
C
Security
D
Financial company
E
Non-financial company
Açıklama:
Financial intermediary is an institution in a financial system that acts as a middleman between borrowers and lenders.
Soru 61
What is the name of the kind of negotiable paper, showing claims on future cash flows of the issuer?
Seçenekler
A
Security
B
Opportunity cost
C
Production value
D
Customer value
E
Liquidity
Açıklama:
Security is a kind of negotiable paper, showing claims on future cash flows of the issuer of the security.
Soru 62
Which term refers to convenience of money?
Seçenekler
A
Production value
B
Customer value
C
Liquidity
D
Opportunity cost
E
Security
Açıklama:
Liquidity refers to convenience of money.
Soru 63
Which term tells how much a customer thinks a product is worth?
Seçenekler
A
Capital expenditures
B
Non-current (fixed) assets
C
Opportunity cost
D
Customer value
E
Production value
Açıklama:
Customer value tells how much a customer thinks a product is worth.
Soru 64
What is the name of the technique used in decision-making that takes into account the estimated costs to be incurred by a proposed decision and the estimated benefits likely to arise from it?
Seçenekler
A
Opportunity cost
B
Cost-benefit analysis
C
Current assets
D
Capital budgeting
E
Capital expenditures
Açıklama:
Cost-benefit analysis is a technique used in decision-making that takes into account the estimated costs to be incurred by a proposed decision and the estimated benefits likely to arise from it.
Soru 65
What is the name of the process of making long-term decisions on investment projects?
Seçenekler
A
Capital budgeting
B
Share
C
Current assets
D
Primary market
E
Capital expenditures
Açıklama:
Capital budgeting is a process of making long-term decisions on investment projects.
Soru 66
Which term refers to a company’s mixture of debt financing and equity financing maintained by the firm?
Seçenekler
A
Limited liability
B
Capital structure
C
Dividend
D
Primary market
E
Share
Açıklama:
Capital structure (financial structure) refers to a company’s mixture of debt financing and equity financing maintained by the firm.
Soru 67
What is the name of the security representing an ownership in a corporation, and representing a claim on part of the corporation’s assets and earnings?
Seçenekler
A
Share
B
Fund
C
Unlimited liability
D
Dividend
E
Primary market
Açıklama:
Share (stock) is a security representing an ownership in a corporation, and representing a claim on part of the corporation’s assets and earnings.
Soru 68
Which term refers to distribution of part of the profits of a company to its shareholders?
Seçenekler
A
Fund
B
Balance sheet
C
Primary market
D
Dividend
E
Share
Açıklama:
Dividend is the distribution of part of the profits of a company to its shareholders.
Ünite 2
Soru 1
Which of the following shows the items in the financial statements are expressed as a percentage of total assets or sales?
Seçenekler
A
Current ratio analysis
B
Vertical analysis
C
Horizontal analysis
D
Acid-test analysis
E
Debt-to-equity analysis
Açıklama:
In vertical (or common size analysis), the items in the financial statements are expressed as a percentage of total assets or sales. The main advantage of vertical analysis is that such an analysis is not much affected by price fluctuations and that it lets industry-wide comparisons.
Soru 2
Which of the following doesn't have to be known to measure quick ratio?
Seçenekler
A
Cash and cash equivalents
B
Trading securities
C
Accounts Receivable
D
Current Liabilities
E
Long-term liabilities
Açıklama:
QuickRatio= (Cash+CashEquiv.+TradingSec.+Accts.Rec.+NotesRec.) / Current Liabilities
Soru 3
A firm has fixed assets of $ 260.000, long-term debt of $ 180.000, shareholders’ equity of $ 200.000. The firm has total assets of $ 500.000.
What is the current ratio of the firm according to above informations?
What is the current ratio of the firm according to above informations?
Seçenekler
A
2,3
B
2
C
1,8
D
1,5
E
2,5
Açıklama:
Current Assets = Total Assets - Fixed Assets = $240.000
Current Liabilities = Total Assets - Long-term Debts - Shareholders' Equity = $120.000
Current Ratio= Current assets/Current liabilities = $240.000 / $120.000 = 2
Current Liabilities = Total Assets - Long-term Debts - Shareholders' Equity = $120.000
Current Ratio= Current assets/Current liabilities = $240.000 / $120.000 = 2
Soru 4
_ _ _ _ _ _ _ is defined as the difference between the current assets and current liabilities of the same period.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Working capital
B
Net working capital
C
Cash flow
D
Net income
E
Financing expense
Açıklama:
Net Working Capital is defined as the difference between the current assets and current liabilities of the same period.
Soru 5
Which measure is an evaluation of a company’s grow rate if its profitability and financial policies do not change?
Seçenekler
A
Operating cycle
B
Working capital
C
Net working capital
D
Sustainable growth rate
E
Net income
Açıklama:
Analysts often use the concept of sustainable growth as a way to evaluate a firm’s future growth rate. Sustainable growth rate refers to the rate at which a firm can grow if its profitability and financial policies do not change.
Soru 6
_ _ _ _ _ _ _ is very important for shareholders or potential investors, because it gives the number of times EPS that investors are willing to pay for one share of stock.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Price to Book Ratio
B
Price Earnings Ratio
C
Dividend Payout
D
Du pont
E
Dividend Yield
Açıklama:
Price Earnings Ratio (P/E Ratio) This ratio is very important for shareholders or potential investors, because it gives the number of times EPS that investors are willing to pay for one share of stock. It is also called the “multiple”. Most analysts publish P/E ratios for various companies.
Soru 7
Which of the following sentences is not true about ratios?
Seçenekler
A
Ratios are representations of average conditions that existed in the past, and are influenced by the selection of accounting methods.
B
Computation of ratios are not standardized, and thus are influenced by data selection choices.
C
Changes in many ratios are strongly associated with each other.
D
Since financial statements are based on historical data, they reflect price level effects and real economic values.
E
When ratios for the same company are compared over a period of time, care must be taken to analyze the changes in operating conditions.
Açıklama:
• Ratios are representations of average conditions that existed in the past, and are influenced by the selection of accounting methods (e.g., weighted average vs. FIFO cost flow; accelerated vs. straight line depreciation);
• Since financial statements are based on historical data, they do not reflect price level effects and real economic values;
• Computation of ratios are not standardized, and thus are influenced by data selection choices;
• Changes in many ratios are strongly associated with each other; e.g., changes in the current ratio and quick ratio between two different times are often in the same direction, and usually proportional. Therefore, it is not necessary to calculate all ratios, and interrelationships between/ among the ratios should be investigated;
• When ratios for the same company are compared over a period of time, care must betaken to analyzethe changes in operating conditions (e.g., changes in economic conditions, changes in product lines or geographic markets, changes in prices, levels of inflation, etc.); and
• When a specific firm is compared with similar firms, differences between/among the firms should be recognized (e.g., accounting policies, type of financing available, operating characteristics such as product lines, size and geographical location).
• The last, but the most important, consideration for the analysis is to obtain audited financial statements. Although unaudited statements might provide valuable information about a company, conclusions reached with this information are questionable, because its use brings up fair representation issues. Financial statement analysis is a multi-faceted issue. An analyst should consider all available techniques and ratios in order to produce useful reports to investors.
• Since financial statements are based on historical data, they do not reflect price level effects and real economic values;
• Computation of ratios are not standardized, and thus are influenced by data selection choices;
• Changes in many ratios are strongly associated with each other; e.g., changes in the current ratio and quick ratio between two different times are often in the same direction, and usually proportional. Therefore, it is not necessary to calculate all ratios, and interrelationships between/ among the ratios should be investigated;
• When ratios for the same company are compared over a period of time, care must betaken to analyzethe changes in operating conditions (e.g., changes in economic conditions, changes in product lines or geographic markets, changes in prices, levels of inflation, etc.); and
• When a specific firm is compared with similar firms, differences between/among the firms should be recognized (e.g., accounting policies, type of financing available, operating characteristics such as product lines, size and geographical location).
• The last, but the most important, consideration for the analysis is to obtain audited financial statements. Although unaudited statements might provide valuable information about a company, conclusions reached with this information are questionable, because its use brings up fair representation issues. Financial statement analysis is a multi-faceted issue. An analyst should consider all available techniques and ratios in order to produce useful reports to investors.
Soru 8
| Inventories | 30.000 TL |
| Accounts Receivable | 25.000 TL |
| Short-Term Debts | 70.000 TL |
| Current Assets | 100.000 TL |
| Net Sales | 150.000 TL |
What is the firm's speed to meet sudden demands for liquid assets?
Seçenekler
A
1,2
B
1,5
C
1
D
0,95
E
1,7
Açıklama:
Quick Ratio, Or Acid Test provides a severe test of immediate liquidity, revealing a company’s ability to meet sudden demands upon liquid current assets.
quick ratio= current assets - inventories / short-term debt
= $100.000 - $ 30.000 / $70.000 = 1
quick ratio= current assets - inventories / short-term debt
= $100.000 - $ 30.000 / $70.000 = 1
Soru 9
HGF Corporation has $100.000 of current assets and $70.000 of current liabilities. What is the amount of net working capital of the firm?
Seçenekler
A
$20.000
B
$25.000
C
$30.000
D
$35.000
E
$40.000
Açıklama:
Net working capital = Current assets - current liabilities = $100.000 - $70.000 = $30.000
Soru 10
Which of the following is the basic accounting equation?
Seçenekler
A
Assets=Liabilities+Equity
B
Liabilities=Assets+Equity
C
Equity=Assets+Liabilities
D
Assets=Liabilities-Equity
E
Assets=Equity-Liabilities
Açıklama:
The sum of liabilities and equity must be equal to assets.
Soru 11
What is the current ratio for 2015?
Seçenekler
A
0.8
B
1.25
C
2.4
D
3
E
3.75
Açıklama:
Current ratio is found by dividing current assets to current liabilities. So 16200/5400=3 is the current ratio for 2015.
Soru 12
Which of the following is used to measure the full effects of an economic transaction which takes place within an accounting period regardless of the timing of cash outcomes.
Seçenekler
A
Cash accounting
B
Earnings management
C
Accrual accounting
D
Balance sheet
E
Statement of financial position
Açıklama:
Accrual acounting is used to measure the full effects of an economic transaction which takes place within an accounting period regardless of the timing of cash outcomes.
Soru 13
What is days in inventory for 2015?
Seçenekler
A
48,66
B
52,74
C
56,83
D
60,83
E
64,75
Açıklama:
Days In Inventory=365/Inventory Turnover
Since
Inventory Turnover=Cost Of Goods Sold/Average Inventory
Then:
Days In Inventory=(365*Average Inventory)/Cost of Goods Sold
Average Inventory=(10800+9600)/2=10200
Therefore;
Days In Inventory=(365*10200)/61200=60,83333....
Since
Inventory Turnover=Cost Of Goods Sold/Average Inventory
Then:
Days In Inventory=(365*Average Inventory)/Cost of Goods Sold
Average Inventory=(10800+9600)/2=10200
Therefore;
Days In Inventory=(365*10200)/61200=60,83333....
Soru 14
Which of the following are the assets that are expected to be converted into cash within the next year or within the next operating cycle, whichever is longer?
Seçenekler
A
Current Assets
B
Current Liabilities
C
Long-term assets
D
Short-term liabilities
E
Long-term liabilities
Açıklama:
Current assets are the assets that are expected to be converted into cash within the next year or within the next operating cycle, whichever is longer. Common types of current assets are; cash and cash equivalents, trade receivables, inventories, and prepaid expenses.The correct answer is A.
Soru 15
It is also known as trend analysis. This analysis performs better for longterm analysis within the same company.
Which kind of analysis is defined above?
Which kind of analysis is defined above?
Seçenekler
A
Vertical Analysis
B
Income Analysis
C
Cost Analysis
D
Horizontal Analysis
E
Materiality Analysis
Açıklama:
Horizontal analysis is also known as trend analysis. This analysis performs better for longterm analysis within the same company. However, selection of the base year is crucial. Depending on the base year, some items might be given more weight than the others. Care must also be taken to incorporate any accounting policy changes during the analysis period, because horizontal analysis is affected by changes in accounting methods.The correct answer is D.
Soru 16
Calculate the gross profit margin for 2014
Seçenekler
A
52.4%
B
53.2%
C
54.5%
D
56.9%
E
60.3%
Açıklama:
Gross profit margin=(revenues-cost of goods sold)/revenues
So for 2014;
Gross profit margin=(139400-55400)/139400=0.603=60.3%
So for 2014;
Gross profit margin=(139400-55400)/139400=0.603=60.3%
Soru 17
Debt ratio shows the percentage of assets that is financed by creditors, and thus is an indication of the level of financial leverage used by the company. How is debt ratio computed?
Seçenekler
A
Total Liabilities / Debt to Equity
B
Total Assets / Debt to Equity
C
Total Liabilities / Total Assets
D
Total Liabilities / Shareholders' Equity
E
Total Assets / Shareholders' Equity
Açıklama:
Debt ratio shows the percentage of assets that is financed by creditors, and thus is an indication of the level of financial leverage used by the company. It is computes as follows :
Debt Ratio : Total Liabilities / Total Assets
The correct answer is C.
Debt Ratio : Total Liabilities / Total Assets
The correct answer is C.
Soru 18
What kind of ratios measure tor operating success of a company in regards to its resources?
Seçenekler
A
Debt
B
Equity
C
Financial
D
Profitability
E
Capital
Açıklama:
Profitability ratios measure tor operating success of a company in regards to its resources. Starting point to profitability analysis is the Return on Equity (ROE) ratio because it provides an indication of how well managers are employing the invested funds in business to generate returns. The correct answer is D.
Soru 19
Calculate the dept to equity ratio for 2015
Seçenekler
A
1.12
B
0.56
C
0.43
D
0.26
E
0.11
Açıklama:
dept to equity ratio=total liabilities/owners equity
so for 2015; dept to equity=20400/48000=0.425=0.43
so for 2015; dept to equity=20400/48000=0.425=0.43
Soru 20
Which kind of ratios gives the expectations of the market regarding the returns on a specific stock?
Seçenekler
A
Price Earning Ratio
B
Price to Book Ratio
C
Dividend Payout
D
Dividend Yield
E
Profitability Ratio
Açıklama:
Price to Book Ratio gives the expectations of the market regarding the returns on a specific stock. The correct answer is B.
Soru 21
Which ratio is computed and expressed as following ?
? = Market Price per Share / Earnings per Price
? = Market Price per Share / Earnings per Price
Seçenekler
A
Price Earnings Ratio
B
Price to Book Ratio
C
Dividend Yield
D
Dividend Payout
E
Profitability Ratio
Açıklama:
Price Earnings Ratio (P/E Ratio): This ratio is very important for shareholders or potential investors, because it gives the number of times EPS that investors are willing to pay for one share of stock. It is also called the “multiple”. Most analysts publish P/E ratios for various companies.
PriceEarningsRatio= MarketPriceperShare / EarningsperShare
The correct answer is A.
PriceEarningsRatio= MarketPriceperShare / EarningsperShare
The correct answer is A.
Soru 22
I. Comparing ratios for the company’s current year with those of preceding years
II. Comparing ratios of the company with those of its competitors
III. Comparing the company’s ratios with ratios for the industry in which the company operates
Which of the statements given above are among the factors that needs to be considered when using financial ratios?
II. Comparing ratios of the company with those of its competitors
III. Comparing the company’s ratios with ratios for the industry in which the company operates
Which of the statements given above are among the factors that needs to be considered when using financial ratios?
Seçenekler
A
Only I
B
I and II
C
I and III
D
II and III
E
I, II and III
Açıklama:
When using financial ratios, factors that needs to be considered are;
• Comparing ratios for the company’s current year with those of preceding years, e.g., 5 to 10 years;
• Comparing ratios of the company with those of its competitors (These can be obtained from the published financial statements of competitors); and
• Comparing the company’s ratios with ratios for the industry in which the company operates. (Industry statistics can be obtained from annual publications of trade associations; for example, TUSIAD publishes such ratios for various industries. For some of the ratios, data can be obtained from weekly stock exchange magazines or internet databases.)
Therefore, the correct answer is E.
• Comparing ratios for the company’s current year with those of preceding years, e.g., 5 to 10 years;
• Comparing ratios of the company with those of its competitors (These can be obtained from the published financial statements of competitors); and
• Comparing the company’s ratios with ratios for the industry in which the company operates. (Industry statistics can be obtained from annual publications of trade associations; for example, TUSIAD publishes such ratios for various industries. For some of the ratios, data can be obtained from weekly stock exchange magazines or internet databases.)
Therefore, the correct answer is E.
Soru 23
Which of the following is one of the solvency ratios?
Seçenekler
A
Return-on-Equity
B
Dividend Payout Ratio
C
Long-term Debt Ratio
D
Gross Margin or Profit Ratio
E
Net Working Capital to Assets
Açıklama:
Solvency ratios are Long-term Debt Ratio,Debt to Equity, Debt Ratio, Book Value Per Share of Common Stock and Times Financing Expenses Earned. Therefore, the correct answer is C.
Soru 24
Which of the following ratios are computed and expressed as follows?
? = Annual Dividends per Share / Current Market Price
? = Annual Dividends per Share / Current Market Price
Seçenekler
A
Dividend Yield
B
Dividend Payout Ratio
C
Sustainable Growth Rate
D
Return-on-Equity (ROE)
E
Return-on-Assets (ROA)
Açıklama:
Dividend Yield ratio is computed and expressed as follows :
Dividend Yield = Annual Dividends per Share / Current Market Price
Therefore, the correct answer is A.
Dividend Yield = Annual Dividends per Share / Current Market Price
Therefore, the correct answer is A.
Soru 25
How is Financial Leverage Effect ratio is expressed?
Seçenekler
A
(Net Income) / Average Shareholders’ Equity
B
Net Income / Average Total Assets
C
ROE - ROA
D
Gross Margin / Net Sales
E
Dividends / Net Income
Açıklama:
Financial Leverage Effect ratio is expressed as follows :
Financial Leverage Effect = ROE - ROA
The correct answer is C.
Financial Leverage Effect = ROE - ROA
The correct answer is C.
Soru 26
Which of the following include obligations which are settled within the next year or operating cycle, resulting in an outflow from the entity either in cash or in kind?
Seçenekler
A
Current assets
B
Long term assets
C
Current liabilities
D
Long term liabilities
E
Equities
Açıklama:
Current liabilities include obligations which are settled within the next year or operating cycle, resulting in an outflow from the entity either in cash or in kind.
Soru 27
Which of the following best describes "Earnings quality"?
Seçenekler
A
The amounts invested in the business by the owners or investors
B
A performance statement for a given period with a bottom line figure of profit or loss
C
Different income items that can be used for different types of analysis
D
The extent which the reported income reflects the true financial condition and performance of the company
E
The cash inflows and outflows from operating, investing, and financing activities during a period
Açıklama:
Earnings Quality: The extent which the reported income reflects the true financial condition and performance of the company.
Soru 28
A statement of cash flows has three sections. Which of the following is one of them?
Seçenekler
A
investing
B
Purchasing
C
Income
D
Equities
E
Assets
Açıklama:
A statement of cash flows has three sections; cash-flows from operating, investing, and financing activities.
Soru 29
Which of the following is the correct formula to calculate "Free cash flow"?
Seçenekler
A
Free Cash Flow = Cash Provided by Operations + Capital Expenditures + Cash Dividends
B
Free Cash Flow = Cash Provided by Operations - Capital Expenditures - Cash Dividends
C
Free Cash Flow = Cash Provided by Operations - Capital Expenditures + Cash Dividends
D
Free Cash Flow = Cash Provided by Operations + Capital Expenditures - Cash Dividends
E
Free Cash Flow = Cash Provided by Operations - Capital Expenditures / Cash Dividends
Açıklama:
Free Cash Flow = Cash Provided by Operations - Capital Expenditures - Cash Dividends
Soru 30
What is times financial expenses earned in 2014?
Seçenekler
A
5
B
7.5
C
10
D
12
E
15
Açıklama:
times financial expenses earned= (net income before taxes and financial expense)/financial expenses
Thus for 2014; times financial expenses earned=(18000+3600+2400)/2400=24000/2400=10
Thus for 2014; times financial expenses earned=(18000+3600+2400)/2400=24000/2400=10
Soru 31
What is return on equity for year 2015?
Seçenekler
A
55.8%
B
61.2%
C
65.6%
D
67.2%
E
76.7%
Açıklama:
return on equity=net income/average equity
For year 2015 average equity=0.5*(39600+48000)=43800
So return on equity=26800/43800=61.2%
For year 2015 average equity=0.5*(39600+48000)=43800
So return on equity=26800/43800=61.2%
Soru 32
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?
Seçenekler
A
Assets-Sales
B
Assets-Liabilities
C
Liabilities-Equity
D
Net Income-Equity
E
Current Assets_Current Liabilities
Açıklama:
Either sales or total assets are used as a denominator in vertical analysis.
Soru 33
Which of the following is not one of market ratios?
Seçenekler
A
Price earnings ratio
B
Price to book ratio
C
Dividend payout
D
Dividend yield
E
Current ratio
Açıklama:
Current ratio is a liquidity ratio but all others are market ratios.
Soru 34
Which of the following causes a decrease in sustainable growth rate?
Seçenekler
A
An increase in return on equity
B
An increase in dividends
C
An increase in net income
D
A decrease in average shareholder equity
E
A decrease in dividend payout ratio
Açıklama:
sustainable growth rate=return on equity*(1-dividend payout ratio)
where return on equity=net income/average shareholder equity
and
dividend payout ratio=dividends/net income.
Thus an increase in return on equity, an increase in net income, a decrease in average shareholder equity or a decrease in dividend payout ratio causes to an increase in sustainable growth rate. However an increase in dividends results in a decrease in susainable growth rate.
where return on equity=net income/average shareholder equity
and
dividend payout ratio=dividends/net income.
Thus an increase in return on equity, an increase in net income, a decrease in average shareholder equity or a decrease in dividend payout ratio causes to an increase in sustainable growth rate. However an increase in dividends results in a decrease in susainable growth rate.
Soru 35
Which of the following is another way to say "horizontal analysis"?
Seçenekler
A
Vertical analysis
B
Income analysis
C
Assests analysis
D
Common size analysis
E
Trend analysis
Açıklama:
Horizontal analysis is also known as trend analysis. This analysis performs better for longterm analysis within the same company.
Soru 36
Which of the following is not one of classifications of ratio?
Seçenekler
A
Liquidity ratios
B
Market ratios
C
Purchase ratios
D
Profitability ratios
E
Capital Structura ratios
Açıklama:
Although there are several available ratios in the literature, most commonly used ratios are within the following classifications. • liquidity ratios • solvency/capital structure ratios • working capital management ratios • profitability ratios • market ratios
Soru 37
Which of the following is the correct formula for "Current ratio"?
Seçenekler
A
Current Ratio = Current Assets / Current Liabilities
B
Current Ratio = Current Income / Current Liabilities
C
Current Ratio = Current Liabilities / Current Assets
D
Current Ratio = Current Liabilities / Current Income
E
Current Ratio = Current Assets / Current Purchases
Açıklama:
The current ratio is computed as follows: Current Ratio = Current Assets / Current Liabilities
Soru 38
_____ provides a severe test of immediate liquidity, revealing a company’s ability to meet sudden demands upon liquid current assets.
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
Solvency ratio
B
Quick ratio
C
Current ratio
D
Debt ratio
E
Working Capital Turnover Ratio
Açıklama:
Quick ratio provides a severe test of immediate liquidity, revealing a company’s ability to meet sudden demands upon liquid current assets. Care must be taken when determining Quick Assets in terms of the assets to be included in the numerator of the equation.
Soru 39
Which of the following is the correct definition of "Financial Leverage"?
Seçenekler
A
the level of full and transparent information provided to users of the financial statements
B
the profitability ratios, especially regarding earnings per share.
C
the proportion of income paid out in dividends
D
the extent which the company uses debt in financing its assets
E
the ability of the company to survive over a long period of time
Açıklama:
Financial Leverage: The extent which the company uses debt in financing its assets. As long as the cost of debt financing is lower than equity financing financial leverage is beneficial for the company.
Soru 40
- Investing
- Financing
- Operating
Seçenekler
A
I,II,III
B
only I
C
only II
D
I, III
E
II, III
Açıklama:
Businesses acquire resources from their environment and use them to produce goods and services. Within the business cycle, they perform three types of activities. These are financing, investing and operating activities. Financial statements represent the results of business activities performed by managers.The correct option is A.
Soru 41
- a statement of financial position
- a statement of profit or loss
- a statement of changes in equity
- a statement of cash flows
Seçenekler
A
I,II,III
B
I,II,III,IV
C
I and II
D
only II
E
II,III,IV
Açıklama:
The general purpose of financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. A complete set of financial statements includes; a statement of financial position (balance sheet), a statement of profit or loss and other comprehensive income, a statement of changes in equity, a statement of cash flows, and notes to financial statements.The correct option is B.
Soru 42
Which of the following is one of the potential benchmarks that could be used to compare a company's financial ratios?
Seçenekler
A
Industry averages
B
previous year's results
C
best company in the industry
D
closest competitor in the market
E
all of the above
Açıklama:
Potential benchmarks to use in financial analysis are, (i) industry averages, (ii) previous year results and (iii)benchmark company (closest competitor in the market, or best company in the industry) results.
Soru 43
Which of the following shows how the assets of a company are financed and provides information about the long term liquidity of a company?
Seçenekler
A
Current ratio
B
Vertical analysis
C
Solvency ratio
D
Earnings
E
Comprehensive income
Açıklama:
These ratios show how the assets of a company are financed (through debt or equity) and provide information about the long-term liquidity of a company. Therefore, the ratios we will demonstrate in the following paragraphs show the relation among these financing sources. The most common ratios in this category are:
- debt ratios
- equity measures
- number of times interest charges are covered
Soru 44
Which of the following expresses items as a percentage of total assets or sales and not much affected by price fluctuations?
Seçenekler
A
Horizantal Analysis
B
Cash flow
C
Vertical Analysis
D
Earning quality
E
Equity
Açıklama:
In vertical (or common size analysis), the items in the financial statements are expressed as a percentage of total assets or sales. e main advantage of vertical analysis is that such an analysis is not much affected by price fluctuations and that it lets industry-wide comparisons.
Soru 45
Which one is not one of the classifications of available ratios?
Seçenekler
A
Solvency ratio
B
Liquidity ratio
C
Profitability ratio
D
Market ratio
E
External ratio
Açıklama:
Ratios are very popular among a variety of internal and external users - from managers, investors, creditors, and the government to employees and potential investors. Users prefer ratio analysis, believing that ratios signal potential problem areas that need further investigation.Although there are several available ratios in the literature, we will illustrate the most commonly used ratios within the following classifications.
- liquidity ratios
- solvency/capital structure ratios
- working capital management ratios
- profitability ratios
- market ratios
Soru 46
Which of the following defines as the difference between the current assets and current liabilities of the same period?
Seçenekler
A
Debt ratio
B
Cash flow
C
Gross profit
D
Net working capital
E
Solvency ratio
Açıklama:
Net Working Capital is defined as the difference between the current assets and current liabilities of the same period.
Soru 47
Which one computes the time it takes for a company to turn finished goods and merchandise inventory into cash received from sales?
Seçenekler
A
Operating cycle
B
Accounts payable turnover
C
Inventory turnover
D
Net working capital
E
Accounts receivable turnover
Açıklama:
Operating cycle computes the time it takes for a company to turn finished goods/merchandise inventory into cash received from sales. (Computed using finished goods inventory.)
Soru 48
Which one gives the expectations of the market regarding the returns on a specific stock?
Seçenekler
A
Price earnings ratio
B
Price to book ratio
C
Dividend yield
D
Net income
E
Dividend payout
Açıklama:
Price to Book Ratio (P/B Ratio) gives the expectations of the market regarding the returns on a specific stock. It is expressed as:
Price Book Ratio = Market Price per Share / Book Value per Share
Price Book Ratio = Market Price per Share / Book Value per Share
Soru 49
Property, plant and equipment, intangible assets, long term investments and prepaid expenses are the common types of _______.
Seçenekler
A
Current assets
B
Long term assets
C
Long term liabilities
D
Current liabilities
E
Equity
Açıklama:
Long-term assets are the assets that an entity expects to use for longer than one year or the operating cycle. ese assets are mainly acquired for the purpose of providing resources for the future operations of the entity. Common types of long term assets are; property, plant and equipment, intangible assets, long term investments, and prepaid expenses.
Soru 50
An example of a liquidity ratio is _______
Seçenekler
A
fixed asset turnover
B
total asset turnover
C
debt ratio
D
acid-test
E
net profit margin
Açıklama:
Acid test (quick ratio) is an example of a liqudity ratio.
Soru 51
If a firm has a higher asset turnover ratio than the industry average, this implies _________.
Seçenekler
A
the firm has a higher P/E ratio than other firms in the industry
B
the firm is more likely to avoid insolvency in the short run than other firms in the industry
C
the firm is more profitable than other firms in the industry
D
the firm is utilizing assets more efficiently than other firms in the industry
E
the firm is more liquid than other firms in the industry
Açıklama:
Asset turnover ratio measures how effectively the company makes use of its assets. Thus,if a firm has a higher asset turnover ratio than the industry average, this implies the firm is utilizing assets more efficiently than other firms in the industry.
Soru 52
If a firm has a P/E ratio of 12 and a ROE of 13%, then the P/B ratio of the firm is __________.
Seçenekler
A
0.64
B
0.92
C
1.08
D
1.56
E
15.6
Açıklama:
Because
P/E = Market Price per share / Earnings per share ,
and ROE =NI / Shareholders' Equity = NI per share / SHE per share = Earnings per share / Book Value per share,
P/B= Market Price per share /Book Value per share = P/E * ROE ;
Hence, P/B = 12*0,13 =1,56
P/E = Market Price per share / Earnings per share ,
and ROE =NI / Shareholders' Equity = NI per share / SHE per share = Earnings per share / Book Value per share,
P/B= Market Price per share /Book Value per share = P/E * ROE ;
Hence, P/B = 12*0,13 =1,56
Soru 53
Which of the following ratios are used to compute ROE in DuPont Analysis?
I. Operating profit margin
II. Net profit margin
III. Working Capital turnover
IV. Asset turnover
V. Debt ratio
VI. Equity multiplier
I. Operating profit margin
II. Net profit margin
III. Working Capital turnover
IV. Asset turnover
V. Debt ratio
VI. Equity multiplier
Seçenekler
A
I, II, V
B
III, IV
C
I; IV, V
D
II, III, VI
E
II, IV, VI
Açıklama:
ROE = (net income / sales) * (sales / average shareholders’ equity)
The first component of the equation is net profit margin and the second is the equity turnover ratio.
This equation can further be written as:
• ROE = (net income / sales) * (sales / average total assets) * (average total assets / shareholders’ equity)
In this case the equation for ROE breaks it into three components, net profit margin, asset turnover
ratio and equity multiplier:
• ROE = (net profit margin) * (asset turnover) * (equity multiplier)
The first component of the equation is net profit margin and the second is the equity turnover ratio.
This equation can further be written as:
• ROE = (net income / sales) * (sales / average total assets) * (average total assets / shareholders’ equity)
In this case the equation for ROE breaks it into three components, net profit margin, asset turnover
ratio and equity multiplier:
• ROE = (net profit margin) * (asset turnover) * (equity multiplier)
Soru 54
Which of the following provides a snapshot of the financial condition of the firm at a particular time?
Seçenekler
A
Balance Sheet
B
Income Statement
C
Statement of cash flows
D
Working capital
E
DuPont Analysis
Açıklama:
The main objective of a statement of financial position is to disclose fairly what a company owns and means used to get them at a certain date. It can be thought as a selfie of the company at a point in time. Thus, Balance Sheet provides a snapshot of the financial condition of the firm at a particular time.
Soru 55
What is the equity of company XYZ at the end of last year given the following information?
Current assets last year were TL 500,000.
Long term asstes last year were TL 300,000.
Current liabilities last year were TL 400,000.
Long-term liabilities last year were TL 150,000.
Current assets last year were TL 500,000.
Long term asstes last year were TL 300,000.
Current liabilities last year were TL 400,000.
Long-term liabilities last year were TL 150,000.
Seçenekler
A
TL 150,000
B
TL 200,000
C
TL 250,000
D
TL 300,000
E
TL 350,000
Açıklama:
Total assets = Total liabilites and equity, hence Equity = Total assets -Total liabilities
Total assets = Current assets + Long term assets = TL 500,000 + TL 300,000 = TL 800,000
Total Liabilites = Current liabilities + Long term liabilites =TL 400,000 +TL 150,000 = TL 550,000.
Equity = TL 800,000 -TL 550,000 = TL 250,000
Total assets = Current assets + Long term assets = TL 500,000 + TL 300,000 = TL 800,000
Total Liabilites = Current liabilities + Long term liabilites =TL 400,000 +TL 150,000 = TL 550,000.
Equity = TL 800,000 -TL 550,000 = TL 250,000
Soru 56
Which of the following provides profitability of the firm over a period of time such as a year?
Seçenekler
A
Balance Sheet
B
Income Statement
C
Statement of Cash Flows
D
Working Capital
E
DuPont Analysis
Açıklama:
Income statement is a performance statement for a given period with a bottom line figure of profit or loss. Hence, Income Statement provides profitability of the firm over a period of time such as a year.
Soru 57
Which of the following shows the ability of the company to generate cash after investing in new operating assets and making cash dividend payments to stockholders ?
Seçenekler
A
Working capital
B
Net working capital
C
Free cash flow
D
Return on Equity
E
P/E ratio
Açıklama:
Free cash flow describes the cash remaining from operations after adjustment for capital expenditures and dividends. Thus, it ows the ability of the company to generate cash after investing in new operating assets and making cash dividend payments to stockholders.
Soru 58
In vertical analysis of the income statement the items in the income statement are expressed as a percentage of ______________.
Seçenekler
A
Total assets
B
Total Liabilites
C
Sales
D
Cost of sales
E
Profit/Loss
Açıklama:
In vertical (or common size analysis), the items in the financial statements are expressed as a percentage of total assets or sales. In case of vertical analysis of income statement, the items in the income statement are expressed as a percentage of sales.
Soru 59
If the sales revenues of a firm had increased compared to last year while the cost of sales had decreased, ____________________ must have _______________________.
Seçenekler
A
Net Profit ; increased
B
Net profit ; decreased
C
Gross profit ; increased
D
Gross profit ; decreased
E
Net profit margin ; decreased
Açıklama:
If the sales revenues of a firm had increased compared to last year while the cost of sales had decreased, gross profit must have increased, since gross profit is the difference between sales revenues and cost of sales.
Ünite 3
Soru 1
The CVP analysis is based upon the following assumptions, EXCEPT...
Seçenekler
A
The sales price per unit changes over time
B
Variable costs per unit is constant
C
The firms sales all units produced
D
Fixed cost is constant
E
The costs change only by the level of activity
Açıklama:
The sales price per unit is also constant, it does not change over time.
Soru 2
Which one of the following is not a component of the CVP equation?
Seçenekler
A
Sale price
B
Quantity
C
Net profit
D
Fixed cost
E
Variable cost
Açıklama:
One of the component of the CVP equation is operating profit, not net profit
Soru 3
Which one of the equation gives us the Unit Contribution Margin
Seçenekler
A
Sales revenue-total costs
B
Sales revenue-total variable costs
C
(Price-VC)/price
D
(Price-VC)/unit
E
Sales revenue-total fixed costs
Açıklama:
The difference between the sale price per unit and the variable costs per unit gives the unit contribution margin
Soru 4
Anadolu Corp. produces a kind of durable goods and sells all of its production. The price of the good is $250/unit. The company incurs $100 of variable costs per unit produced and sold. Anadolu Corp. has total fixed costs of $5,250,000. What is the break-even point of activity for Anadolu Corp.?
Seçenekler
A
30,000 units
B
32,000 units
C
34,500 units
D
36,000 units
E
35,000 units
Açıklama:
Break-even point=5,250,000/(250-100)=35,000 units
Soru 5
A pen producer corporation sales its products $2/unit. It has variable costs of $1.2 per unit and total fixed cost of $50,000. What is the break-even sales in dollars?
Seçenekler
A
$100,000
B
$125,000
C
$140,000
D
$165,000
E
$175,000
Açıklama:
First we need to calculate contribution margin ratio as:
($2-$1.2)/$2=0.4
Then we need to divide total fixed cost by contribution margin ratio as:
$50,000/0.4=$125,000
($2-$1.2)/$2=0.4
Then we need to divide total fixed cost by contribution margin ratio as:
$50,000/0.4=$125,000
Soru 6
Suppose a corp. has an expected sales revenue of $820,000 and has a break-even point of $615,000. What is the margin of safety ratio for this corp.?
Seçenekler
A
22%
B
25%
C
27%
D
30%
E
33%
Açıklama:
First we need to calculate margin of safety in dollars as:
$820,000-$615,000=$205,000
Then we need to divide it by expected sales to find margin of safety ratio as follows:
$205,000/$820,000=25%
$820,000-$615,000=$205,000
Then we need to divide it by expected sales to find margin of safety ratio as follows:
$205,000/$820,000=25%
Soru 7
Cold Co. sells one product for $10 per unit. Variable production costs are $5 per unit and fixed costs are $150.000. What is break-even sales in dollars?
Seçenekler
A
$150,000
B
$210,000
C
$300,000
D
$450,000
E
$500,000
Açıklama:
Break-even point: $150,000/($10-$5) = 30,000
Break even sales: 30,000*$7 = $210,000
Break even sales: 30,000*$7 = $210,000
Soru 8
_ _ _ _ _ _ _ directly change in proportion to the level of activity while the _ _ _ _ _ _ _ are the same within a specific activity range.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Variable costs / marginal costs
B
Marginal costs / variable costs
C
Variable costs / fixed costs
D
Marginal costs/ fixed costs
E
Fixed costs/ variable costs
Açıklama:
The variable costs directly change in proportion to the level of activity while the fixed costs are the same within a specific activity range.
Soru 9
MonkeyOne Corp. manufactures socks and sells all of its production. The price of the socks is $15 per unit and $9 of variable costs per unit produced and sold. The company has total fixed costs of $540,000 What is the break-even point of activity for MonkeyOne?
Seçenekler
A
50,000
B
60,000
C
70,000
D
80,000
E
90,000
Açıklama:
Break-even point = Fixed cost / (Price - Variable cost)
= $540,000 / ($15 - $9) = 90,000
= $540,000 / ($15 - $9) = 90,000
Soru 10
The One Corp. sold 20,000 last year and sales revenue of the company was $400,000 for the same year and $10 of variable costs per unit, $200,000 of total fixed costs. What is the contribution margin ratio?
Seçenekler
A
2
B
2.5
C
1.5
D
1
E
0.5
Açıklama:
Price per unit = $400,000 / 20,000 = $20
Contribution margin per unit=Price - VC /Price
= $20 - $10 / $20 = 0.5
Contribution margin per unit=Price - VC /Price
= $20 - $10 / $20 = 0.5
Soru 11
The DuckCold manufactures two products, hat and gloves. The total fixed costs of the DuckCold is $540,000. The sales mix of the DuckCold is composed of 60% hat, 40% gloves and the ski hat has contribution margin ratio of 50% while for the gloves it is 60%. What is the break-even sales of gloves?
Seçenekler
A
$400,000
B
$500,000
C
$600,000
D
$700,000
E
$800,000
Açıklama:
Contribution margin ratio of the company: (0.60*0.50)+(0.40*0.60) = 0.54
Overall break-even sales: $540,000/0.54 = $1,000,000
Break-even sales for gloves: $1,000,000*0.60 = $600,000
Overall break-even sales: $540,000/0.54 = $1,000,000
Break-even sales for gloves: $1,000,000*0.60 = $600,000
Soru 12
Svpam Corp. has a break-even point of 10,000 units, which sell for $12 per. The company’s total sales are $300,000. What is the company’s margin of safety ratio?
Seçenekler
A
1.2
B
1.5
C
1.7
D
0.9
E
0.6
Açıklama:
$300,000 - ($10 * $12) = $180,000
$180,000 / $300,000 = 0.6
$180,000 / $300,000 = 0.6
Soru 13
_ _ _ _ _ _ _ is the cushion amount that the actual or budgeted sales can drop by, still enabling the business to break even.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Contribution margin
B
Break-even point
C
Margin of safety
D
Cost-volume-profit
E
Total leverage
Açıklama:
The margin of safety is the cushion amount that the actual or budgeted sales can drop by, still enabling the business to break even. It is the difference between actual/budgeted sales and the break-even sales. The margin of safety can be stated in units, dollars or in a ratio form.
Soru 14
Which of the following sentences could be true if a company has DOL of 2?
Seçenekler
A
If EBIT rises by 1%, then EPS will rise by 2%.
B
If EBIT rises 2%, then EPS will rise by 2%.
C
If sales rises 1%, then EPS will rise by 1%.
D
If sales will rise 1%, then EBIT will rise by 2%.
E
If EBIT will rise 2%, then sales will rise by 2%.
Açıklama:
The degree of operating leverage is a concept widely used to assess the operating risk of a business stemming from its cost structure. Basically, the degree of operating leverage shows how much the operating income of the business changes with a relative change in its sales. In fact it is a multiple depicting how many times the operating income of a business changes in relation to a percentage change in the sales.
Degree of OperatingLeverage(DOL) = %ΔEBIT / %ΔSales
Degree of OperatingLeverage(DOL) = %ΔEBIT / %ΔSales
Soru 15
XYS Corp. sells only one product at a price $20. The sales quantity for 2017 is 1,000 units. Total fixed costs of the company is $4,000 and variable costs per unit are $8. What is the DOL of the company for 2017?
Seçenekler
A
1,8
B
1,5
C
2
D
2,3
E
2,7
Açıklama:
DOL = ($20 - $8) * 1,000 / [($20 - $8) * 1,000 -$4,000] = 1,5
Soru 16
_ _ _ _ _ _ _ measures the sensitivity in the EPS relative to a percentage variation in the sales revenue.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Degree of Financial Leverage
B
Degree of Operating Leverage
C
Degree of Total Leverage
D
Degree of Marketing Leverage
E
Degree of Managing Leverage
Açıklama:
The degree of total leverage shows the combined effects of operating leverage and financial leverage on a company’s earnings. Hence, DTL measures the sensitivity in the EPS relative to a percentage variation in the sales revenue. Operating leverage is an indicator of business risk and financial leverage is a measure of financial risk. Therefore, total leverage indicates the combined effects of the cost structure and capital structure of a firm on its net profit. Degree of total leverage is the product of DOL and DFL.
Soru 17
I. Depreciation expense is deducted from the variable cost in cash break even calculation.
II. Unless there is no depreciation expense, the cash break-even quantity will be less than the break-even quantity.
III. The cash fixed costs are divided by the contribition margin to determine the cash break-even quantity.
Which of the statements given above is/are correct?
II. Unless there is no depreciation expense, the cash break-even quantity will be less than the break-even quantity.
III. The cash fixed costs are divided by the contribition margin to determine the cash break-even quantity.
Which of the statements given above is/are correct?
Seçenekler
A
I only
B
II only
C
Both I and II
D
Both II and III
E
All of them
Açıklama:
Depreciation expense is deducted from the total fixed costs not variable costs in cash break even calculation.
Soru 18
A corp. has a fixed costs of $500,000. And it sales only one product at $40 sale price with $15 variable costs. In case this corp. announces a $75,000 depreciation expense on its physical assets, find the cash break-even point in units.
Seçenekler
A
15,000 units
B
17,000 units
C
19,000 units
D
20,000 units
E
22,000 units
Açıklama:
Cash break even(q)=(500,000-75,000)/(40-15)=17,000
Soru 19
Which one of the following is not correct?
Seçenekler
A
The cvp analysis is based on absorption costing
B
The cvp analysis assumes constant cost
C
The cvp analysis requires all costs to be split into their fixed and variable components
D
The cvp analysis necessitates the assumption that all production is sold
E
In a multi-product environment the cvp analysis assumes a constant sales mix
Açıklama:
The cvp analysis is based on variable costing
Soru 20
A cable corp. is producing fiber obtic cables. The firm records $2,500,000 EBIT and incurs $500,000 of interest expense. What is the degree of financial leverage this company?
Seçenekler
A
1.05
B
1.15
C
1.25
D
1.30
E
1.45
Açıklama:
DFL=2,500,000/(2,500,000-500,000)=1.25
Soru 21
Which of the following refer to the costs that do not vary with the level of activity of a firm?
Seçenekler
A
Mixed Costs
B
Variable Costs
C
Fixed Costs
D
Marginal Costs
E
Opportunity Costs
Açıklama:
The variable costs directly change in proportion to the level of activity while the fixed costs are the same within a specific activity range. The unit variable costs are constant at different levels of activity. On the other hand, the unit fixed cost decreases as the level of activity increases and is minimized at full capacity production.
Soru 22
Goldstar Inc. and Blackline Corp. are two competitors producing DVD players. Both firms record the same EBIT amount of $4,000,000. Goldstar Inc.’s management is conservative and relies more on equity financing whereas Blackline Inc. is a younger company utilizing more debt financing in its capital structure. Goldstar has a debt ratio of 20% and Blackline reports a debt ratio of 50%. Thus, Goldstar incurs $500,000 of interest expense while Blackline pays $1,750,000 of interest. The tax rate is 35% for both companies.
What is the DFL of these companies?
What is the DFL of these companies?
Seçenekler
A
1.142-1.778
B
1.142-1.777
C
1.143-1.777
D
1.143-1.770
E
1.143-1.778
Açıklama:
Goldstar Inc. DFL = $4,000,000 $4.000,000 -$500,000 = 1.142
Blackline Corp. DFL = $4,000,000 $4,000,000 -$1,750,000 = 1.777
Blackline Corp. DFL = $4,000,000 $4,000,000 -$1,750,000 = 1.777
Soru 23
Hakan and Hasan are two competitors in the same industry. Both companies produce computer hardware. Hakan expects a 20% increase in its operating income if its sales were to rise by 10%. On the other hand, Hasan has a contribution margin ratio of 50%, total fixed costs of $500,000 and sales revenue of $2,500,000.What is the DOL for both Hakan and Hasan?
Seçenekler
A
2.77-1.67
B
2-1.77
C
2.67-1
D
2.67-1.67
E
2-1.67
Açıklama:
Hakan DOL = 20% 10% = 2
Hasan DOL = ($2,500,000 -$1,250,000)/($2,500,000 -$1,250,000 -$500,000) = 1.67
Hasan DOL = ($2,500,000 -$1,250,000)/($2,500,000 -$1,250,000 -$500,000) = 1.67
Soru 24
HKN Corp. manufactures a computer appliance and sells all of its production. The price of the appliance is $24/unit. The company incurs $10 of variable costs per unit produced and sold. HKN has total fixed costs of $420,000. What is the break-even point of activity for HKN?
Seçenekler
A
25,000 units
B
32,000 units
C
10,000 units
D
30,000 units
E
20,000 units
Açıklama:
Break - even point = $420,000 $24 -$10 = 30,000units
Soru 25
Selex and Medex are two competitors in the same industry. Both companies produce computer hardware. Selex expects a 20% increase in its operating income if its sales were to rise by 10%. On the other hand, Medex has a contribution margin ratio of 50%, total fixed costs of $500,000 and sales revenue of $2,500,000. If both companies are expecting a 15% increase in sales as the result of the expansion in the market, how much will their operating income change?
Seçenekler
A
Selex:30%
Melex:25%
Melex:25%
B
Selex:30%
Melex:25.05%
Melex:25.05%
C
Selex:30%
Melex:20
Selex:30%
Melex:25%
%
Melex:20
Selex:30%
Melex:25%
%
D
Selex:30%
Melex:25%
Melex:25%
E
Selex:15%
Melex:25%
Melex:25%
Açıklama:
Selex DOL = 20% 10% = 2
Medex DOL = $2,500,000 -$1,250,000 $2,500,000 -$1,250,000 -$500,000 = 1.67
Change in the operating income of Selex = 2*15% = 30%
Change in the operating income of Medex = 1.67*15% = 25.05%
Medex DOL = $2,500,000 -$1,250,000 $2,500,000 -$1,250,000 -$500,000 = 1.67
Change in the operating income of Selex = 2*15% = 30%
Change in the operating income of Medex = 1.67*15% = 25.05%
Soru 26
Pencil Inc. manufactures two different electrical components. Component A has a contribution margin ratio of 60% and component B has a contribution margin ratio of 40%. Pencil’s sales mix is 75% component A and 25% component B. The company’s total fixed costs are $110,000. What is the break-even sales revenue for Pencil Inc.?
Seçenekler
A
$150,000
B
$410,000
C
$180,000
D
$200,000
E
$220,000
Açıklama:
$200,000
Soru 27
Which of the following is P in the CVP equation?
Seçenekler
A
the sales price per unit
B
the variable cost per unit
C
the quantity produced and sold
D
the total fixed costs
E
None of them
Açıklama:
P*Q = VC*Q+FC+Operating Profit where P is the sales price per unit, Q is the quantity produced and sold, VC is the variable cost per unit and FC is the total fixed costs.
Soru 28
Which of the following is the difference between the sales revenue and the total variable costs?
Seçenekler
A
Leverage
B
Cash Break-Even Point
C
Break -Even Sales
D
Margin of Safety
E
Contribution Margin
Açıklama:
The difference between the sales revenue and the total variable costs is named as the contribution margin
Soru 29
Which of the following shows the degree of operating leverage?
Seçenekler
A
The percentage change in the net income as the result of the percentage change in the sales volume
B
The percentage change in the operating income as the result of the percentage change in the sales volume
C
The percentage change in the net income as the result of the percentage change in the variable costs
D
The percentage change in the sales volume as the result of the percentage change in cost of the goods sold
E
The percentage change in the sales volume as the result of the percentage change in the sales price
Açıklama:
The degree of operating leverage is a concept widely used to assess the operating risk of a business stemming from its cost structure. Basically, the degree of operating leverage shows how much the operating income of the business changes with a relative change in its sales. In fact it is a multiple depicting how many times the operating income of a business changes in relation to a percentage change in the sales.
Soru 30
September Corp. sells a single product at a price of $80/unit. The variable cost/unit is $50 and the company incurs total fixed costs of $180,000. What is the contribution margin ratio of the product?
Seçenekler
A
0.500
B
0.475
C
0.375
D
0.275
E
0.625
Açıklama:
The contribution margin ratio is the division of the unit contribution margin by the sales price per unit.
Soru 31
Which of the following assumptions is the CVP based upon?
I. The sales price per unit is constant
II. Variable costs per unit and fixed costs are variable
III. The firm sells all units produced
IV. The cost structure is constant meaning that costs change only by the level of activity
I. The sales price per unit is constant
II. Variable costs per unit and fixed costs are variable
III. The firm sells all units produced
IV. The cost structure is constant meaning that costs change only by the level of activity
Seçenekler
A
I and II
B
I, II and IV
C
I, III and IV
D
III and IV
E
I and IV
Açıklama:
The CVP analysis is based upon the following assumptions:
1. The sales price per unit is constant,
2. Variable costs per unit and fixed costs are constant,
3. The firm sells all units produced,
4. The cost structure is constant meaning that costs change only by the level of activity,
5. If there is more than one product produced and sold, the sales mix of these products is constant.
6. Costs and revenues remain constant within a specified production level, which is usually called as the relevant range.
1. The sales price per unit is constant,
2. Variable costs per unit and fixed costs are constant,
3. The firm sells all units produced,
4. The cost structure is constant meaning that costs change only by the level of activity,
5. If there is more than one product produced and sold, the sales mix of these products is constant.
6. Costs and revenues remain constant within a specified production level, which is usually called as the relevant range.
Soru 32
________ is the product of the sales price per unit and the quantity sold.
Seçenekler
A
The sales revenue
B
Sales price
C
Break-even quantity
D
Profit
E
Operating profit
Açıklama:
P*Q = VC*Q+FC+Operating Profit
where P is the sales price per unit, Q is the quantity produced and sold, VC is the variable cost per unit
and FC is the total fixed costs. As can be seen from the above equation the sales revenue is the product of the sales price per unit and the quantity sold. The sales revenue equals the variable costs of the products plus the total fixed costs and the operating profit. At a zero profit the break-even point is calculated which shows the quantity required to be produced and sold to cover up all the fixed and variable costs of the business.
where P is the sales price per unit, Q is the quantity produced and sold, VC is the variable cost per unit
and FC is the total fixed costs. As can be seen from the above equation the sales revenue is the product of the sales price per unit and the quantity sold. The sales revenue equals the variable costs of the products plus the total fixed costs and the operating profit. At a zero profit the break-even point is calculated which shows the quantity required to be produced and sold to cover up all the fixed and variable costs of the business.
Soru 33
_________________shows the amount of income generated to cover up the total fixed costs and earn the targeted profit.
Seçenekler
A
Break-even sales
B
The contribution margin
C
Price
D
Total variable costs
E
Sales revenue
Açıklama:
The difference between the sales revenue and the total variable costs is named as the contribution margin. The difference between the sales price per unit and the variable costs per unit gives the unit contribution margin. At the break-even point the contribution margin equals the total fixed costs. The unit contribution margin calculation enhances the management to decide for efficient capacity allocations.
Soru 34
ABC Corp. manufactures a computer appliance and sells all of its production. The price of the appliance
is $20/unit. The company incurs $5 of variable costs per unit produced and sold. ABC has total fixed
costs of $300,000. What is the break-even point of activity for ABC?
is $20/unit. The company incurs $5 of variable costs per unit produced and sold. ABC has total fixed
costs of $300,000. What is the break-even point of activity for ABC?
Seçenekler
A
50.000 units
B
40.000 units
C
30.000 units
D
20.000 units
E
10.000 units
Açıklama:
Break-even point= 300.000/(20-5)=20.000
Soru 35
The management of ABC Corp. has an expected sales revenue of $950,000 and their break-even sales($) is 700.000 . What is the margin of safety ($)?
Seçenekler
A
350.000
B
300.000
C
250.000
D
200.000
E
150.000
Açıklama:
Margin of Safety($) = Actual/Budgeted Sales($)-Break-even Sales($)
950.000-700.000=250.000
950.000-700.000=250.000
Soru 36
Which of the following is NOT one of the assumptions that CVP analysis is based upon?
Seçenekler
A
The sales price per unit is constant.
B
Variable costs per unit and fixed costs are constant.
C
The firm sells all units produced.
D
Costs and revenues remain constant within a specified production level.
E
The cost structure is constant meaning that costs change by various factors.
Açıklama:
Costs and revenues remain constant within a specified production level, which is usually called as the relevant range.Therefore, the statement in option E is not one of the assumptions that CVP analysis is based upon. The corrext answer is E.
Soru 37
What is the concept widely used to assess the operating risk of a business stemming from its cost structure called?
Seçenekler
A
Degree of Operating Leverage
B
CVP Analysis
C
New Contribution Margin Ratio
D
Cash Break-even Point
E
Break-even Analysis
Açıklama:
The degree of operating leverage is a concept widely used to assess the operating risk of a business stemming from its cost structure. Basically, the degree of operating leverage shows how much the operating income of the business changes with a relative change in its sales. In fact it is a multiple depicting how many times the operating income of a business changes in relation to a percentage change in the sales.
Soru 38
What is CVP analysis?
Seçenekler
A
Cost- Variable -Power Analysis
B
Cash- Volume-Profit Analysis
C
Cash- Variable- Profit Analysis
D
Cost- Volume- Publicity Analysis
E
Cost- Volume - Profit Analysis
Açıklama:
CVP is Cost-Volume-Profit Analysis. In the business world, managers evaluate firm performance by conducting detailed financial analyses and cost-volume-profit analysis is one of the major tools of financial performance measurement. The correct answer is E.
Soru 39
What shows the amount of income generated to cover up the total fixed costs and earn the targeted profit?
Seçenekler
A
Break-even sales
B
Contribution margin
C
Sales revenue
D
Total variable costs
E
Unit contribution margin
Açıklama:
The contribution margin shows the amount of income generated to cover up the total fixed costs and earn the targeted profit. The correct answer is B.
Soru 40
I. They increase or decrease depending on company's production volume.
II. They are the expenses that have to be paid by a company, independent of any business activity.
III. They are corporate expenses that change in proportion with production output.
Which of the statements above are true regarding a variable cost?
II. They are the expenses that have to be paid by a company, independent of any business activity.
III. They are corporate expenses that change in proportion with production output.
Which of the statements above are true regarding a variable cost?
Seçenekler
A
Only I
B
I an II
C
II and III
D
I and III
E
I, II and III
Açıklama:
A variable cost is a corporate expense that changes in proportion with production output.Variable costs increase or decrease depending on a company’s production volume; they rise as production increases and fall as production decreases.A fixed cost is an expense or cost that does not change with an increase or decrease in the number of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any business activity. Therefore, the correct answer is D.
Soru 41
Parrot Corp. is manufacturing two different types of bicycles, a mountain type bike and a city bike.
The city type bike has a contribution margin ratio of 60% while for the mountain bike it is 30%. The sales mix of Parrot is composed of 60% city bike and 25% mountain bike. The total fixed costs of the company is $43,500. What is the overall break-even sales of Parrot?
The city type bike has a contribution margin ratio of 60% while for the mountain bike it is 30%. The sales mix of Parrot is composed of 60% city bike and 25% mountain bike. The total fixed costs of the company is $43,500. What is the overall break-even sales of Parrot?
Seçenekler
A
100.000
B
110.000
C
130.000
D
140.000
E
150.000
Açıklama:
Contribution Margin Ratio of Parrot=(0.60*0.60)+(0.30*0.25)=0.435
Overall Break-even Sales=$43,500/0.435=$100,000
Overall Break-even Sales=$43,500/0.435=$100,000
Soru 42
____________refers to the use of debt to acquire additional assets.
Seçenekler
A
Financial leverage
B
Operating leverage
C
Break even sale
D
Contibution margin
E
Variable cost
Açıklama:
There are two major types of leverage - financial and operating. Financial leverage refers to the use of
debt to acquire additional assets. Operating leverage measures a company’s fixed costs as a percentage of its total costs. In the cases of both financial and operating leverage, the crucial question is how much leverageis appropriate.
debt to acquire additional assets. Operating leverage measures a company’s fixed costs as a percentage of its total costs. In the cases of both financial and operating leverage, the crucial question is how much leverageis appropriate.
Soru 43
XYZ Co. is a manufacturer of a single product which it totally sells in the domestic market. The sales price of the product is $900. The unit variable cost is $300. What is the contribution margin per unit?
Seçenekler
A
1200
B
3
C
600
D
0,3
E
270.000
Açıklama:
XYZ Co. is a manufacturer of a single product which it totally sells in the domestic market. The sales price of the product is $900. The unit variable cost is $300.
Contribution Margin = Sales Price of the Product - Unit Variable Cost = 900 - 300 = 600.
The correct answer is C.
Contribution Margin = Sales Price of the Product - Unit Variable Cost = 900 - 300 = 600.
The correct answer is C.
Soru 44
___________is the difference between the sales revenue and the operating costs of the business.
Seçenekler
A
VC
B
EBIT
C
DOL
D
Sales
E
CVP
Açıklama:
The operating income of a business is measured by its EBIT (earnings before interest and taxes). EBIT
is the difference between the sales revenue and the operating costs of the business.
is the difference between the sales revenue and the operating costs of the business.
Soru 45
Selex produces computer hardware. Selex expects a 80% increase in its operating income if its sales were to rise by 20%.What is the DOL for Selex?
Seçenekler
A
2
B
3
C
4
D
5
E
6
Açıklama:
DOL=80/20=4
Soru 46
MOD Company sells a single product at a price of $50/unit. The variable cost/unit is $10 and the company incurs total fixed costs of $90,000. What is the contribution margin ratio of the product?
Seçenekler
A
0,8
B
0,9
C
1
D
0
E
9
Açıklama:
Contribution Margin =The sales price of the product -The unit variable cost = 50-10 = 40
Contribution Margin Ratio =Contribution Margin / The sales price of the product = 40 / 50 = 0,8
The correct answer is A.
Contribution Margin Ratio =Contribution Margin / The sales price of the product = 40 / 50 = 0,8
The correct answer is A.
Soru 47
Which of the following refers to the cost that change depending on the company's volume?
Seçenekler
A
Fixed Cost
B
Dependent Cost
C
Opporunity Cost
D
Variable Cost
E
Marginal Cost
Açıklama:
A variable cost increase or decrease depending on the volume of the company. The correct answer is D.
Soru 48
Rockstar Inc. produces DVD players. The firm record EBIT amount of $6,000,000. Rockstar has a debt ratio of 20% Thus, Rockstar incurs $300,000 of interest expense. The tax rate is 35%. What is the DFL for the company?
Seçenekler
A
2.502
B
2.900
C
1.989
D
2.156
E
1.052
Açıklama:
DFL= 6.000.000/(6.000.000-300.000)=1.052
Soru 49
In which area , the CVP analysis technique CANNOT be used?
Seçenekler
A
Accounting
B
Managerial Finance
C
Marketing
D
Production
E
Customer relations
Açıklama:
CVP analysis is a financial performance measurement tool. It t is not merely an accounting technique, but it is also applicable in the decision making of managerial finance, marketing and production. However for customer relations it is not an applicable technique. The correct answer is E.
Soru 50
The goods and services consumed by the world population are produced by millions of businesses around the world established and operated by the same goal. What is this goal?
Seçenekler
A
High quality
B
High performance
C
Profit maximization
D
Equality
E
Latest technology
Açıklama:
The goods and services consumed by the world population are produced by millions of businesses around the world established and operated by the same goal of profit maximization. These businesses invest without knowing the financial results of their efforts but there is a universal reality that no business can survive without profits. For this reason, it is pivotal for any business to estimate how much will it earn at an expected level of activity. The correct answer is C.
Soru 51
ABC company sells shirts for $50. The variable cost is $20 per unit. The fixed costs are $600,000. What is the break-even quantity?
Seçenekler
A
12,000
B
30,000
C
20,000
D
25,000
E
15,000
Açıklama:
Kitaptaki formül hatalıdır. Pay ve payda olması gerekenin tam tersi şekilde verilmiştir !!!
Break-even hesaplamaya ilişkin öğrenim amacı bulunmadığından, bu soru mecburen 1. öğrenim amacı ile ilişkilendirilmiştir.
Break-even point = Fixed Costs / (Price-Variable Cost per unit ) = 600,000 /(50-20) =600,000/30= 20,000
Break-even hesaplamaya ilişkin öğrenim amacı bulunmadığından, bu soru mecburen 1. öğrenim amacı ile ilişkilendirilmiştir.
Break-even point = Fixed Costs / (Price-Variable Cost per unit ) = 600,000 /(50-20) =600,000/30= 20,000
Soru 52
ABC company sells shirts for $50. The variable cost is $20 per unit. The fixed costs are $600,000. Thus, the unit contribution margin is .......... and the contribution margin ratio is ...............
Seçenekler
A
20 ; 0.4
B
20 ; 0.6
C
30 ; 0.6
D
30 ; 0.4
E
30 ; 0.5
Açıklama:
Unit contribution margin = Price -Variable cost per unit ; UCM = 50-20 = 30
Contibution Margin Ratio = Unit contribution margin / Price = 30 / 50 = 0.6
Contibution Margin Ratio = Unit contribution margin / Price = 30 / 50 = 0.6
Soru 53
ABC company sells shirts for $50. The variable cost is $20 per unit. The fixed costs are $600,000. What is the break-even sales in dollars?
Seçenekler
A
500,000
B
600,000
C
750,000
D
800,000
E
1,000,000
Açıklama:
Break-even hesaplamaya ilişkin öğrenim amacı bulunmadığından, bu soru mecburen 1. öğrenim amacı ile ilişkilendirilmiştir.
Contribution Margin Ratio = (P-VC)/P = (50-20) / 50 = 0.6
Break-even sales in dollars = Fixed Costs / Contribution Margin Ratio = 600,000 / 0.6 = 1,000,000
Contribution Margin Ratio = (P-VC)/P = (50-20) / 50 = 0.6
Break-even sales in dollars = Fixed Costs / Contribution Margin Ratio = 600,000 / 0.6 = 1,000,000
Soru 54
Determine the margin of safety ratio given following data:
Sales Price is $15, Variable Cost per unit is $ 10, number of units sold is 1,000 and Fixed Costs are $ 60,000.
Sales Price is $15, Variable Cost per unit is $ 10, number of units sold is 1,000 and Fixed Costs are $ 60,000.
Seçenekler
A
0.2
B
0.25
C
0.3
D
0.35
E
0.4
Açıklama:
Break-even sales = Fixed Costs / (P-VC) = 60,000 / (15-10) = 60,000 / 5 = 12,000
Actual Sales = Price * Quantity sold = 15 * 1,000 = 15,000
Margin of Safety (in dollars) = Total actual sales − Break-even sales = 15,000 -12,000 =3,000
Margin of Safety = Margin of safety in dollars / Total actual sales = 3,000 / 15,000 = 0.2
Actual Sales = Price * Quantity sold = 15 * 1,000 = 15,000
Margin of Safety (in dollars) = Total actual sales − Break-even sales = 15,000 -12,000 =3,000
Margin of Safety = Margin of safety in dollars / Total actual sales = 3,000 / 15,000 = 0.2
Soru 55
ABC company sells sneakers for $45. The variable cost is $20 per unit. The fixed costs are $75,000. The company wants to have an operating profit of $25,000. How many units do they have to sell to achieve this goal?
Seçenekler
A
2000
B
3000
C
4000
D
5000
E
6000
Açıklama:
Break-even hesaplamaya ilişkin öğrenim amacı bulunmadığından, bu soru mecburen 1. öğrenim amacı ile ilişkilendirilmiştir.
Profit = Sales - Variable Costs -Fixed Costs = Quantity sold * (Price-Variable Cost per unit) - Fixed Costs = Q * (45-20) - 75,000 = 25,000
Hence, Q = 100,000 / 25 = 4,000 units
Profit = Sales - Variable Costs -Fixed Costs = Quantity sold * (Price-Variable Cost per unit) - Fixed Costs = Q * (45-20) - 75,000 = 25,000
Hence, Q = 100,000 / 25 = 4,000 units
Soru 56
A firm has a DFL of 2.5 at X dollars. What does this tell us about the firm?
Seçenekler
A
B
C
D
E
Açıklama:
Öğrenim amaçlarında DOL ile ilgili amaç olduğu halde, DFL ile ilgili bulunmamaktadır. O yüzden, bu soru değerlendirmede mecburen DOL'la ilgili olan amaçla ilişkilendirilmiştir.
Degree of Financial Leverage(DFL) = %Δ EPS / %Δ EBIT ; Hence given DFL is 2.5 , a 1% increase in EBIT will lead to a 2.5 % increase in EPS.
Degree of Financial Leverage(DFL) = %Δ EPS / %Δ EBIT ; Hence given DFL is 2.5 , a 1% increase in EBIT will lead to a 2.5 % increase in EPS.
Soru 57
A firm has a DOL of 3 at Q units. What does this tell us about the firm?
Seçenekler
A
If sales rise by 3 % at the firm, then EBIT will rise by 1 %.
B
If EBIT rises by 3 % at the firm, then EPS will rise by 1 %.
C
If EBIT rises by 1% at the firm, then EPS will rise by 3 %.
D
E
Açıklama:
Degree of Operating Leverage(DOL)= %Δ EBIT / %Δ Sales ; Hence given DOL is 3 , a 1% increase in sales will lead to a 3 % increase in EBIT.
Soru 58
Higher business risk is is related to the use of additional __________.
Seçenekler
A
Fixed costs
B
Variable costs
C
Debt financing
D
Common equity financing
E
Dividend payment
Açıklama:
A higher DOL implies a higher business risk. For companies with high fixed costs, the DOL will be automatically higher.
Soru 59
Higher financial risk is is related to the use of additional __________.
Seçenekler
A
Fixed costs
B
Variable costs
C
Debt financing
D
Common Equity financing
E
Retained earnings
Açıklama:
Öğrenim amaçlarında DOL ile ilgili amaç olduğu halde, DFL ile ilgili bulunmamaktadır. O yüzden, bu soru değerlendirmede mecburen DOL'la ilgili olan amaçla ilişkilendirilmiştir.
The use of debt, or in other words the extent of financial leverage determines the level of financial risk.
The use of debt, or in other words the extent of financial leverage determines the level of financial risk.
Soru 60
A firm's degree of total leverage (DTL) is equal to its degree of operating leverage its degree of financial leverage (DFL).
Seçenekler
A
plus
B
minus
C
divided by
D
multiplied by
E
to the power of
Açıklama:
Öğrenim amaçlarında DOL ile ilgili amaç olduğu halde, DTL ile ilgili bulunmamaktadır. O yüzden, bu soru değerlendirmede mecburen DOL'la ilgili olan amaçla ilişkilendirilmiştir.
Degree of Total Leverage(DTL) = DOL * DFL
Degree of Total Leverage(DTL) = DOL * DFL
Ünite 4
Soru 1
If you deposit $20,000 per year for 8 years which are made at the beginning of each year in an account that pays an annual interest rate of 10%, what will your account be worth at the end of 8 years?
Seçenekler
A
$250,435
B
$225,980
C
$228,717
D
$243,745
E
$213,762
Açıklama:
20000*((1,10^8)-1)/0.10 = 228,117
Soru 2
How much will you need to put in the bank today at 7% interest rate (monthly) to have $200,000 six years from now for a payment on a house?
Seçenekler
A
$135,000
B
$125,435
C
$136,985
D
$133,268
E
$139,854
Açıklama:
200,000= P*(1,07^6) = 133,268
Soru 3
You are supposed to receive $10,000 ten years from now. At an interest rate of 12%, what is that $10,000 worth today?
Seçenekler
A
$8,333
B
$5,456
C
$4,980
D
$3,220
E
$3,156
Açıklama:
$10,000= P*(1,12^10) = $3,220
Soru 4
_ _ _ _ _ _ _ is the interest that one earns only from the initial capital.
Which of the following complete the sentences above?
Which of the following complete the sentences above?
Seçenekler
A
Simple interest
B
Compound interest
C
Annual interest
D
Periodic interest
E
Effective interest
Açıklama:
Simple interest is the interest that one earns only from the initial capital (principal). This is the interest that you would earn in a bank account that takes out theinterestearned and only renews the time deposit for the capital.
Soru 5
_ _ _ _ _ _ _ is the stated rate of which banks, credit card companies, mortgage loan officers tell you they charge.
Which of the following complete the sentences above?
Which of the following complete the sentences above?
Seçenekler
A
Periodic interest rate
B
Effective interest rate
C
Simple interest rate
D
Compound interest rate
E
Annual percentage rate
Açıklama:
Annual percentage rate (APR) is the stated rate of which banks, credit card companies, mortgage loan officers tell you they charge.
Soru 6
Bill decides to set aside $100 at the end of each month for his child’s college education. If the child were to be born today, how much will be available for its college education when s/he turns 19 years old with an interest rate of 5% monthly?
Seçenekler
A
$67,789
B
$135,576
C
$85,432
D
$76,574
E
$32,985
Açıklama:
$100* (1,05^228)-1)/0,05=$135,576
Soru 7
How many years will it take for $10,000 to grow to $15,000 if it is invested in an account with an yearly interest rate of 8%?
Seçenekler
A
6,21
B
8,45
C
7,56
D
4,32
E
5,27
Açıklama:
$15,000=$10,000 *(1,08^n)
n= log1,5/log !,08
n=5,27
n= log1,5/log !,08
n=5,27
Soru 8
$50,000 has been deposited in the bank for 3 years. If an interest rate of 12% and monthly maturity for first year, 14% and quarterly maturity for second year, 16% and semi-annual maturity for last year, how much money will be accumulated in the bank after 3 years?
Seçenekler
A
$75,411
B
$80,654
C
$92,340
D
$65,432
E
$59,650
Açıklama:
S=$50,000 * (1,01^12)*(1,035^4)*(1,08^2)= $75,411
Soru 9
How many years will it take for $136,000 to grow to be $468,000 if it is invested in an account with an interest rate of 8%?
Seçenekler
A
20
B
18
C
16
D
14
E
12
Açıklama:
$468,000= $136,000 (1.08)^n
3.44= 1.08^n
n=log3.44/log 1.08
n=16
3.44= 1.08^n
n=log3.44/log 1.08
n=16
Soru 10
If you deposit $16,000 per year for 12 years (each deposit is made at the end of each year) in an account that pays an annual interest rate of 14%, what will your account be worth at the end of 12 years?
Seçenekler
A
$509,054
B
$367,897
C
$436,332
D
$465,763
E
$543,221
Açıklama:
FV= $16,000 *((1,14)^12 -1) / 0,14
=$436,332
=$436,332
Soru 11
Suppose that you have $325 cash in your hand. If you put it into your bank account for one year period with %15 interest, what will be the FV of this deposit?
Seçenekler
A
$342.25
B
$352
C
$364.5
D
$373.75
E
$381
Açıklama:
FV=100*(1+0.15)=373.75
Soru 12
What will be the future value of $2800 today at the end of 10 years if the interest rate is 18%?
Seçenekler
A
$14,657.74
B
$14,582.32
C
$14,423.85
D
$14,352.66
E
$14,298.08
Açıklama:
FV=$2800*(1+0.18)^10=14,654.74
Soru 13
I. Simple interest is the interest that one earns only from the principal.
II. The calculation of future values that include the interest on interest is called compounding.
III. Compound interest gets more and more significant over time comparing to simple interest.
Which statement given above is/are correct?
II. The calculation of future values that include the interest on interest is called compounding.
III. Compound interest gets more and more significant over time comparing to simple interest.
Which statement given above is/are correct?
Seçenekler
A
I only
B
III only
C
Both I and II
D
Both I and III
E
All of them
Açıklama:
All the statements given are correct.
Soru 14
A firm needs to make a payment of $35,000 in one year to its supplier. How much money would the firm need to put in the bank to have enough to cover its dept if the interest rate is 15%?
Seçenekler
A
$30,254.08
B
$30,354.87
C
$30,434.78
D
$30,514.23
E
$30,668.91
Açıklama:
pv=35,000/(1+0,15)=30,434.78
Soru 15
Suppose your son needs to ₺25,000 to cover his college expenses in 10 years. How much you should put in a bank account today to pay them if the interest rate is 20%?
Seçenekler
A
3658
B
3752
C
3891
D
3955
E
4037
Açıklama:
pv=25,000/(1+0.2)^10=4037
Soru 16
A series of equal cash flows that occur for a given period at regular intervals is ..............
Seçenekler
A
An annuity
B
A perpetuity
C
Principal
D
Present value
E
Simple interest
Açıklama:
A series of equal cash flows that occur for a given period at regular intervals is an annuity.
Soru 17
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%?
Seçenekler
A
₺314,251
B
₺325,247
C
₺336,923
D
₺345,058
E
359,206
Açıklama:
FV annuity=1500*(1+0.01)^120/0.01=345,058
Soru 18
Suppose you are offered to be paid ₺500 at the end of each month for the next 5 years. What would be the present value of this regular payments if the interest rate is 18%?
Seçenekler
A
₺18,521
B
₺19,690
C
₺20,056
D
₺20,526
E
₺21,183
Açıklama:
PV annuity=500*1-(1/(1+0.015)^60)/0.015=19,690
Soru 19
If a bank offers 12% interest and quarterly compounding, what would be the effective annual rate?
Seçenekler
A
12%
B
12.33%
C
12.55%
D
12.62%
E
12.86%
Açıklama:
EAR=(1+(0.12/4)^4)-1=12.55%
Soru 20
When the initial amount borrowed and interest is repaid in equal periodic instalments, the name of this loan is ..............
Seçenekler
A
Discount loan
B
Pure discount loan
C
Secured loan
D
Commercial loan
E
Amortizing loan
Açıklama:
Amortizing loans is another common type of loan where the initial amount borrowed and interest is repaid in equal periodic installments.
Soru 21
___________ is the amount of money an investment will grow to over a period of time, at a given interest rate.
Seçenekler
A
Simple interest
B
Future value
C
Present value
D
Annuity
E
Pure discount rate
Açıklama:
The Future Value (FV) is the amount of money an investment will grow to over a period of time, at a given interest rate (r).
Soru 22
What will be the future value of your money worth 250 Turkish Liras considering you put it a time deposit bank account with 8% interest rate for one year?
Seçenekler
A
230
B
250
C
270
D
300
E
310
Açıklama:
FV= PV * (1 + r)
250*(1+0,08)=250*1.08=270
250*(1+0,08)=250*1.08=270
Soru 23
You sold a house and put the money you got from the sale 200.000 Turkish Liras in a bank account for 15 years. You withdraw your money after 15 years and the bank account currently pays 6% interest per year. Assuming that the interest rate remains unchanged, how much will you get after 15 years?
Seçenekler
A
479.311
B
501.254
C
385.965
D
389.568
E
458.122
Açıklama:
FV= 200.000* (1+0.06)(1+0.06)......... (1+0.6) [15 times]
200.000* 2.396=479.311
200.000* 2.396=479.311
Soru 24
You need to keep some of your money in a bank account for your sister's wedding next year. You want to give them 20.000. With the interest rate of 10% how much do you need to spare now in your bank account?
Seçenekler
A
23.060
B
24.561
C
17.562
D
18.181
E
19.020
Açıklama:
PV=FV/(1+r)
20.000/(1+0.1)=18.181
20.000/(1+0.1)=18.181
Soru 25
You have 3 nephws, aged 17,15 and 13. You want to give each of them 1.000 Turkish Liras for their 18th birthdays. How much in total should you put in your bank account with 8% interest rate assuming that the rate will stay the same?
Seçenekler
A
3.100
B
2.887
C
2.114
D
2.398
E
2.023
Açıklama:
For the nephew aged 17; 1000/(1+0.08)=925
For the nephew aged 15; 1000/(1+0.08)*(1+0.08)*(1+0.08)= 793
For the nephew aged 13; 1000/(1+0.08)*(1+0.08)*(1+0.08)*(1+0.08)*(1+0.08)= 680
In total= 925+793+680= 2398
For the nephew aged 15; 1000/(1+0.08)*(1+0.08)*(1+0.08)= 793
For the nephew aged 13; 1000/(1+0.08)*(1+0.08)*(1+0.08)*(1+0.08)*(1+0.08)= 680
In total= 925+793+680= 2398
Soru 26
___________a series of equal cash flows that occur for a given period at regular intervals.
Seçenekler
A
Annuity
B
Perpetuity
C
Compounding period
D
Period rate
E
Amortizing rates
Açıklama:
An annuity is a series of equal cash flows that occur for a given period at regular intervals. Examples of annuities include loan repayments in installments of equal amounts, interest payments on bonds, mortgage payments, insurance payments, rent payments, etc.
Soru 27
You own a consol with 200 Turkish Liras fixed payment with an interest rate of 20%. So what is the worth of the consol?
Seçenekler
A
1200
B
1000
C
800
D
1400
E
900
Açıklama:
PV= 200/0.20=1000
Soru 28
Sinan left 200 Turkish Liras in a bank account for the next 2 years which is compounded quarterly under an annual interest rate of 8%. What would be the future value of the saving at the end of the deposit term?
Seçenekler
A
287.78
B
344,03
C
578.52
D
234.2
E
365.58
Açıklama:
Periodic rate:2%
Number of periods: 8
200*(1+0.02)*(1+0.02)*......(1+0.02)(8 times)= 234.2
Number of periods: 8
200*(1+0.02)*(1+0.02)*......(1+0.02)(8 times)= 234.2
Soru 29
____________ is the stated rate of which banks, credit card companies, mortgage loan officers tell you they charge.
Seçenekler
A
Annuinity
B
Non-annual compounding periods
C
Annual percentage rate
D
Perpetuity
E
Cash flow
Açıklama:
Annual percentage rate (APR) is the stated rate of which banks, credit card companies, mortgage
loan officers tell you they charge. On the other hand, two banks stating both are charging 10%
interest rates does not necessarily mean that both are charging the same interest. Payment times
are highly critical to compare 10% of these two banks and hence effective rates could be different.
Therefore, one should employ effective annual rate to compare.
loan officers tell you they charge. On the other hand, two banks stating both are charging 10%
interest rates does not necessarily mean that both are charging the same interest. Payment times
are highly critical to compare 10% of these two banks and hence effective rates could be different.
Therefore, one should employ effective annual rate to compare.
Soru 30
Levent is going to borrow 4000 Turkish Liras from the bank to purchase a mobile phone. The bank offers him to use a pure discount loan under 8% interest rate with 1 year maturity. So how much he is going to pay total at maturity?
Seçenekler
A
4.320
B
2.202
C
4.800
D
3.025
E
3.670
Açıklama:
FV= 4000*(1+0.08)=4320
Soru 31
The calculation of Future Values that include the interest on interest is called _____.
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
Investment
B
Reinvestment
C
Present value
D
Future value
E
Compounding
Açıklama:
The calculation of Future Values that include the interest on interest is called compounding.
Soru 32
Which of the following is the correct formula to calculate "Present Value"?
Seçenekler
A
PV = Future Value / (1 + Interest rate)
B
PV = Future Value / (1 - Interest rate)
C
PV = Future Value - (1 + Interest rate)
D
PV = Future Value x (1 + Interest rate)
E
PV = Future Value + (1 / Interest rate)
Açıklama:
Here FV is the cash flow at the end of the first period and r is the interest rate. Correct formula: PV = FV / (1 + r)
Soru 33
Which of the following is the correct definition of "Annuities"
Seçenekler
A
the type of loan where the initial amount borrowed and interest is repaid in equal periodic instalments
B
the rate which is actually earned on an investment
C
a series of equal cash flows that occur for a given period at regular intervals.
D
the interest that one earns only from the initial capital (principal)
E
The calculation of Future Values that include the interest on interest
Açıklama:
An annuity is a series of equal cash flows that occur for a given period at regular intervals. Examples of annuities include loan repayments in instalments of equal amounts, interest payments on bonds, mortgage payments, insurance payments, rent payments, etc.
Soru 34
Which of the following is the reason why the valuation of perpetuities are highly dependent upon the interest rate?
Seçenekler
A
The cash flows are brought forward in time, becoming more valuable as a result.
B
Interest rate is located in the denominator of the present value formula.
C
these types of cash flows get special attention is that in addition to being relatively common
D
The periodic rate is the annual rate divided by the number of installments per year.
E
The interest will exceed the stated rate if the compounding period is smaller than one year
Açıklama:
The valuation of perpetuities are highly dependent upon the interest rate. Since interest rate is located in the denominator of the present value formula, an increase in interest rates would lead to lower present value of the given consol, keeping everything else constant.
Soru 35
Ali is going to borrow 4000 TL from the bank to purchase a holiday. The bank offers him to use a pure discount loan under 6% interest rate with 1 year maturity.
Which of the following is the amount he is going to pay at maturity?
Which of the following is the amount he is going to pay at maturity?
Seçenekler
A
4240
B
4480
C
4960
D
4000
E
4120
Açıklama:
FV = PV * (1 + r)
FV = 4240
FV = 4240
Soru 36
If you wanted to determine the FV of 1.000 TL invested at 8% for 5 years, which of the following is the correct value?
Seçenekler
A
1.369,33 TL
B
1.469,33 TL
C
1.569,33 TL
D
1.669,33 TL
E
1.769,33 TL
Açıklama:
at t = 5, 8% interest FV = 1.000 * (1 + 0,08)5 = 1.000 * 1,46933 = 1.469,33 TL
Soru 37
If you need 1000 TL at the end of the year, How much should you put into bank account paying 10% for a year?
Seçenekler
A
1000
B
1100
C
900,90
D
990,90
E
909,09
Açıklama:
The present value of 1.000 one year from now equals 909,09. So if you take this amount and put it into the bank account paying 10% for one year. You will end up with the 1.000 you need at the end of the year.
Soru 38
How much money would you have to put into an investment expected to return 10% per year for the next 5 years if you want to have 10.000 TL at the end?
Seçenekler
A
8.264,46
B
9.090,91
C
7.513,15
D
6.209,21
E
6830,13
Açıklama:
We can directly calculate at t=0 PV = 10.000 / (1,10)5 = 10.000 / 1,61051 = 6.209,21
Soru 39
Imagine that you are the owner of a TV store. A customer buys a TV with a price of 2.000, however, she would like to pay in installments.
How much should the installment payments be for 10 monthly installments at the monthly interest rate 1%?
How much should the installment payments be for 10 monthly installments at the monthly interest rate 1%?
Seçenekler
A
200
B
210.07
C
211.1
D
211,17
E
221.77
Açıklama:
2000 = C * {1 - [1 / (1.01)10]} / 0.01
2000 = C * [(1 - 0,90529) / 0,01]
2000 = C * 9,471 → C = 2000 / 9.471 = 211,17
2000 = C * [(1 - 0,90529) / 0,01]
2000 = C * 9,471 → C = 2000 / 9.471 = 211,17
Soru 40
Cengiz left 500 TL in a bank account for 2 years which is compounded quarterly under an annual interest rate of 12%.
What would be the future value of the saving at the end of the deposit term?
What would be the future value of the saving at the end of the deposit term?
Seçenekler
A
560.66
B
600.30
C
633,39
D
663,33
E
693,69
Açıklama:
Future value of 500 deposited in a bank account for 2 years’ time under quarterly compounding with 12% interest rate is 633.39.
FV = 500 * (1 + 0,03)8
FV = 633,39
FV = 500 * (1 + 0,03)8
FV = 633,39
Soru 41
What is the effective annual rate of a loan quoted as 1 % per month?
Seçenekler
A
12.62 %
B
12.68 %
C
12.74 %
D
12.80 %
E
12.86 %
Açıklama:
EAR formula
(1+0.12/12)^12-1 = 0.1268 =12.68 %
(1+0.12/12)^12-1 = 0.1268 =12.68 %
Soru 42
What is the value of a house which is expected to generate a monthly rent income of USD 2000 forever if the annual interest rate is 6 % ? (Hint: Use the present value formula for perpetuities)
Seçenekler
A
USD 200,000
B
USD 250,000
C
USD 300,000
D
USD 350,000
E
USD 400,000
Açıklama:
PV of annuity formula
2000 / (0.06/12) = 400,000
2000 / (0.06/12) = 400,000
Soru 43
Which of the following statements is TRUE about the amortization process of loans?
Seçenekler
A
The amount of the installment payment decreases each period
B
The amount of the principal repayment decreases each period
C
The installment payment includes the interest and the principal amount
D
The amount of the interest payment increases each period
E
The total of the installment payments equals the beginning amount of the loan
Açıklama:
"The installment payment includes the interest and the principal amount" is TRUE. All the other statements are false.
Soru 44
What is the future value of TL 100,000 invested in a bank deposit account which offers 12 % annual interest for 5 years?
Seçenekler
A
168,506
B
TL 176,234
C
TL 184,244
D
TL 192,541
E
TL 201,136
Açıklama:
Future Value Formula
100,000*(1.12)^5 = 176,234
100,000*(1.12)^5 = 176,234
Soru 45
A friend of yours asks to borrow some amount of money from you today and promises to pay you TL 5000 3 years later. If you expect to earn an annual interest rate of 10 %, how much money should you lend today?
Seçenekler
A
3969
B
3861
C
3757
D
3656
E
3559
Açıklama:
Present Value Formula
5000/(1+0,1)^3=3757
5000/(1+0,1)^3=3757
Soru 46
Lease is a contract whereby one party, the lessor, grants the right to use a particular good for a period of time to the other party, the lessee, which will pay a fixed amount regularly for a certain period of time. When a lease payment is made, it typically covers the month-long period following the payment date. Therefore, lease payments are ________.
Seçenekler
A
Perpetuity
B
Ordinary annuity
C
Annuity due
D
Future value
E
Present value
Açıklama:
Annuity due cash flows are at the beginning of the period.
Soru 47
Which of the following statements about time value of money is correct?
Seçenekler
A
Money received in the future is more valuable than money received today
B
The present value of some amount of money increases as interest rate increases
C
The future value of some amount of money decreases as number of periods increases
D
Annuity due payments of a loan is smaller than ordinary annuity payments of a the same amount of loan
E
Money invested in compound interest rate earns more interest than money invested in simple interest rate.
Açıklama:
With compound interest, one can earn interest on interest earned in the previous periods (You can earn interest on interest). Thus, money invested in compound interest rate earns more interest than money invested in simple interest rate.
Soru 48
Computing the future value of some amount of money invested today is called ....., while computing the present value of some amount of money that will be received in the future is called.......
Seçenekler
A
compounding ; discounting
B
discounting ; compounding
C
annuity ; perpetuity
D
perpetuity ; annuity
E
leasing ; factoring
Açıklama:
Computing the future value of some amount of money invested today is called compounding, while computing the present value of some amount of money that will be received in the future is called discounting.
Soru 49
You would like to buy a car to finance some portion of the purchase price of the car with a car loan. You will be paying the loan in equal monthly installments for a specific period of time with a certain interest rate. You set a certain amount of payment for each month according to your monthly budget and ask the bank how much money you can borrow today. In this case, the account officer in the bank should compute ...............
Seçenekler
A
the future value of the annuity
B
the present value of the annuity
C
the payment of the annuity
D
the future value of the loan
E
the interest payments of the loan
Açıklama:
The money that can be borrowed today by paying the loan in equal installments referes to the present value of an annuity.
Soru 50
You would like to accumulate some amount of money at the time you retire by investing equal amounts of money at the end of each month for some years. Earning some fixed interest rate during the period, you wonder how much you should save each month to achive your target amount of money in the future. In this case, you must compute ......
Seçenekler
A
the future value of thethe annuity
B
the present value of the annuity
C
the payment of the annuity
D
the future value of some present value
E
the present value of some future value
Açıklama:
The equal installments that should be invested each month refers to the payment of the annuity
Ünite 5
Soru 1
_ _ _ _ _ _ _ is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time plus it also pays out the face value of the bond at maturity together with the last coupon payment.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Stock
B
Bond
C
Current yield
D
Dividend rate
E
Capital gains yield
Açıklama:
A bond is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time plus it also pays out the face value of the bond at maturity together with the last coupon payment. The total annual coupon payments are equal to the coupon rate multiplied by the face value of the bond. The coupon payments may be split into more than one payment per year.
Soru 2
How much should you pay for a $50 bond with 12% coupon, annual payments, and 5 years to maturity if the interest rate is 14%?
Seçenekler
A
$35,56
B
$57,49
C
$49,65
D
$46,57
E
$39,85
Açıklama:
$50*0.12 = $6 coupon
$6/1.14 + $6/(1.14^2) + $6/(1.14^3) + $6/(1.14^4) + ($50 + $6)/(1.14^5) = $46,57
$6/1.14 + $6/(1.14^2) + $6/(1.14^3) + $6/(1.14^4) + ($50 + $6)/(1.14^5) = $46,57
Soru 3
_ _ _ _ _ _ _ is negative when there is a decline in value of a bond.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Capital gains yield
B
Dividend yield
C
Current yield
D
Yield to majurity
E
Coupon
Açıklama:
Capital gains yield is negative when there is a decline in value of a bond.
Soru 4
What is the rate of return for a $60 par bond paying $5 annually that has 5 years until maturity and currently sells for $50?
Seçenekler
A
12%
B
15%
C
20%
D
24%
E
30%
Açıklama:
Rate of return = [$5 + ($60 - $50)] / $50 = 0.30
Soru 5
What is the investor’s real return if a bond offers an investor 21% in nominal return during a year in which the rate of inflation is 18%?
Seçenekler
A
2.45%
B
2.13%
C
2.54%
D
2.94%
E
2.04%
Açıklama:
(1+0.21) = (1+r)*(1+0.18) r=0.0254=2.54%
Soru 6
What is the current price of a stock if it will be $50 two years from today, they distribute $4 as a dividend and if you require a return of 15% in order to invest in this stock?
Seçenekler
A
$40
B
$46.96
C
$51.32
D
$39.80
E
#42
Açıklama:
Current price of stock = $50+$4 /1.15 =$46.96
Soru 7
Suppose the company distributes $10 as dividend every year and it is not expected to change. If the required rate of return for this stock is 8%, how much should be selling in the market?
Seçenekler
A
$100
B
$150
C
$125
D
$175
E
$135
Açıklama:
Value= Div0 /r
= 10/0.08 = $125
= 10/0.08 = $125
Soru 8
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?
Seçenekler
A
5.3%
B
4.6%
C
3.5%
D
6.4%
E
5%
Açıklama:
r = (Div1 + P1 − P0)/D0
r= 8+ (250-245) /245 =0.053 = 5.3%
r= 8+ (250-245) /245 =0.053 = 5.3%
Soru 9
____________is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time.
Seçenekler
A
Constant growth
B
A bond
C
Income stock
D
Interest rate
E
Annuity factor
Açıklama:
A bond is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time plus it also pays out the face value of the bond at maturity together with the last coupon payment. The total annual coupon payments are equal to the coupon rate multiplied by the face value of the bond. The coupon payments may be split into more than one payment per year.
Soru 10
Which one is true about bonds?
Seçenekler
A
They can be issued by any firm.
B
An issuer will pay the face value of a bond until maturiy.
C
Coupon rate of a bond determines the coupon(interest) payments.
D
Indenture is a contract which the issuer has to sign at the end of the maturity.
E
If the interest rate increases, the price of a bod increases.
Açıklama:
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.
Soru 11
If a company issues a 10-year bond with the coupon interest rate of 10% and par value of 200 Turkish Liras by selling 20.000 bonds. Until the maturity, how much a bondholder will recieve in total?
Seçenekler
A
150 Turkish Liras
B
300 Turkish Liras
C
400 Turkish Liras
D
220Turkish Liras
E
200Turkish Liras
Açıklama:
200*10/100=20 (per year)
20*10 (years)= 200 (before the maturity time)
20*10 (years)= 200 (before the maturity time)
Soru 12
If the market interest rate is 13%, the present value of the bond coupons equals to 80.000 Turkish Liras and the present value of the bond's par value equals to 82.000, what will be the value of the bond?
Seçenekler
A
158.000 Turkish Liras
B
175.500 Turkish Liras
C
162.000 Turkish Liras
D
44.826 Turkish Liras
E
168.440 Turkish Liras
Açıklama:
Value of Bond = Present Value (Coupons) + Present Value (Par Value)
80.000+82.000=162.000
80.000+82.000=162.000
Soru 13
I. Bonds sell at their par value.
II. Bonds sell above their par value.
III. Bonds sell below their par value.
What happens when the market interest rate is equal to the coupon interest rate?
II. Bonds sell above their par value.
III. Bonds sell below their par value.
What happens when the market interest rate is equal to the coupon interest rate?
Seçenekler
A
Only I
B
Only II
C
Only III
D
I and II
E
I and III
Açıklama:
When the market interest rate is equal to the coupon interest rate, bonds sell at their par value. When the market interest rate is below the coupon interest rate, bonds sell above their par value and they are called premium bonds. When the market interest rate exceeds the coupon interest rate, bonds sell below their par and are called discount bonds.
Soru 14
______________ is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures.
Seçenekler
A
Interest rate
B
Yield-to-maturity
C
Inverstment rate risk
D
Bond value
E
Par value
Açıklama:
Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price. It is like an internal rate of return of a bond.
Soru 15
If a bond's initial price is 110 and its current price is 120, and its cupon payment is 20, what will be the rate of return?
Seçenekler
A
0.352
B
0.452
C
0.724
D
0.272
E
0.265
Açıklama:
Rate of return = (Coupon Payment + Price Change) / Initial Price
(20+10)/110=0.272
(20+10)/110=0.272
Soru 16
[(1+ nominal interestrate)/(1+ Inflation rate)] −1
What will the equation give us?
What will the equation give us?
Seçenekler
A
Nominal interest rates
B
Yield curve
C
Return rate
D
Risk rate
E
Real interest rate
Açıklama:
Real interest rate=[(1+ nominal interestrate)/(1+ Inflation rate)] −1
Soru 17
__________plots the relationship between bond yields and maturity.
Seçenekler
A
Yield curve
B
Return interest
C
Par value
D
Nominal interest rate
E
Real interest rate
Açıklama:
Yield curve plots the relationship between bond yields and maturity.
Soru 18
The difference between the promised yield on the corporate bond and the yield on government bond with the same coupon rate and maturity is called __________________.
Seçenekler
A
Price change
B
Default premium
C
Market value
D
Stock valuation
E
Book value
Açıklama:
The higher the default risk, the higher is the yield on the bonds. The difference between the promised yield on the corporate bond and the yield on government bond with the same coupon rate and maturity is called default premium. The higher the probability of being defaulted, the higher default premium will be.
Soru 19
_ _ _ _ _ _ _ provide all or almost all of their returns from dividend yield.
Which of the following completes the sentences above?
Which of the following completes the sentences above?
Seçenekler
A
Income stocks
B
Growth Stocks
C
Current stocks
D
Common stocks
E
Preferred Stocks
Açıklama:
Stocks that provide all or almost all of their returns from dividend yield are referred to as income stocks.
Soru 20
Suppose that the company has a policy of increasing their dividends by 1.5% every year. Suppose their last dividend paid was $3 and the discount rate is 8%. What is the market price of the stock?
Seçenekler
A
$45.80
B
$39.46
C
$54.37
D
$46.85
E
$50.25
Açıklama:
value= $3*(1+0.015) /(0.08 - 0.015) = $46.85
Soru 21
Which one of the below is the security that contractually obligates the issuer to make fixed coupon payments at fixed intervals plus it also pays out the face value of the bond at maturity together with the last coupon payment?
Seçenekler
A
Bonds
B
Coupon Paying Stocks
C
Blue Chips
D
Penny Stocks
E
Convertible Bonds
Açıklama:
A Bond is a security that contractually obligates the issuer to make fixed coupon payments at fixed intervals plus it also pays out the face value of the bond at maturity together with the last coupon payment. The correct answer is A.
Soru 22
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?
Seçenekler
A
calculation errors
B
fluctuations on the interest rate in the market
C
market failures
D
transaction fees
E
intermediation commissions
Açıklama:
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.
Soru 23
If market interest rates increase, which one of the following is expected for a fixed-coupon payment bond?
Seçenekler
A
The payments of the coupon increase
B
The payments of the coupon decrease
C
The values of bonds decline
D
The values of bonds incline
E
Neither the value nor the coupon payments of the bonds change
Açıklama:
If market interest rates increase, the values of bonds decline.
Soru 24
Which one of the following is the most sensitive to changes in the market interest rates in general?
Seçenekler
A
1-year bond
B
3-year bond
C
5-year bond
D
10-year bond
E
15-year bond
Açıklama:
Bonds with longer maturity have a higher sensitivity to changes in market interest rates and have higher interest rate risk. In this problem, 15-year bond has the longest maturity. Thus, it is the most sensitive to changes in the market interest rates
Soru 25
Which one of the following is the term for the risk that cash flows received may not be able to be reinvested at the expected rates if market rates have changed?
Seçenekler
A
Default risk
B
Reimbursement risk
C
Reinvestment risk
D
Risk of bankruptcy
E
The risks arise from trading
Açıklama:
Bonds carry reinvestment rate risk, which is the risk that cash flows received may not be able to be reinvested at the expected rates if market rates have changed.
Soru 26
I. Coupon Payments
II. Price Changes
III. Initial Price
Which one (or ones) above do (es) affect the rate of return of a bond?
II. Price Changes
III. Initial Price
Which one (or ones) above do (es) affect the rate of return of a bond?
Seçenekler
A
I and II
B
I and III
C
II and III
D
Only I
E
I, II and III
Açıklama:
Coupon Payments, Price Changes and Initial Price do all affects the rate of return of a bond.
Soru 27
What is the difference between nominal and real interest rates?
Seçenekler
A
Nominal interest rate includes the current Inflation
B
Nominal interest rate includes the expected inflation
C
Real interest rate includes the current Inflation
D
Real interest rate includes the expected inflation
E
There are no difference
Açıklama:
Real interest rate includes the expected inflation; nominal interest rate does not.
Soru 28
Which of the statement below is true for the relationship between a bond’s yield-to-maturity and the rate of return in a particular period?
Seçenekler
A
If the market rate of interest and the bond’s yield-to-maturity changes over the period, then the bond’s rate of return will be equal to its yield-to-maturity.
B
If the market rate of interest and the bond’s yield-to-maturity changes over the period, then the bond’s rate of return will be higher than its yield-to-maturity.
C
If there is a decline in interest rates, the rate of return will be higher than the bond’s yield-to-maturity as in the case of the example.
D
If there is a decline in interest rates, the rate of return will be lower than the bond’s yield-to-maturity as in the case of the example.
E
If there is an increase in interest rates, the rate of return will be greater than the bond’s yield to maturity because of the decline in the value of the bond with the increase in interest rates.
Açıklama:
If the market rate of interest and the bond’s yield-to-maturity does not change over this period, then the bond’s rate of return will be equal to its yield-to-maturity. If there is a decline in interest rates, the rate of return will be higher than the bond’s yield-to-maturity as in the case of the example. If there is an increase in interest rates, the rate of return will be less than the bond’s yield to maturity because of the decline in the value of the bond with the increase in interest rates.
Soru 29
Which of the rates below does correspond to the nominal interest rate if the investors in the market demand 5% real rate of return from a specific investment for the next year and expects inflation to be 15% for that period?
Seçenekler
A
% 20
B
%20.25
C
% 20.50
D
% 20.75
E
%21
Açıklama:
for the given statement the nominal interest rate should be:
(1.05 x 1.15) - 1 = %20.75
(1.05 x 1.15) - 1 = %20.75
Soru 30
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.
Seçenekler
A
Income Stocks
B
Penny Stocks
C
Blue-Chip Stocks
D
Growth Stocks
E
Preferred Stocks
Açıklama:
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 Growth Stocks.
Soru 31
I. Bonds cannot be issued by governments,
II. Par value may vary depending on the issuing body,
III. Coupon payments are periodic,
IV. Coupon rate of a bond determines interest payments.
Which of the ones listed above is correct concerning bonds?
II. Par value may vary depending on the issuing body,
III. Coupon payments are periodic,
IV. Coupon rate of a bond determines interest payments.
Which of the ones listed above is correct concerning bonds?
Seçenekler
A
I, II & III.
B
II, III & IV.
C
Only II.
D
I & III.
E
III & IV.
Açıklama:
Page 131.
A bond is a type of debt security which means that it represents borrowing by the firm. However, rather than getting a loan from a bank or other financial institution, the bond allows the funds to be obtained from a large number of parties under common standardized terms. Bonds can usually only be issued by governments or large, well known firms. 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 T100 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. Therefore, the correct option is B.
A bond is a type of debt security which means that it represents borrowing by the firm. However, rather than getting a loan from a bank or other financial institution, the bond allows the funds to be obtained from a large number of parties under common standardized terms. Bonds can usually only be issued by governments or large, well known firms. 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 T100 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. Therefore, the correct option is B.
Soru 32
Which of the followings refers to the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures?
Seçenekler
A
Reinvestment rate risk.
B
Bond.
C
Yield-to-maturity.
D
Cash flow.
E
Interest rate risk.
Açıklama:
Page 135.
Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price. It is like an internal rate of return of a bond. Therefore, the correct option is C.
Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price. It is like an internal rate of return of a bond. Therefore, the correct option is C.
Soru 33
In terms of yield-to-maturity, which of the followings refers to the return you get from the change in the value of bond?
Seçenekler
A
Capital gains yield.
B
Maturity.
C
Dividends.
D
Face value.
E
Current yield.
Açıklama:
Page 135.
Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield. Therefore, the correct option is A.
Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield. Therefore, the correct option is A.
Soru 34
At maturity, which of the followings is equal to the value of the bond?
Seçenekler
A
Its par value.
B
Its current yield.
C
Its interest rate risk.
D
Its dividends.
E
Its capital gains yield.
Açıklama:
Page 136.
The bond’s price may change over time even if there are no changes in interest rates. At maturity, the value of the bond is equal to its par value. Assuming that there is no change in market interest rates, as we approach to maturity, the value of the bond approaches to its par value. Therefore, the correct option is A.
The bond’s price may change over time even if there are no changes in interest rates. At maturity, the value of the bond is equal to its par value. Assuming that there is no change in market interest rates, as we approach to maturity, the value of the bond approaches to its par value. Therefore, the correct option is A.
Soru 35
The yield curve plots the relationship between bond yields and which of the followings?
Seçenekler
A
Dividends.
B
Face value.
C
Interest rates.
D
Maturity.
E
Interest rate risk.
Açıklama:
Page 137.
Yield curve plots the relationship between bond yields and maturity. Therefore, the correct option is D.
Yield curve plots the relationship between bond yields and maturity. Therefore, the correct option is D.
Soru 36
Which of the followings refers to the difference between the promised yield on the corporate bond and the yield on government bond with the same coupon rate and maturity?
Seçenekler
A
Default premium.
B
Ex ante.
C
Yield curve.
D
Inflation.
E
Default.
Açıklama:
Page 139.
Corporations can not print money and it is possible to default if they do not make their payments on time. They hold default risk, i.e., the risk that a bond issuer may default on its obligations. In order to invest in the bonds of corporations with higher default risk, investors require higher returns than the yields on government bonds. The higher the default risk, the higher is the yield on the bonds. The difference between the promised yield on the corporate bond and the yield on government bond with the same coupon rate and maturity is called default premium. The higher the probability of being defaulted, the higher default premium will be. Therefore, the correct option is A.
Corporations can not print money and it is possible to default if they do not make their payments on time. They hold default risk, i.e., the risk that a bond issuer may default on its obligations. In order to invest in the bonds of corporations with higher default risk, investors require higher returns than the yields on government bonds. The higher the default risk, the higher is the yield on the bonds. The difference between the promised yield on the corporate bond and the yield on government bond with the same coupon rate and maturity is called default premium. The higher the probability of being defaulted, the higher default premium will be. Therefore, the correct option is A.
Soru 37
According to Standard & Poors, which of the following ratings indicates the bonds with the lowest default risk?
Seçenekler
A
AAA
B
BBB
C
CCC
D
CC
E
D
Açıklama:
Page 139.
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.
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.
Soru 38
I. Right to share in the residual in case of dissolution,
II. Right to receive dividends,
III. A preemptive right to prevent undesired reduction of ownership share
IV. Right to vote.
Which of the ones listed above is among the rights that stock ownership provides?
II. Right to receive dividends,
III. A preemptive right to prevent undesired reduction of ownership share
IV. Right to vote.
Which of the ones listed above is among the rights that stock ownership provides?
Seçenekler
A
I, II & III.
B
II, III & IV.
C
I, II & IV.
D
I, II, III & IV.
E
II & IV.
Açıklama:
Page 140.
Stock ownership provides rights to vote, to receive dividends, to share in the residual in case of dissolution and a preemptive right to prevent undesired reduction of ownership share. Therefore, the correct option is D.
Stock ownership provides rights to vote, to receive dividends, to share in the residual in case of dissolution and a preemptive right to prevent undesired reduction of ownership share. Therefore, the correct option is D.
Soru 39
Which of the following abbreviations refers to the first time the company offers its shares to the public?
Seçenekler
A
MV.
B
IPO.
C
FCFE.
D
NWC.
E
BV.
Açıklama:
Page 140.
The first time the company offers its shares to the public is called initial public offering (IPO). Therefore, the correct option is B.
The first time the company offers its shares to the public is called initial public offering (IPO). Therefore, the correct option is B.
Soru 40
I. Investment requirements,
II. Growth prospects,
III. Profitability,
IV. Payout decisions.
Which of the ones listed above is among the characteristics of a company on which dividends depend?
II. Growth prospects,
III. Profitability,
IV. Payout decisions.
Which of the ones listed above is among the characteristics of a company on which dividends depend?
Seçenekler
A
I, II, III & IV.
B
II & III.
C
II, III & IV.
D
III & IV.
E
Only III.
Açıklama:
Page 141.
The cash flows that are associated with stocks are the dividends that the firm may pay and price that the investor receives when she sells the shares. Dividends are paid only after interest and other required payments are made to creditors and they are not fixed amounts; Dividends depend on the profitability, growth prospects, investment requirements and payout decisions of the company. As a result, their timing and quantities are uncertain and they are more risky than debt securities. In order to compensate for this greater risk, they need to offer greater expected returns in order to make them attractive to investors. Therefore, the correct option is A.
The cash flows that are associated with stocks are the dividends that the firm may pay and price that the investor receives when she sells the shares. Dividends are paid only after interest and other required payments are made to creditors and they are not fixed amounts; Dividends depend on the profitability, growth prospects, investment requirements and payout decisions of the company. As a result, their timing and quantities are uncertain and they are more risky than debt securities. In order to compensate for this greater risk, they need to offer greater expected returns in order to make them attractive to investors. Therefore, the correct option is A.
Soru 41
- Bonds can only be issued by governments.
- Bonds obligate the issuer to make specified payments to the bondholder on specified dates over a specified time period (maturity).
- Bonds can be considered interest only loans because the issuer pays only coupon payments until maturity and the face value at maturity.
- Unlike amortized loans, the issuer does not pay any part of par value during the life of the bond.
- For the annual coupon paying bonds, the number of times that coupons are paid indicates maturity.
- Once the bond is issued, the maturity declines as time passes and coupon payments are made.
Seçenekler
A
I, II and III
B
II, IV and V
C
I, IV, V and VI
D
III, IV, V and VI
E
II, III, IV, V and VI
Açıklama:
A bond is a type of debt security which means that it represents borrowing by the firm. However, rather than getting a loan from a bank or other financial institution, the bond allows the funds to be obtained from a large number of parties under common standardized terms. Bonds can usually only be issued by governments or large, well known firms. 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.
Bonds can be issued by corporations or governments. They can be considered interest only loans because the issuer pays only coupon payments until maturity and the face value at maturity. Unlike amortized loans, the issuer does not pay any part of par value during the life of the bond. For the annual coupon paying bonds, the number of times that coupons are paid indicates maturity. Once the bond is issued, the maturity declines as time passes and coupon payments are made.
As also understood from the information given, the statements in the options II, III, IV, V and VI are correct, so the correct answer is E. The statement in the option I is not correct because of the fact that bonds can be issued by corporations or governments.
Bonds can be issued by corporations or governments. They can be considered interest only loans because the issuer pays only coupon payments until maturity and the face value at maturity. Unlike amortized loans, the issuer does not pay any part of par value during the life of the bond. For the annual coupon paying bonds, the number of times that coupons are paid indicates maturity. Once the bond is issued, the maturity declines as time passes and coupon payments are made.
As also understood from the information given, the statements in the options II, III, IV, V and VI are correct, so the correct answer is E. The statement in the option I is not correct because of the fact that bonds can be issued by corporations or governments.
Soru 42
- 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.
Seçenekler
A
I and II
B
I and V
C
I, II and III
D
I, II, III and V
E
II, III, IV and V
Açıklama:
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.
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.
Soru 43
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 …
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 …Seçenekler
A
52, 7585
B
53, 9162
C
54,2760
D
107,0345
E
107,1888
Açıklama:
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.
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.Soru 44
- When the market interest rate is equal to the coupon interest rate, bonds sell at their par value.
- When the market interest rate is below the coupon interest rate, bonds sell above their par value and they are called premium bonds.
- When the market interest rate exceeds the coupon interest rate, bonds sell below their par and are called discount bonds.
- Market interest rates might change but there is no change in coupon interest rate.
Seçenekler
A
Only I
B
I and II
C
II and III
D
I, II and IV
E
I, II, III and IV
Açıklama:
When the market interest rate is equal to the coupon interest rate, bonds sell at their par value. When the market interest rate is below the coupon interest rate, bonds sell above their par value and they are called premium bonds. When the market interest rate exceeds the coupon interest rate, bonds sell below their par and are called discount bonds.
There is an inverse relationship between value of bonds and market interest rates. As market interest rates increase, the present value of future cash flows declines and the value of bond decreases. Conversely, if market interest rates decrease, the present value of future cash flows increases and the value of bond increases. It is important to note that market interest rates might change but there is no change in coupon interest rate.
As also understood from the information given, all of the statements in the options about interest rates and bond values are correct, so the correct answer is E.
There is an inverse relationship between value of bonds and market interest rates. As market interest rates increase, the present value of future cash flows declines and the value of bond decreases. Conversely, if market interest rates decrease, the present value of future cash flows increases and the value of bond increases. It is important to note that market interest rates might change but there is no change in coupon interest rate.
As also understood from the information given, all of the statements in the options about interest rates and bond values are correct, so the correct answer is E.
Soru 45
- Long-term bond investors face higher interest rate risk.
- Long-term bond investors will have a disadvantage when market interest rates increase
- Short-term bond investor faces higher reinvestment rate risk.
- Short-term bond investors will have a disadvantage when market interest rates decline.
Seçenekler
A
Only I
B
I and II
C
II and III
D
I, III and IV
E
I, II, III and IV
Açıklama:
Recommended Correction
Page 135-150: Self Review 1
c) what will the bond sell for?
d) what percent of the bond’s total price is represented by the present value of the coupons?
Page135-150 Self Review 1
a) what will the bond sell for?
b) what percent of the bond’s total price is represented by the present value of the coupons?
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. An increase in interest rates reduces bond values. However, the decline in value of long-term bonds is more than the decline in value of short-term bonds because a change in interest rates has only a modest impact on the present value of near-term cash flows but a greater impact on the present value of distant cash flows. Bonds with longer maturity have a higher sensitivity to changes in market interest rates and have higher interest rate risk.
Bonds carry reinvestment rate risk, which is the risk that cash flows received may not be able to be reinvested at the expected rates if market rates have changed. It is important when there is a decrease in market interest rates. When a bond investor makes a short-term bond investment, if market interest rates decline when this investment matures, the proceeds from short-term investment will be reinvested at a lower interest rate. Long-term bond investors face higher interest rate risk and will have a disadvantage when market interest rates increase whereas short-term bond investor faces higher reinvestment rate risk and will have a disadvantage when market interest rates decline.
As also understood from the information given, all of the statements in the options about bond investors are correct, so the correct answer is E.
Page 135-150: Self Review 1
c) what will the bond sell for?
d) what percent of the bond’s total price is represented by the present value of the coupons?
Page135-150 Self Review 1
a) what will the bond sell for?
b) what percent of the bond’s total price is represented by the present value of the coupons?
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. An increase in interest rates reduces bond values. However, the decline in value of long-term bonds is more than the decline in value of short-term bonds because a change in interest rates has only a modest impact on the present value of near-term cash flows but a greater impact on the present value of distant cash flows. Bonds with longer maturity have a higher sensitivity to changes in market interest rates and have higher interest rate risk.
Bonds carry reinvestment rate risk, which is the risk that cash flows received may not be able to be reinvested at the expected rates if market rates have changed. It is important when there is a decrease in market interest rates. When a bond investor makes a short-term bond investment, if market interest rates decline when this investment matures, the proceeds from short-term investment will be reinvested at a lower interest rate. Long-term bond investors face higher interest rate risk and will have a disadvantage when market interest rates increase whereas short-term bond investor faces higher reinvestment rate risk and will have a disadvantage when market interest rates decline.
As also understood from the information given, all of the statements in the options about bond investors are correct, so the correct answer is E.
Soru 46
- Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures.
- Yield-to-maturity of a bond selling at par is equal to its coupon interest rate.
- For discount bonds, yield-to-maturity is greater than their coupon rate
- Yield-to-maturity of premium bonds is less than their coupon rate.
- Yield-to-maturity has two components: current yield (annual coupon/current bond price) and capital gains yield ((p1-p0)/p0).
Seçenekler
A
I and II
B
II and IV
C
II, III and IV
D
I, III, IV and V
E
I, II, III, IV and V
Açıklama:
Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price. It is like an internal rate of return of a bond.
Calculating yield-to-maturity of a bond selling at par is easy. It is equal to its coupon interest rate. For discount bonds, yield-to-maturity is greater than their coupon rate whereas yield-to-maturity of premium bonds is less than their coupon rate.
Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield ((p1-p0)/p0).
As also understood from the information given, all of the statements in the options about yield-to- maturity are correct, so the correct answer is E.
Calculating yield-to-maturity of a bond selling at par is easy. It is equal to its coupon interest rate. For discount bonds, yield-to-maturity is greater than their coupon rate whereas yield-to-maturity of premium bonds is less than their coupon rate.
Yield-to-maturity has two components. The first one is the return you get from coupon payments, called current yield (annual coupon/current bond price). The second one is the return you get from the change in the value of bond, called capital gains yield ((p1-p0)/p0).
As also understood from the information given, all of the statements in the options about yield-to- maturity are correct, so the correct answer is E.
Soru 47
- Yield curve plots the relationship between bond yields and maturity.
- One can infer the future levels of interest rates by examining the shape of the yield curve.
- In general, yield curves are upward sloping because investors may require more yield to invest in long-term bonds.
- Prices of long-term bonds fluctuate more with the changes in interest rates.
- Downward sloping yield curve implies that short-term interest rates will increase in the future.
Seçenekler
A
I and II
B
II and V
C
I, III and IV
D
I, II, III and IV
E
II, III, IV and V
Açıklama:
Yield curve plots the relationship between bond yields and maturity. One can infer the future levels of interest rates by examining the shape of the yield curve. In general, yield curves are upward sloping because investors may require more yield to invest in longterm bonds. First, as maturity increases, uncertainty in investing long-term bonds is higher. Second, prices of long-term bonds fluctuate more with the changes in interest rates. Long-term bonds have higher interest rate risk. Upward sloping yield curve implies that short-term interest rates will increase in the future.
As also understood from the information given, the statements in the options I, II, III and IV are correct, so the correct answer is D. The statement in the option V is not correct because of the fact that upward sloping yield curve implies that short-term interest rates will increase in the future.
As also understood from the information given, the statements in the options I, II, III and IV are correct, so the correct answer is D. The statement in the option V is not correct because of the fact that upward sloping yield curve implies that short-term interest rates will increase in the future.
Soru 48
- You have a right to vote in the shareholders’ meeting
- You have a right to receive dividends, if the corporation decides to distribute any
- You have pre-emptive right.
- You have the right to receive your share of the residual (Assets Liabilities) in case of dissolution of the company.
Seçenekler
A
Only III
B
I and II
C
II and III
D
I, III and IV
E
I, II, III and IV
Açıklama:
If you purchase stocks of a company, you become an owner of that company. As an owner, you have several rights. One of them is voting right. You have a right to vote in the shareholders’ meeting. Second, you have a right to receive dividends, if the corporation decides to distribute any. They will be cash flows you expect to get in investing in stocks. Third, you have pre-emptive right. If the company issues additional shares, you have a right to purchase your share of these shares (sometimes at a discount) before the new stocks are offered to the public in order to protect your initial share in the company. Fourth, the right to receive your share of the residual (Assets Liabilities) in case of dissolution of the company. Note that this residual may be significantly different from the accounting number as it will depend on market values and not accounting values.
As also understood from the information given, if you purchase stocks of a company you have all of the rights in the options, so the correct answer is E.
As also understood from the information given, if you purchase stocks of a company you have all of the rights in the options, so the correct answer is E.
Soru 49
- The Profitability
- Growth Prospects
- Investment Requirements
- Payout Decisions of the Company
Seçenekler
A
Only I
B
I and II
C
I and IV
D
I, III and IV
E
I, II, III and IV
Açıklama:
The cash flows that are associated with stocks are the dividends that the firm may pay and price that the investor receives when she sells the shares. Dividends are paid only after interest and other required payments are made to creditors and they are not fixed amounts; Dividends depend on the profitability, growth prospects, investment requirements and payout decisions of the company. As a result, their timing and quantities are uncertain and they are more risky than debt securities. In order to compensate for this greater risk, they need to offer greater expected returns in order to make them attractive to investors.
As also understood from the information given, dividends depend on all of the factors in the options, so the correct answer is E.
As also understood from the information given, dividends depend on all of the factors in the options, so the correct answer is E.
Soru 50
- 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
Seçenekler
A
I and II
B
I, III and IV
C
II, III and IV
D
I, III, IV and V
E
I, II, III, IV and V
Açıklama:
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.
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.
Soru 51
Which of the following statements about bonds is FALSE?
Seçenekler
A
When the market interest rate is equal to the coupon interest rate, bonds sell at their par value.
B
When the market interest rate is below the coupon interest rate, bonds sell above their par value.
C
When the market interest rate exceeds the coupon interest rate, bonds sell below their par value.
D
There is an inverse relationship between value of bonds and market interest rates
E
Bonds with longer maturity have a higher sensitivity to changes in market have lower interest rate risk.
Açıklama:
Bonds with longer maturity have a higher sensitivity to changes in market interest rates and have higher interest rate risk.
Soru 52
................... bond investors face higher reinvestment rate risk
and will have a disadvantage when market interest rates decline.
and will have a disadvantage when market interest rates decline.
Seçenekler
A
Short-term
B
Long-term
C
Premium
D
Discount
E
Government
Açıklama:
When a bond investor makes a short-term bond investment, if market interest rates decline when this investment matures, the proceeds from short-term investment will be reinvested at a lower interest rate. Thus, short-term bond investor faces higher reinvestment rate risk and will have a disadvantage when market interest rates decline.
Soru 53
.....................bonds have a higher sensitivity to changes in market interest rates and have higher interest rate risk.
Seçenekler
A
Short-term
B
Long-term
C
Premium
D
Discount
E
Government
Açıklama:
An increase in interest rates reduces bond values. However,the decline in value of long-term bonds is more than the decline in value of short-term bonds because achange in interest rates has only a modest impact on the present value of near-term cash flows but a greater impact on the present value of distant cash flows. Therefore, long-term bonds have a higher sensitivity to
changes in market interest rates and have higher interest rate risk.
changes in market interest rates and have higher interest rate risk.
Soru 54
When the market's required rate of return for a particular bond is much less than its coupon rate, the bond is selling at ................
Seçenekler
A
a premium
B
a discount
C
par value
D
yield to maturity
E
expected rate of return
Açıklama:
When the market's required rate of return for a particular bond is much less than its coupon rate, then this implies the market interest rates have declined and the value of the bond has increased. Hence, the bond is selling at a premium.
Soru 55
What does an upward sloping yield curve imply?
Seçenekler
A
Short-term interest rates will increase in the future
B
Long-term interest rates will increase in the future
C
Long-term interest rates will decrease in the future
D
Short-term interest rates will decrease in the future
E
Inflation will rise in the future.
Açıklama:
Upward sloping yield curve implies that short-term interest rates will increase in the future.
Soru 56
Why are lower rated companies expected to provide higher yields than higher rated companies with the same maturity?
Seçenekler
A
Because they have higher default risk
B
Because they have higher maturity risk
C
Because they have lower liquidity risk
D
Because they have lower credit risk
E
Because they have higher interest rate risk
Açıklama:
Lower rated companies have higher default risk and their bonds are required to provide very high yield in order to attract investors to invest in these bonds.
Soru 57
If the intrinsic value of a stock is smaller than its market value, which of the following is a reasonable conclusion?
Seçenekler
A
The market is underpricing the stock
B
The market is overpricing the stock
C
The stock has a high dividend payout ratio
D
The stock has a high price earnings ratio
E
The stock has a high credit risk
Açıklama:
If the market price is greater than intrinsic value, then stock is overpriced in the
market.
market.
Soru 58
Stocks that provide all or almost all of their returns from dividend yield are called .......... stocks.
Seçenekler
A
Income
B
Growth
C
Dividend
D
Capital
E
Gain
Açıklama:
Stocks that provide all or almost all of their returns from dividend yield are
referred to as income stocks.
referred to as income stocks.
Soru 59
Suppose that you are planning to invest in a stock that will pay TL 2.5 as dividend and its price will be TL 55 next year. Assume that this stock is correctly priced in the market and its market price is TL 50. If you buy it at this market price, then what is your expected dividend yield and capital gain yield?
Seçenekler
A
5%; 10%
B
4.5%; 9.1%
C
10% ; 5 %
D
9.1%; 4.5%
E
9%; 4%
Açıklama:
2.5/50=5 % ; (55-50)/50 = 10 %
Soru 60
Cash flows available to the firm or to the shareholders after the company makes its capital expenditures are defined as ................
Seçenekler
A
Dividends
B
Earnings
C
Profits
D
Free Cash Flows
E
Financing cash flows
Açıklama:
Cash flows available to the firm or to the shareholders after the company makes its capital expenditures are defined as free cash flows.
Soru 61
Which of the followings is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time?
Seçenekler
A
Coupon
B
Bond
C
Maturity
D
Current Yield
E
Stock
Açıklama:
BONDS
A bond is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time plus it also pays out the face value of the bond at maturity together with the last coupon payment.
A bond is a debt security that contractually obligates the issuer to make fixed coupon payments at fixed intervals for a fixed amount of time plus it also pays out the face value of the bond at maturity together with the last coupon payment.
Soru 62
Which of the followings happens if market interest rates increase?
Seçenekler
A
The price of bonds decrease.
B
The price of bonds increase.
C
The present value of cash flows from bonds decrease.
D
The cash flows from the bond stays the same.
E
Market interest rates change.
Açıklama:
If market interest rates increase, the price of bonds decrease.
Soru 63
Which of the following results occur as market interest rates increase?
Seçenekler
A
The value of bond increases.
B
The present value of future cash flows increases.
C
The present value of future cash flows declines.
D
Coupon interest rate declines.
E
Coupon interest rate increase.
Açıklama:
Valuation of Bonds and Stocks
There is an inverse relationship between value of bonds and market interest rates. As market interest rates increase, the present value of future cash flows declines and the value of bond decreases. Conversely, if market interest rates decrease, the present value of future cash flows increases and the value of bond increases. It is important to note that market interest rates might change but there is no change in coupon interest rate.
There is an inverse relationship between value of bonds and market interest rates. As market interest rates increase, the present value of future cash flows declines and the value of bond decreases. Conversely, if market interest rates decrease, the present value of future cash flows increases and the value of bond increases. It is important to note that market interest rates might change but there is no change in coupon interest rate.
Soru 64
Which of the followings is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures?
Seçenekler
A
Face (Par, Nominal) Value
B
Yield to Maturity
C
Current Yield
D
Capital Gains Yield
E
Yield Curve
Açıklama:
Yield-to-maturity is the average rate of return that will be earned on a bond if it is bought at the market price and held until it matures. It is the discount rate that makes the present value of its future cash flows equal to its market price.
Soru 65
Which of the following results occur if the market rate of interest and the bond’s yield-to-maturity does not change during a particular period?
Seçenekler
A
The rate of return will be higher than the bond’s yield-to-maturity.
B
The rate of return will be less than the bond’s yield to maturity.
C
The present value of future cash flows declines and the value of bond decreases.
D
The present value of future cash flows increases and the value of bond decreases.
E
The bond’s rate of return will be equal to its yield-to-maturity.
Açıklama:
If the market rate of interest and the bond’s yield-to-maturity does not change over this period, then the bond’s rate of return will be equal to its yield-to-maturity.
Soru 66
Which of the following statements is not true regarding "Nominal and Real Interest Rates"?
Seçenekler
A
The interest rates you observe in the world around you are typically real interest rates.
B
They are usually assumed to have a real interest rate component and another component to compensate for expected inflation.
C
Investors in bonds expect to receive fixed payments in the future (fixed coupon payments and par value at maturity).
D
Assuming that investors care about the purchasing power of their cash flows, they would need to be compensated for the expected inflation.
E
The Fisher equation shows us the relationship between Nominal interest rates and real interest rates that an investor should have.
Açıklama:
Nominal and Real Interest Rates
The interest rates you observe in the world around you are typically nominal rates.
The interest rates you observe in the world around you are typically nominal rates.
Soru 67
Which of the followings plots the relationship between bond yields and maturity?
Seçenekler
A
Yield to Maturity
B
Dividend
C
Current Yield
D
Yield curve
E
Capital Gains Yield
Açıklama:
The Yield Curve
Yield curve plots the relationship between bond yields and maturity.
Yield curve plots the relationship between bond yields and maturity.
Soru 68
Which of the followings suggests that the value of stock is equal to the present value of all future dividends that investors expect to get from that stock?
Seçenekler
A
Dividend Discount Model
B
Zero Growth
C
Constant Growth
D
Supernormal Growth
E
Free Cash Flow
Açıklama:
Dividend Discount Model
According to this model, the value of stock is equal to the present value of all future dividends that investors expect to get from that stock.
According to this model, the value of stock is equal to the present value of all future dividends that investors expect to get from that stock.
Soru 69
Which of the following statements is not true regarding bonds?
Seçenekler
A
The value of a bond comes from the present value of two separate components.
B
The discount rate to use in present value calculations is market rate of interest for investments of this risk and maturity.
C
If the market rate of interest is equal to the coupon rate then the bond will have a value equal to its par value.
D
The price of a bond is inversely related to the market interest rate.
E
Bond prices decline when interest rates rise and bond prices rise when interest rates decrease.
Açıklama:
Calculate the value of a bond and understand the relationship between the market interest rate and value of a bond.
Bond prices fall when interest rates rise and bond prices rise when interest rates decrease.
Bond prices fall when interest rates rise and bond prices rise when interest rates decrease.
Soru 70
If you purchase stocks of a company, you become an owner of that company. As an owner, you have several rights.
Which of the followings is not among these rights?
Which of the followings is not among these rights?
Seçenekler
A
To vote
B
To receive dividends
C
To share in the residual in case of dissolution
D
To decide how much dividend the company will distribute in the future
E
To prevent undesired reduction of ownership share
Açıklama:
STOCKS
It is not possible to know how much dividend the company will distribute in the future.
It is not possible to know how much dividend the company will distribute in the future.
Ünite 6
Soru 1
What will be the beta of an asset whose expected return is 12 % given the expected market return is 10% and risk free return is 6%?
Seçenekler
A
2
B
1.5
C
1
D
0.6
E
0.5
Açıklama:
E(RA)=RF+B(E(RM)-RF) will give the expected return of asset A (RA) given the expected market return (E(RM)) and risk-free return (RF). Thus:
12=6+(10-6)B
6=4B
1.5=B
12=6+(10-6)B
6=4B
1.5=B
Soru 2
Suppose that you have an investment whose quarterly return rates are 5%, 7%, 9% and 3% in a given year. What is the variance of returns in the given year?
Seçenekler
A
0.0005
B
0.0010
C
0.0015
D
0.0018
E
0.002
Açıklama:
Average rate = (0.05 + 0.07 + 0.09 + 0.03)/4 = 0.06
Variance=(1/4)*((0.05-0.06)2+(0.07-0.06)2+(0.09-0.06)2+(0.03-0.06)2)=(1/4)*(0.0001+0.0001+0.0009+0.0009)=0.0005
Variance=(1/4)*((0.05-0.06)2+(0.07-0.06)2+(0.09-0.06)2+(0.03-0.06)2)=(1/4)*(0.0001+0.0001+0.0009+0.0009)=0.0005
Soru 3
The covariance that has been standardized to be between -1 to +1 is called......
Seçenekler
A
Variance
B
Standart deviation
C
Average deviation
D
Expected return
E
Correlation
Açıklama:
That is definition of correlation. If the correlation is negative then the prices or returns are moving in inverse directions, if the correlation is positive they are moving in same directions and if correlation is zero then there is no relation.
Soru 4
Suppose that you invest 30% of your money in security A, %50 in security B and the rest in security C. The expected returns of A, B and C are given as 10%, 8% and 5% respectively. What is your expected rate of return for this investment?
Seçenekler
A
10%
B
9%
C
8%
D
7%
E
6%
Açıklama:
Expected return of a portfolio is the weighted average of returns of securities in that portfolio. The share of C=1-0.5-0.3=0.2
Thus, expected return will be:
ER=0.3*10+0.5*8+0.2*5=3+4+1=8%
Thus, expected return will be:
ER=0.3*10+0.5*8+0.2*5=3+4+1=8%
Soru 5
Suppose that security X has an expected return of 10% and security Y has an expected return of 5 %. What is the interval of expected rate of return of a portfolio consisting X and Y?
Seçenekler
A
(0,5)
B
(0,10)
C
(8,10)
D
(5,10)
E
(10,15)
Açıklama:
Suppose that weight of X in portfolio is w. Then the weight of Y will be 1-w, given 0
since 0
multiplying all sides with 5: 0<5w<5
adding 5 to all sides: 5<5+5w<10. Thus the expected return of portfolio will be between 5 and 10. Therefore correct answer is D.
since 0
multiplying all sides with 5: 0<5w<5
adding 5 to all sides: 5<5+5w<10. Thus the expected return of portfolio will be between 5 and 10. Therefore correct answer is D.
Soru 6
What is the effect of combining assets with negative correlation on the expected return and expected risk (variance) of a portfolio?
Seçenekler
A
It increases the expected return, but decreases the expected risk
B
It decreases the expected return, but increases the expected risk
C
It decreases both the expected return and the expected risk
D
It increases both the expected return and the expected risk
E
It doesn't affect the expected return and but decreases the expected risk
Açıklama:
Combining assets with negaive correlation decreases both the risk and rate of return of a portfolio.
Soru 7
The risk which may be eliminated at little or no cost with proper diversification is called......
Seçenekler
A
Systematic risk
B
Unsystematic risk
C
Portfolio risk
D
Asset risk
E
Market risk
Açıklama:
The risk which can be diminished by diversification is called unsystematic risk because the source of the risk is not the market.
Soru 8
Which of the following measures the co-movement of a securities returns with the market return?
Seçenekler
A
Beta
B
Alfa
C
Sigma
D
Theta
E
Omega
Açıklama:
Beta measures the co-movement of a securities returns with the market return. It is stimated by standardizing the covariance between a given security and market portfolio with the variance of the market.
Soru 9
Which securities on the graph above are over-valued?Seçenekler
A
C and D
B
E and D
C
A and C
D
B and E
E
A and B
Açıklama:
The securities above the security market line (SML) are over-valued. So A and B are overvalued, D and C are under-valued, E is correctly valued.
Soru 10
Which of the following is true for the graph above?Seçenekler
A
Z is preferable to X because it provides more return for same level of risk
B
X is not feasible
C
Y is not feasible
D
X is preferable to Y because it provides same level of return with less risk
E
Y and Z are efficient
Açıklama:
X is preferable to Y because they have same rate of return but X is less risky. Also, X is preferable to Z because for same level of risk, X provides higher rate of return. Y and Z are feasible but not efficient. X is the single efficient point among them.
Soru 11
_____ of the Efficient Markets Hypothesis states that all publicly available information is fully reflected in prices.
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
Weak form
B
Semistrong form
C
Strong form
D
Ineffi cient market overreaction response
E
Effi cient market response
Açıklama:
Semistrong form of the EMH states that all publicly available information is fully reflected in prices. If semistrong form efficiency holds, it should not be possible for investors using publicly available information to obtain consistent excess profits.
Soru 12
The correlation always lies between _____ (perfect positive correlation) and _____ (perfect negative correlation).
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
+1 and -1
B
+1 and 0
C
0 and -1
D
+2 and -1
E
+2 and -2
Açıklama:
Since covariance is standardized by dividing by the standard deviations, the correlation always lies between +1 (perfect positive correlation) and -1 (perfect negative correlation). Zero correlation would mean there is no relation at all.
Soru 13
Market, portfolio or systematic risk is the uncertainty inherent to the market that cannot be controllable. On the other hand, the diversifiable, unique or unsystematic risk is the uncertainty that is related to the _____ .
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
costs
B
correlation
C
invested asset
D
regulations
E
Variance
Açıklama:
Market, portfolio or systematic risk is the uncertainty inherent to the market that cannot be controllable. On the other hand, the diversifiable, unique or unsystematic risk is the uncertainty that is related to the invested asset. Therefore, unsystematic risk can be reduced through diversification whereas systematic risk cannot.
Soru 14
The Capital Market Line (CML) is the line that connects the _____ with the _____.
Which of the following best completes the statement above?
Which of the following best completes the statement above?
Seçenekler
A
Risk free asset - market portfolio
B
Risk - return
C
Expected returns - unexpected returns
D
Risky securities - risk free assets
E
Trade - Return
Açıklama:
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.
Soru 15
_____ describes the relationship between the systematic risk of a security, namely beta, and expected returns.
Which of the following best complete the statement above?
Which of the following best complete the statement above?
Seçenekler
A
Deviation
B
Capital market line
C
Beta
D
The Security Market Line
E
Capital-Asset-Pricing Model
Açıklama:
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.
Soru 16
Which of the following is defined as "the excess return required on a risky asset over that earned on a risk-free asset"?
Seçenekler
A
Variance
B
Risk premium
C
Risky asset
D
Cost of return
E
Average return
Açıklama:
Risk-free return is the rate of return that investors require to invest in risk free investments in that environment. The short term T-Bill rate is usually used to measure it. The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.
Soru 17
The earnings of a company for the first quarter of the year fell by 40%, however, the stock price did not change after the announcement. The general market was also flat during this period.
Which of the following best explain the situation above?
Which of the following best explain the situation above?
Seçenekler
A
The price didn’t change because the market was stable.
B
The news were already priced in.
C
Interest rates in the banks have increased.
D
The firm beta equals to one
E
The market was surprised by the announcement.
Açıklama:
Strong form of the EMH states that all privately and publicly available information is fully reflected in prices. If strong form efficiency holds, it should not even be possible for insiders like managers, owners, bankers, politicians, or judges using private information to obtain consistent excess profits. Even insiders trading on their information (independent of legal and ethical considerations) are engaging in useless activities.
Soru 18
Which of the following is the correct definition of Expected return of a portfolio?
Seçenekler
A
the covariance of the returns of securities.
B
the weighted average of the returns of securities.
C
the standard deviation of the returns of securities.
D
the addition of the returns of securities.
E
the variance of the returns of securities.
Açıklama:
Expected return of a portfolio is simply the weighted average of the returns of securities.
Soru 19
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?
Which of the following could not be an example of unexpected information?
Seçenekler
A
News of a large accident at the factory.
B
Announcement of a new facility being built
C
Announcement of the latest growth rate of the economy
D
Large swings in the value of the national currency
E
Yearly inflation rate
Açıklama:
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
• 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
Soru 20
Beta is used to measure the risk level of securities in relation to the overall market. Beta values do not have a limit, they can range from negative infinity to positive infinity. However, the vast majority of beta values will lie between 0 and +2.
Which of the following is true If 1> Beta >0?
Which of the following is true If 1> Beta >0?
Seçenekler
A
the security has average risk and returns are expected to be similar to the market.
B
the security has below average risk and may be constant or if not constant then varying totally independently from market returns.
C
the security has above average risk and returns are expected to be more extreme and in the same direction as the market
D
the security has below average risk and returns are expected to be less extreme and in the same direction as the market
E
security has very low risk and returns are expected to move in opposite direction with the market.
Açıklama:
Beta is used to measure the risk level of securities in relation to the overall market. Beta values do not have a limit, they can range from negative infinity to positive infinity. However, the vast majority of beta values will lie between 0 and +2. Beta values can be interpreted using the following guidelines:
(i) 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 market returns go up 1%, security returns on average go up >1%.
(ii) If Beta = 1, then the security has average risk and returns are expected to be similar to the market. If market returns go up 1%, security returns on average go up 1%.
(iii) If 1> Beta >0, then the security has below average risk and returns are expected to be less extreme and in the same direction as the market. If market returns go up 1%, security returns on average go up <1%.
(iv) If Beta = 0, then the security has below average risk. The security returns may be constant or if not constant then varying totally independently from market returns.
(v) If Beta < 0, then security has very low risk and returns are expected to move in opposite direction with the market. This type of security is not common and may be insurance related. These securities may be very useful in reducing portfolio risk.
(i) 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 market returns go up 1%, security returns on average go up >1%.
(ii) If Beta = 1, then the security has average risk and returns are expected to be similar to the market. If market returns go up 1%, security returns on average go up 1%.
(iii) If 1> Beta >0, then the security has below average risk and returns are expected to be less extreme and in the same direction as the market. If market returns go up 1%, security returns on average go up <1%.
(iv) If Beta = 0, then the security has below average risk. The security returns may be constant or if not constant then varying totally independently from market returns.
(v) If Beta < 0, then security has very low risk and returns are expected to move in opposite direction with the market. This type of security is not common and may be insurance related. These securities may be very useful in reducing portfolio risk.
Soru 21
1.Expected returns
2.Risk levels
3.Possible interactions/co-movements with other securities
4.Trends
Which of the above should we take into account when deciding on an investment?
2.Risk levels
3.Possible interactions/co-movements with other securities
4.Trends
Which of the above should we take into account when deciding on an investment?
Seçenekler
A
1 and 2
B
2 and 3
C
3 and 4
D
1,2 and 3
E
1,3 and 4
Açıklama:
When deciding on an investment, we should take into account not only their expected returns and risk levels, but also possible interactions/ co-movements with other securities.
Soru 22
Which of the following sentences is wrong?
Seçenekler
A
Correlation always lies between +1 and -1
B
Zero correlation means there is no correlation at all
C
Covariance is standardized by dividing by the standard deviations
D
The sign of correlation is determined by whether the covariance is positive or negative
E
The correlation between two returns is affected by the ordering of variables
Açıklama:
Similar to covariance, the correlation between two returns is not affected by the ordering of variables.
Soru 23
- Announcement of the latest growth rate of the economy
- Announcement of a new facility being built that will significantly increase the production capacity of the company
- Announcement of a new contract to sell large quantity of products to another country
- News of a large accident at the factor
Seçenekler
A
Unexpected information
B
Systematic risk
C
Unsystematic risk
D
Expected return
E
Unexpected return
Açıklama:
Unexpected returns are the result of new unexpected information arriving to the market during the period which changes some of the factors we believe are pertinent to the valuation of Aselsan. 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
• 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
Soru 24
1. Systematic risk can be reduced through diversification
2. Unsystematic risk is the uncertainty that isrelated to the invested asset
3. On average unexpected returns should be positive
4. Unexpected returns can be broken down into a systematic risk and unsystematic risk components
Which of the statements are true?
2. Unsystematic risk is the uncertainty that isrelated to the invested asset
3. On average unexpected returns should be positive
4. Unexpected returns can be broken down into a systematic risk and unsystematic risk components
Which of the statements are true?
Seçenekler
A
1 and 2
B
1 and 3
C
2 and 4
D
3 and 4
E
2 and 3
Açıklama:
Unsystematic risk can be reduced through diversification whereas systematic risk cannot.
In any given period, unexpected returns may be negative or positive, however, on average they should be zero.
In any given period, unexpected returns may be negative or positive, however, on average they should be zero.
Soru 25
1. As long as p less than 1, there will always be a diversification benefit
2. The correlation lies between -0.5 and +0.5
3. The diversification benefit would be eliminated at +1 correlation
4. The maximum diversification benefit would be reached at -0.5
Which of the above statements are true?
2. The correlation lies between -0.5 and +0.5
3. The diversification benefit would be eliminated at +1 correlation
4. The maximum diversification benefit would be reached at -0.5
Which of the above statements are true?
Seçenekler
A
1 and 2
B
1 and 3
C
2 and 3
D
3 and 4
E
1 and 4
Açıklama:
The correlation lies between -1 and +1. The maximum diversification benefit would be
reached at -1 correlation.
reached at -1 correlation.
Soru 26
- 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
Seçenekler
A
1
B
2
C
3
D
4
E
5
Açıklama:
All statements are true.
Soru 27
Which of the following statements about Beta is wrong?
Seçenekler
A
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
B
If Beta=1, the security has average risk and returns are expected to be similar to the market
C
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
D
If Beta=0, the security has below average risk
E
If Beta<0, security has very low risk and returns are expected to move in opposite direction with the market
Açıklama:
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.
Soru 28
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 true?
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 true?
Seçenekler
A
1 and 2
B
1 and 3
C
2 and 3
D
3 and 4
E
1 and 4
Açıklama:
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.
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.
Soru 29
Which of the following is the definition of the capital-asset-pricing model?
Seçenekler
A
It is a model describing the relationship between the unsystematic risk of a security and expected returns
B
It is a model describing the relationship between the unsystematic risk of a security and unexpected returns
C
It is a model describing the relationship between the systematic risk of a security and unexpected returns
D
It is a model describing the relationship between the systematic risk of a security and expected returns
E
It is a model describing the relationship between risk-free asset and expected returns
Açıklama:
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.
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.
Soru 30
- It is the relationship between expected returns and beta
- It deals with systematic risk
Seçenekler
A
Security Market Line
B
Capital Market Line
C
Profit Market Line
D
Loss Market Line
E
Risk Market Line
Açıklama:
SML is the relationship between expected returns and beta, not
standard deviation. In this regard, CML deals with portfolio risk whereas SML deals with systematic risk.
standard deviation. In this regard, CML deals with portfolio risk whereas SML deals with systematic risk.
Soru 31
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?
Seçenekler
A
U.S. Small Stocks
B
U.S. Large Stocks
C
U.S. Long Term Corporate Bonds
D
U.S. Long Term Government Bonds
E
U.S. Treasury Bills
Açıklama:
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.
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.
Soru 32
Which of the following is expected to yield more based on the historical data of Turkey over the period of 2006-2017?
Seçenekler
A
BIST 100
B
One-year deposit
C
One-month deposits
D
10-year Government Bond
E
1-year Government Bond
Açıklama:
BIST 100 is expected to yield more based on the historical data for the Turkey Economy over the period of 2006-2017
Soru 33
In an efficient market, prices .... reflect .... available information.
Which of the word pairs below does correctly fill the blanks in the sentence given above?
Which of the word pairs below does correctly fill the blanks in the sentence given above?
Seçenekler
A
semi - some
B
partly - all
C
fully - some
D
does not - all
E
fully - all
Açıklama:
In an efficient market, prices fully reflect all available information. Therefore the correct answer is E.
Soru 34
Which one of the following is a measure for risk-free return rate?
Seçenekler
A
Growth stocks
B
Income stocks
C
10-year government bonds
D
1-year company bond
E
Short term T-Bills
Açıklama:
Risk-free return is the rate of return that investors require to invest in risk-free
investments in that environment. The short term T-Bill rate is usually used to measure it.
investments in that environment. The short term T-Bill rate is usually used to measure it.
Soru 35
Which of the following is correct for the Efficient Market concept?
Seçenekler
A
Weak form of the EMH states that all information contained in past prices is partly reflected in prices.
B
In the weak form of Efficient Markets, chartists and other technical analysts are exploit the weaknesses.
C
If weak-form efficiency holds, it is possible for investors using information from past price changes to obtain consistent excess profits.
D
If semistrong form efficiency holds, it should not be possible for investors using publicly available information to obtain consistent excess profits.
E
If semistrong form efficiency holds, security analysts and others involved in conducting fundamental analyses with financial statements and other publicly available information are engaging useful activities
Açıklama:
A, B, C and E are false, whereas D is correct: If semistrong form efficiency holds, it should not be possible for investors using publicly available information to obtain consistent excess profits.
Soru 36
Which of the following is not considered when adjusting the risk-return bias of a portfolio?
Seçenekler
A
Expected return of individual securities
B
Standard deviation of individual securities
C
Correlation between securities
D
How each security would contribute to the portfolio return
E
The monetary amount of the portfolio
Açıklama:
Here, the investor should consider:
(i) Expected return of individual securities, and how each would contribute to the portfolio return,
(ii) Standard deviation of individual securities, correlation between securities, and how these would
impact the standard deviation of the portfolio.
The monetary amount of a portfolio is not relative. Therefore, the answer is E
(i) Expected return of individual securities, and how each would contribute to the portfolio return,
(ii) Standard deviation of individual securities, correlation between securities, and how these would
impact the standard deviation of the portfolio.
The monetary amount of a portfolio is not relative. Therefore, the answer is E
Soru 37
What is the maximum value for the correlation of securities to provide a benefit from diversification?
Seçenekler
A
0.1
B
0.5
C
1
D
5
E
10
Açıklama:
As long as ρ is less than 1, there will always be a diversification benefit to investing in a portfolio.
Soru 38
Which of the following is the value for correlation of two securities that creates the maximum diversification?
Seçenekler
A
-100
B
-1
C
0
D
1
E
100
Açıklama:
Remembering that the correlation lies between -1 and +1, the benefit would be eliminated at +1, whereas the maximum diversification benefit would be reached at -1. Therefore, the correct answer is B.
Soru 39
Which of the following can be considered as an unsystematic risk?
Seçenekler
A
Infliation
B
Decleration of international trading bans
C
Currency slumps
D
Stock Exchange System Fails
E
Idiosyncratic risks of the companies
Açıklama:
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.
Soru 40
Which of the following can be considered as a systematic risk?
Seçenekler
A
A natural disaster affecting some companies at a specific region
B
A contractual flaw that results against a company
C
Information system failure resulting in a loss of money
D
An accident in the production system in a factory of a company
E
A security bug in the SWIFT payment system
Açıklama:
A possible security bug in the SWIFT payment system will create losses for almost all companies. The consequences of this risk make it a systematic risk. The other risks given in A, B, C and D are unsystematic risks that affects a limited number of companies.
Soru 41
I.As a holder of some stocks, you own a part of the company and you have the right to benefit from the profitability of the company.
II.During periods where the company loses money, the companies are not able to satisfy the expectations of their shareholders.
III.Shareholders will have capital gains if the market price of your stocks have increased.
Which one/ones above is/are correct about the return on stocks?
II.During periods where the company loses money, the companies are not able to satisfy the expectations of their shareholders.
III.Shareholders will have capital gains if the market price of your stocks have increased.
Which one/ones above is/are correct about the return on stocks?
Seçenekler
A
Only I
B
I-II
C
I-III
D
II-III
E
I-II-III
Açıklama:
RETURNS
Even during periods where the company loses money, the companies may strategically decide to distribute dividends (as long as they have cash and sufficient retained earnings from the past) in order to satisfy the expectations of their shareholders and
manage their position in the market.
Even during periods where the company loses money, the companies may strategically decide to distribute dividends (as long as they have cash and sufficient retained earnings from the past) in order to satisfy the expectations of their shareholders and
manage their position in the market.
Soru 42
"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 return in TL be at the end of the year?
Seçenekler
A
50
B
150
C
200
D
420
E
130
Açıklama:
RETURNS
Total investment C0 = 200 x 1= T200
Capital gain (220 − 200) x 1= T20
Dividend T30
20+30=50
Total investment C0 = 200 x 1= T200
Capital gain (220 − 200) x 1= T20
Dividend T30
20+30=50
Soru 43
I.It is the rate of return that investors require to invest in risk free investments in that environment.
II.The short term T-Bill rate is usually used to measure it.
III.The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.
Which one/ones above is/are correct about risk free returns?
II.The short term T-Bill rate is usually used to measure it.
III.The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.
Which one/ones above is/are correct about risk free returns?
Seçenekler
A
Only I
B
I-II
C
I-III
D
II-III
E
I-II-III
Açıklama:
Calculatif Returns
Risk-free return is the rate of return that investors require to invest in risk free investments in that environment. The short term T-Bill rate is usually used to measure
it. The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.
Risk-free return is the rate of return that investors require to invest in risk free investments in that environment. The short term T-Bill rate is usually used to measure
it. The Risk premium is the return in excess of the risk-free rate that investors require to compensate for the risk of an investment.
Soru 44
Which one below is a component of weak form in the results of the EMH?
Seçenekler
A
EMH states that all publicly available information is fully reflected in prices.
B
EMH states that all privately and publicly available information is fully reflected in prices.
C
It should not be possible for investors using information from past price changes to obtain consistent excess profits.
D
It should not be possible for investors using publicly available information to obtain consistent excess profits.
E
Even insiders trading on their information (independent of legal and ethical considerations) are engaging in useless activities
Açıklama:
The Efficiency of Financial Markets
Weak form of the EMH states that all information contained in past prices is fully reflected in prices. If weak-form efficiency holds, it should not be possible for investors using information from past price changes to obtain consistent excess profits. Chartists and other technical analysts are engaging in useless activities.
Weak form of the EMH states that all information contained in past prices is fully reflected in prices. If weak-form efficiency holds, it should not be possible for investors using information from past price changes to obtain consistent excess profits. Chartists and other technical analysts are engaging in useless activities.
Soru 45
Which one below is not an example of relevant new information arriving to the market?
Seçenekler
A
Announcement of the latest growth rate of the economy
B
Announcement of a new contract to sell large quantity of products to another country
C
News of a large accident at the factory
D
The expenditure for an employee's new born baby
E
Large swings in the value of the national currency
Açıklama:
EXPECTED AND UNEXPECTED RETURNS, SYSTEMATIC AND UNSYSTEMATIC RISK
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
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
Soru 46
I.Market, portfolio or systematic risk is the uncertainty inherent to the market that cannot be controllable.
II.Systematic risk can be reduced through diversification.
III. Unsystematic risk can not be reduced through diversification.
Which one/ones above is/are correct about systematic and unsystematic risk?
II.Systematic risk can be reduced through diversification.
III. Unsystematic risk can not be reduced through diversification.
Which one/ones above is/are correct about systematic and unsystematic risk?
Seçenekler
A
Only I
B
I-II
C
I-III
D
II-III
E
Only II
Açıklama:
EXPECTED AND UNEXPECTED RETURNS, SYSTEMATIC AND UNSYSTEMATIC RISK
Market, portfolio or systematic risk is the uncertainty inherent to the market that
cannot be controllable. On the other hand, the diversifiable, unique or unsystematic
risk is the uncertainty that is related to the invested asset. Therefore, unsystematic
risk can be reduced through diversification whereas systematic risk cannot.
Market, portfolio or systematic risk is the uncertainty inherent to the market that
cannot be controllable. On the other hand, the diversifiable, unique or unsystematic
risk is the uncertainty that is related to the invested asset. Therefore, unsystematic
risk can be reduced through diversification whereas systematic risk cannot.
Soru 47
"It is used to measure the risk level of securities in relation to the overall market."Which notion below belongs to the given definition?
Seçenekler
A
The Capital Market Line
B
Market Portfolio
C
Beta
D
Divergent
E
T-Bill
Açıklama:
COMBINING RISKY SECURITIES WITH RISK-FREE ASSETS
Beta is used to measure the risk level of securities in relation to the overall market. Beta values do not have a limit, they can range from negative infinity to positive infinity.
Beta is used to measure the risk level of securities in relation to the overall market. Beta values do not have a limit, they can range from negative infinity to positive infinity.
Soru 48
Historically, which of the following investments has provided the smallest average return in USA Markets for 1926 - 2017 period?
Seçenekler
A
Treasury bills
B
Government bonds
C
Corporate bonds
D
Small company stocks
E
Large company stocks
Açıklama:
Historical Returns
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.
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.
Soru 49
Which one below is about the Degree of Operating Leverage of the factors that affect the Beta of a firm?
Seçenekler
A
Products/services that are more discretionary tend to have higher betas because they more affected by economic conditions.
B
Luxury goods and higher priced goods tend to be more cyclical compared to food and other necessities.
C
Companies with higher levels of debt are able to magnify the returns to their stockholders.
D
High operating leverage means that fixed costs have a high proportion within total costs.
E
It leads to large reductions and even losses when profits fall.
Açıklama:
Beta
Degree of Operating Leverage. High operating leverage means that fixed costs have a high proportion within total costs. High fixed cost proportion will lead to poor performance in bad times but very good performance in good times.
Degree of Operating Leverage. High operating leverage means that fixed costs have a high proportion within total costs. High fixed cost proportion will lead to poor performance in bad times but very good performance in good times.
Soru 50
"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?
Seçenekler
A
Capital-Asset-Pricing Model
B
Average Return Model
C
Systematic risk
D
Efficient Markets Hypothesis
E
Risk free return
Açıklama:
THE SECURITY MARKET LINE (SML) AND CAPITAL ASSET PRICING MODEL (CAPM)
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.
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.
Soru 51
The variance of a portfolio of 2 stocks is lower than the variance of the both of the variances of the individual stocks in the portfolio unless ………..
Seçenekler
A
They are perfectly negatively correlated
B
They are perfectly positively correlated
C
They trade in the same index
D
Their proportion is 50% in the portfolio
E
The coefficient correlation between their returns is 0
Açıklama:
As long as the correlation is lower than 1, there will always be a benefit of including that security in the portfolio.
Soru 52
The return in excess of the risk-free rate that investors require to
compensate for the risk of an investment is the ............
compensate for the risk of an investment is the ............
Seçenekler
A
Market risk
B
Risk premium
C
Excess risk
D
Expected Return
E
Expected risk
Açıklama:
The return in excess of the risk-free rate that investors require to
compensate for the risk of an investment is the risk premium.
compensate for the risk of an investment is the risk premium.
Soru 53
All portfolio compositions that reflect the positive relationship between risk and return are ………
Seçenekler
A
Below the characteristic line
B
Above the characteristic line
C
Above the minimum variance portfolio
D
Below the minimum variance portfolio
E
On the security market line
Açıklama:
Different points in this opportunity set would correspond to different securities or portfolios of securities. Despite the feasible set being the entire shaded area, we are still interested in determining the efficient set and that will be on the outside edge of this area. Once again, it is points on the curve from W to M (the minimum variance portfolio) that form the efficient set because they dominate all other points in the shaded area.They are the points that maximize expected returns for given levels of risk (standard deviation).
Soru 54
Someone who says “Do not put all your eggs in one basket” is referring to …………..
Seçenekler
A
Return Maximization
B
Stock valuation
C
Bond valuation
D
Return optimization
E
Diversification
Açıklama:
When we combine securities into a portfolio, the portfolio risk / standard deviation usually become less than their weighted average. The effect of diversification is risk reduction by investing in multiple securities so it is like reducing the risk by putting your eggs in multiple baskets rather than one basket.
Soru 55
Which of the following statements is TRUE?
Seçenekler
A
The variance of portfolio returns is the weighted average of the variances of the stock returns in the portfolio
B
The expected return of the portfolio is the weighted average of the stock returns in the portfolio
C
The standard deviation of portfolio returns is the weighted average of the standard deviation of the stock returns in the portfolio
D
The expected return of the portfolio is greater than the expected return of the individual stocks in the portfolio
E
The variance of the portfolio is greater than the variances of the individual stocks in the portfolio
Açıklama:
Expected return of a portfolio is simply the weighted average of the returns of securities.
Soru 56
The variance of portfolio depends on the following EXCEPT FOR …….
Seçenekler
A
The relation between the stocks in the portfolio
B
The variances of individual stock returns in the portfolio
C
The covariance between the individual stock returns
D
The expected return of the portfolio
E
The weights of the stocks in the portfolio
Açıklama:
The variance of a portfolio is a function of the individual security return variances and of the covariance / relation between them. It also depends on the weight of the securities in the portfolio. The variance of the portfolio does not depend on the expected return of the portfolio.
Soru 57
The average relationship between stock returns and the market returns can be modelled with the ………..
Seçenekler
A
Capital asset pricing model
B
Security market line
C
Capital market line
D
Characteristic line
E
Factor analysis
Açıklama:
The characteristic line of the security and the slope of this line shows how much the security return would change in response to a 1% change in market returns.
Soru 58
According to the capital-asset pricing model (CAPM), a security's expected (required) return is equal to the risk-free rate plus a risk premium …………….
Seçenekler
A
equal to the security's beta
B
proportional to the unsystematic risk of the security
C
proportional to the systematic risk of the security
D
equal to the variance of the security
E
based on the total risk of the security
Açıklama:
CAPM summarizes the expected returns on a security or portfolio as a summation of risk-free rate plus risk premium proportional to its beta (systematic risk)
Soru 59
Beta is the slope of …………………
Seçenekler
A
the security market line
B
the capital market line
C
a characteristic line
D
the CAPM
E
the factor model
Açıklama:
The slope of the characteristic line line shows how much the security return would change in response to a 1% change in market returns. Therefore, the slope of this line is the estimated beta coefficient of that security.
Soru 60
Those stocks the returns of which are relatively more sensitive to changes in the market returns have a higher ………… and …………...
Seçenekler
A
Systematic risk, beta
B
Unsystematic risk, alpha
C
Systematic risk, expected return
D
Unsystematic risk, expected return
E
Unsystematic risk, beta
Açıklama:
Beta measures the relevant (systematic) risk, which is the co-movement of a securities returns with the market return. Hence, those stocks the returns of which are relatively more sensitive to changes in the market returns have a higher systematic risk and beta.
Ünite 7
Soru 1
What is the maximum time limit for short term in financial planning?
Seçenekler
A
3 months
B
6 months
C
9 months
D
12 months
E
36 months
Açıklama:
Plans up to 1 year are called short term in financial planning.
Soru 2
Which of the following is not one of the outputs of financial planning process?
Seçenekler
A
Cash Flow Estimations
B
Working Capital Strategy
C
Short-Term Capital Budget
D
Long-Term Capital Budget
E
Cash Divident Policy
Açıklama:
Cash divident policy is not an output of financial planning but an assumption used in.
Soru 3
The strategies and operational tactics used in very bad unexpected economic and business conditions are called....
Seçenekler
A
Best Case Scenario
B
Normal Case Scenario
C
Usual Case Scenario
D
Worst Case Scenario
E
Second Best Solution
Açıklama:
This is called worst case scenario. In such cases policies such as cost reduction or even liquidation, should be developed in response to such deterioration in the business environment.
Soru 4
"The purpose of this aspect of financial analysis is to evaluate the effects of the possible financial and environmental changes on corporate activities in the future." Which aspect is described above?
Seçenekler
A
Cash Flows
B
Departmental analysis
C
Scenario Analysis
D
Short-term Time Frame
E
Long-term Time Frame
Açıklama:
Scenario Analysis:The flexibility of financial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in the future.
Soru 5
Which one is not about operational and financial data required for the financial planning process?
Seçenekler
A
Short and long term profit targets
B
Divisional proforma and realized budgets
C
Analysis of security portfolio and subsidiaries
D
The effectiveness and length of cash conversion cycle
E
Internal control reports
Açıklama:
Option D is about assumptions of financial planning.
Soru 6
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?
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?
Seçenekler
A
Only I
B
I-II
C
I-III
D
II-III
E
I-II-III
Açıklama:
The first dimension of financial planning is the time horizon. There exist two time horizons.
Soru 7
Which one can be the secondary goal of a sales budget?
Seçenekler
A
To determine the raw materials
B
To maximize volume
C
To maximize the market share
D
To reach a predetermined level of profit
E
To maximize profit
Açıklama:
The secondary goal of a sales budget can be determined as a guide for preparation of the working capital and investment budgets, to determine the raw materials, production equipment and labor requirements, to help to the preparation of funding plans and its revisions.
Soru 8
"This type of budget is used to determine the required labor hours in order to produce the volume of products as stipulated in the production budget." Which option is explained above?
Seçenekler
A
Direct Materials Budget
B
Direct Labor Budget
C
Manufacturing Overhead Budget
D
Costs of Goods Sold Budget
E
Production Budget
Açıklama:
The direct labor budget is used to determine the required labor hours in order to produce the volume of products as stipulated in the production budget.
Soru 9
I.To determine the cash shortfall and/or excess
II.To define the funding sources when necessary
III.To plan an effective collection policy
Which one/ones above is/are correct about the basic aims to prepare the cash budgets?
II.To define the funding sources when necessary
III.To plan an effective collection policy
Which one/ones above is/are correct about the basic aims to prepare the cash budgets?
Seçenekler
A
Only I
B
I-II
C
I-III
D
II-III
E
I-II-III
Açıklama:
The basic aims to preparethe cash budgets are:
To make available the required amount of
cash for the realization of planned activities,
To determine the cash shortfall and/or excess,
To coordinate the cash management
for working capital, sales, liabilities and
procurements,
To define the funding sources when necessary,
To plan an effective collection policy,
To stipulate the availability of cash for
investments,
To define the minimum acceptable cash
amount,
To enable the control of cash inflows and
outflows.
To make available the required amount of
cash for the realization of planned activities,
To determine the cash shortfall and/or excess,
To coordinate the cash management
for working capital, sales, liabilities and
procurements,
To define the funding sources when necessary,
To plan an effective collection policy,
To stipulate the availability of cash for
investments,
To define the minimum acceptable cash
amount,
To enable the control of cash inflows and
outflows.
Soru 10
Which option is not one of the steps of preparation of a proforma balance sheet?
Seçenekler
A
The forecast of sales and distribution of the sales proceeds to financial accounts
B
Determining the amount of funds intrinsically generated
C
Sales, direct materials, direct labor and manufacturing overhead budgets
D
Determining the equity of the company
E
Balancing the total of projected asset and liabilities
Açıklama:
Option C is about the forecasts and estimations to prepare the proforma financial reports.The other ones are about the steps of preparation of a proforma balance sheet in order.
Soru 11
In the situations where annual business budgets are prepared, the cash inflows and outflows are estimated by referring to the which subject below?
Seçenekler
A
Cash profit
B
Net profit
C
The budgeted sales
D
Labor
E
Expenses
Açıklama:
In the situations where annual business budgets are prepared, the cash inflows and outflows are estimated referring to the budgeted sales, production, cost figures.
Soru 12
Which option is not taken into consideration as an aspects of production while a production budget is being prepared?
Seçenekler
A
The term of production budget
B
The timing of production of each product type
C
The location of production
D
The cost figures to determine the cost per unit
E
The specific market for each product and service
Açıklama:
Option E is about sales budget.
Soru 13
How much time do the long-term financial plans cover?
Seçenekler
A
1-2 years
B
5-10 months
C
10-15 years
D
2-5 years
E
1-5 months
Açıklama:
Long-term (Strategic) Financial Plans: These plans contain the envisaged long term financial activities and they figure out the effects of these activities on the financial position of the company. Although the time frame covered is 2-5 years, 5 year strategic plans which are revised as the new data arrives are used generally.
Soru 14
Long term financial plans are also called......
Seçenekler
A
Operational plans
B
Tactic plans
C
Strategic plans
D
Cash management plans
E
Production plans
Açıklama:
Long term financial plans are also called strategic plans because they show the long term financial plan of the firms. Short term financial plans on the other hand, are called operational plans.
Soru 15
Which of the following sales forecast methods assumes that there exists a linear relation between sales volume as dependent variable and some other predetermined economic factors as independent variables?
Seçenekler
A
Manegerial Assesment Mehod
B
Industry Analysis Method
C
Regression Method
D
Product Analysis Method
E
Fuzzy Logic Method
Açıklama:
The defined method is regression. It solves a linear regression and hence, forecasts the level of sales given the independent variables.
Soru 16
Which of the following is used to determine the required labor hours in order to produce the volume of products as stipulated?
Seçenekler
A
Direct Labor Budget
B
Direct Materials Budget
C
Manufacturing Overhead Budget
D
Cost of Goods Sold Budget
E
Sales Budget
Açıklama:
Labor hours required for production are stated in direct labor budget.
Soru 17
Which of the following budgets consist of any expenses directly related with the production except direct materials and direct labor?
Seçenekler
A
Cost of Goods Sold Budget
B
Manufacturing Overhead Budget
C
Terms of Cash Budge
D
Structure of Cash Budget
E
Direct Labor Budget
Açıklama:
Direct materials cost is in direct materials budget and labor costs are included in direct labor budget, but the costs other than these are addressed in the manufacturing overhead budget.
Soru 18
I- To determine cash shortfall and/or excess
II- To define the funding sources when necessary
III- To plan an effective collection policy
IV- To determine the cost of direct materials for production
Which of the aims stated above are related to cash budgets?
II- To define the funding sources when necessary
III- To plan an effective collection policy
IV- To determine the cost of direct materials for production
Which of the aims stated above are related to cash budgets?
Seçenekler
A
I and II
B
I, III and IV
C
I, II and IV
D
II, III and IV
E
I, II and III
Açıklama:
Aims stated in I, II and III are related to cash budgets, but aim IV is related to direct materials cost budget.
Soru 19
Which of the following methods is generally used for the preparation for long term cash budgets?
Seçenekler
A
Regression Method
B
Adjusted Net Profit Method
C
Managerial Assessment Method
D
Industry Analysis Method
E
Combined Method
Açıklama:
Adjusted Net Profit Method is used in cash budgets, the other ones are used in sales budget.
Soru 20
Which of the following is the final step of financial control?
Seçenekler
A
Correction of Deviations
B
Detection of Deviations in the Basic Financial Statements
C
Preparation of Forecasts and Simulations
D
Analysis of the Initial Situation
E
Estimationof Cash Inflows
Açıklama:
Correction of Deviations is the final step of financial control process. The steps stated in choices A to D are steps in financial control but the one in E is a part of cash budget preperation.
Soru 21
Which of the following is not amongst the process of financial planning?
Seçenekler
A
Funding Requirement
B
Cash Flows
C
Short and Long-term Time Frame
D
Scenario Analysis
E
Departmental analysis
Açıklama:
The process of financial planning includes the following financial analysis and aspects:
• Cash Flows: The building block of financial planning is projected cash flows for future given the activity level of today and the forecasts of future. The cash flows convey the liquidity performance, flexibility and risk concepts to the financial planning as supported by the accounting data and financial reports,
• Departmental analysis: For large companies and conglomerates, the targets produced by financial planning for each individual department generated by taking into account its own investment finance and cash flow requirements serves as benchmarks of success.
• Scenario Analysis:Theflexibilityoffinancial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in thefuture.
• Short and Long-term Time Frame: The financial plans can be prepared for short (less than 1 year) and long t(more than 1 year term. They can also be prepared as monthly, quarterly and semiannually, each of which are used for control purposes. In the short-term, the basic motivation is to determine the funding needs or surplus and the method to secure or invest the relevant amounts. In thelong run financial planning is used as a strategic tool inordertomaximize the return under different risk estimations.
• Cash Flows: The building block of financial planning is projected cash flows for future given the activity level of today and the forecasts of future. The cash flows convey the liquidity performance, flexibility and risk concepts to the financial planning as supported by the accounting data and financial reports,
• Departmental analysis: For large companies and conglomerates, the targets produced by financial planning for each individual department generated by taking into account its own investment finance and cash flow requirements serves as benchmarks of success.
• Scenario Analysis:Theflexibilityoffinancial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in thefuture.
• Short and Long-term Time Frame: The financial plans can be prepared for short (less than 1 year) and long t(more than 1 year term. They can also be prepared as monthly, quarterly and semiannually, each of which are used for control purposes. In the short-term, the basic motivation is to determine the funding needs or surplus and the method to secure or invest the relevant amounts. In thelong run financial planning is used as a strategic tool inordertomaximize the return under different risk estimations.
Soru 22
Which of the following is not amongst the data set of financial planning?
Seçenekler
A
Short and long term profit target
B
Divisional financial report
C
Internal control report
D
Labor productivity report
E
Worst Case Scenario
Açıklama:
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
• 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
Soru 23
Which of the following is the first step of the short-term financial planning?
Seçenekler
A
Sales Forecast
B
Production Plan
C
Proforma Income Statement
D
Cash Budget
E
Fixed Investments Plan
Açıklama:
The first step of the short-term financial planning is sales forecast which is used to develop production plans.
Soru 24
Which of the following is the core of the overall budgeting efforts within an organization at a business budget?
Seçenekler
A
Direct Materials Budget
B
Direct Labor Budget
C
Sales Budget
D
Production Budget
E
Manufacturing Overhead Budget
Açıklama:
The sales budget is the core of the overall budgeting efforts within an organization.
Soru 25
Which of the following is not amongst the sales forecast methods?
Seçenekler
A
Special Purpose Methods
B
Combined Methods
C
Regression Method
D
Managerial Assessment
E
Product Methods
Açıklama:
• Regression Method: It assumed that there exists a linear relation with sales volume as dependent variable and some predetermined economic factors as independent variables.
• Managerial Assessment Method: In many case it is not easy to determine the independent variables in a regression. In such cases managers who have insight about the dynamics in market place use their own assessments to forecast the future sales targets. Sometimes the managerial assessments are used as a contributor to the regression results.
• Special Purpose Methods: There exist three special purpose methods to analyze the determinants of sales to make more realistic sales forecasts. The first one is industry analysis in which the individual company sales forecast is based on total industry sales. In the product analysis method, the focus is on individual product demand. It is also possible for some special sectors such as component manufacturing to use the forecast of the clients’ demand forecasts and this method is named as latest use method.
• Combined Methods: It is the most proper approach to combine two or more of the methods mentioned above in order to fully address the company specific factors such as size, structure, suppliers and seasonality etc.
• Managerial Assessment Method: In many case it is not easy to determine the independent variables in a regression. In such cases managers who have insight about the dynamics in market place use their own assessments to forecast the future sales targets. Sometimes the managerial assessments are used as a contributor to the regression results.
• Special Purpose Methods: There exist three special purpose methods to analyze the determinants of sales to make more realistic sales forecasts. The first one is industry analysis in which the individual company sales forecast is based on total industry sales. In the product analysis method, the focus is on individual product demand. It is also possible for some special sectors such as component manufacturing to use the forecast of the clients’ demand forecasts and this method is named as latest use method.
• Combined Methods: It is the most proper approach to combine two or more of the methods mentioned above in order to fully address the company specific factors such as size, structure, suppliers and seasonality etc.
Soru 26
Which of the following is a management plan for the most important factor of a company’s viability?
Seçenekler
A
Cash Budget
B
Costs of Goods Sold Budget
C
Manufacturing Overhead Budget
D
Direct Labor Budget
E
Direct Materials Budget
Açıklama:
Cash budget is a management plan for the most important factor of a company’s viability - its cash position.
Soru 27
Which of the following is required to prepare the production budget?
Seçenekler
A
Cost of goods sold budget
B
Manufacturing overhead budget
C
Sales budget
D
Direct materials budget
E
Cash budget
Açıklama:
The production volume has to be determined by taking into account the sales budget
Soru 28
Which of the following is not forecasts and estimations should be made in order to prepare the proforma financial reports?
Seçenekler
A
The volume and amount of finished products
B
Net profit
C
Sales, direct materials, direct labor and manufacturing overhead budgets
D
The ownership structure
E
None of them
Açıklama:
The following forecasts and estimations should be made in order to prepare the proforma financial reports:
• Sales, direct materials, direct labor and manufacturing overhead budgets,
• The forecasted sales, management expenses budget,
• Existing funding structure,
• The ownership structure,
• The volume and amount of direct materials,
• The volume and amount of finished products,
• The existing amount of fixed assets,
• The receivables and payables,
• The sales and proceeds,
• Non operating and extraordinary expenses,
• Operating expenses,
• Net profit.
• Sales, direct materials, direct labor and manufacturing overhead budgets,
• The forecasted sales, management expenses budget,
• Existing funding structure,
• The ownership structure,
• The volume and amount of direct materials,
• The volume and amount of finished products,
• The existing amount of fixed assets,
• The receivables and payables,
• The sales and proceeds,
• Non operating and extraordinary expenses,
• Operating expenses,
• Net profit.
Soru 29
There are many different types and methodologies, an accepted router to establish a financial control infrastructure within a company.Which of the following is not amongst of them?
Seçenekler
A
Analysis of the Initial Situation
B
Preparation of Forecasts and Simulations
C
Detection of Deviations in the Basic Financial Statements
D
Correction of Deviations
E
The sales and proceeds
Açıklama:
Although there are many different types and methodologies, an accepted router to establish a financial control infrastructure within a company involves the following steps:
1. Analysis of the Initial Situation: The first step is to conduct an exhaustive, reliable and detailed analysis of the financial situation of the firm in terms of cash, profitability, sales, etc.
2. Preparation of Forecasts and Simulations: On the basis of the initial situation analyzed above and the establishment of a set of parameters or indicators, a set of forecasts and simulations of different contexts and scenarios can be prepared. These simulations are immeasurably helpful in making appropriate decisions on such crucial aspects as investments, profitability, changes in production systems, etc.
3. Detection of Deviations in the Basic Financial Statements: The basic financial statements are balance sheet, the profit and loss account and the cash flow statement. The analyses and tests to determine the deviations from the budgeted figures are fundamental part of financial control, since they permit problems, errors and deviations from the ideal situation or initial objectives to be detected early.
4. Correction of Deviations: Financial control would have very little practical use if the proper decisions relating to corrective actions were not taken to get the company accounts on theright track as previously established in the organization’s general objectives.
1. Analysis of the Initial Situation: The first step is to conduct an exhaustive, reliable and detailed analysis of the financial situation of the firm in terms of cash, profitability, sales, etc.
2. Preparation of Forecasts and Simulations: On the basis of the initial situation analyzed above and the establishment of a set of parameters or indicators, a set of forecasts and simulations of different contexts and scenarios can be prepared. These simulations are immeasurably helpful in making appropriate decisions on such crucial aspects as investments, profitability, changes in production systems, etc.
3. Detection of Deviations in the Basic Financial Statements: The basic financial statements are balance sheet, the profit and loss account and the cash flow statement. The analyses and tests to determine the deviations from the budgeted figures are fundamental part of financial control, since they permit problems, errors and deviations from the ideal situation or initial objectives to be detected early.
4. Correction of Deviations: Financial control would have very little practical use if the proper decisions relating to corrective actions were not taken to get the company accounts on theright track as previously established in the organization’s general objectives.
Soru 30
Which of the following is not amongst the information required for preparing sales budget?
Seçenekler
A
Pricing policy
B
The inflation expectations
C
Receivable Collection policy
D
Quality of sales
E
Cash discount on sales
Açıklama:
The sales should contain the following information derived from the market research and sales expectations:
• The alternatives of sale on account credit terms including term and interest and the collection policy ,
• The specific market for each product and service,
• The after sales service and the service providers’ responsibility,
• In the case of new market penetration and product development, the relevant strategies containing the targeted sales volume and its’ effects on the prices,
• The expenditures required to apply the sales budget and funding sources,
• The inflation expectations and pricing policy
• The alternatives of sale on account credit terms including term and interest and the collection policy ,
• The specific market for each product and service,
• The after sales service and the service providers’ responsibility,
• In the case of new market penetration and product development, the relevant strategies containing the targeted sales volume and its’ effects on the prices,
• The expenditures required to apply the sales budget and funding sources,
• The inflation expectations and pricing policy
Soru 31
Which of the following constituents of financial planning deals with the possible financial and environmental changes on corporate activities in the future?
Seçenekler
A
Cash flows.
B
Departmental analysis.
C
Scenario analysis.
D
Short time frame.
E
Long-term time frame.
Açıklama:
Page 191.
The flexibility of financial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in the future. Therefore, the correct option is C.
The flexibility of financial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in the future. Therefore, the correct option is C.
Soru 32
I. Target capital structure,
II. Cash dividend policy,
III. Natural disasters,
IV. Sales and collection policies.
Which of the ones listed above is among the assumptions used in financial planning?
II. Cash dividend policy,
III. Natural disasters,
IV. Sales and collection policies.
Which of the ones listed above is among the assumptions used in financial planning?
Seçenekler
A
I & II.
B
I, II & III.
C
I, III & IV.
D
I, II & IV.
E
I, II, III & IV.
Açıklama:
Page 192.
The financial plans should be realistic but also flexible in order to give future direction to the corporate and serve as benchmark. However, in order to prepare financial plans, some assumptions should be made in relation with the variables including, but not limited to inflation, economic growth, sales growth, foreign exchange rates etc. It is a fact that during the planning horizon those assumptions may fail. The planning process should be designed to be revised periodically to reflect the effects of those changes to the financial plans. The assumptions used may be:
• The effectiveness and length of cash conversion cycle
• The sales and collection policies,
• Capital budgeting techniques,
• The cost of capital and its revisions depending on the financial circumstances,
• Target capital structure,
• The cash dividend policy,
• The tendency to finance the working capital needs by short-term borrowings
Therefore, the correct option is D.
The financial plans should be realistic but also flexible in order to give future direction to the corporate and serve as benchmark. However, in order to prepare financial plans, some assumptions should be made in relation with the variables including, but not limited to inflation, economic growth, sales growth, foreign exchange rates etc. It is a fact that during the planning horizon those assumptions may fail. The planning process should be designed to be revised periodically to reflect the effects of those changes to the financial plans. The assumptions used may be:
• The effectiveness and length of cash conversion cycle
• The sales and collection policies,
• Capital budgeting techniques,
• The cost of capital and its revisions depending on the financial circumstances,
• Target capital structure,
• The cash dividend policy,
• The tendency to finance the working capital needs by short-term borrowings
Therefore, the correct option is D.
Soru 33
Which of the followings is among the main data sources required for financial planning?
Seçenekler
A
Divisional proforma and realized budgets.
B
Investment projects evaluations.
C
Internal control reports.
D
Short and long term profit targets.
E
Labor productivity reports.
Açıklama:
Page 192.
The operational peculiarities of a company and the cost accounting structure determine the coverage and reliability of a financial planning system. The required data mainly includes Breakeven Analysis, Ratio Analysis and the Investment Projects Evaluations. Therefore, the correct option is B
The operational peculiarities of a company and the cost accounting structure determine the coverage and reliability of a financial planning system. The required data mainly includes Breakeven Analysis, Ratio Analysis and the Investment Projects Evaluations. Therefore, the correct option is B
Soru 34
Which of the followings is among the dimension of financial planning?
Seçenekler
A
Time horizon.
B
Best case scenario.
C
Break-even analysis.
D
Funding requirements.
E
Working capital strategy.
Açıklama:
Page 193.
The first dimension of financial planning is the time horizon. There exist two time horizons. Shortterm is specified as maximum 12 months and the long-term which is more critical in the context of planning is said to be 5 years on average. Therefore, the correct option is A.
The first dimension of financial planning is the time horizon. There exist two time horizons. Shortterm is specified as maximum 12 months and the long-term which is more critical in the context of planning is said to be 5 years on average. Therefore, the correct option is A.
Soru 35
Which of the followings is among the purposes of long-term financial plans?
Seçenekler
A
Basic outputs.
B
Proforma financial reports.
C
Research and development.
D
Cash budget reports.
E
Operational budgets for divisions.
Açıklama:
Page 193.
Long-term (Strategic) Financial Plans: These plans contain the envisaged long term financial activities and they figure out the effects of these activities on the financial position of the company. Although the time frame covered is 2-5 years, 5 year strategic plans which are revised as the new data arrives are used generally. Typically the companies that have higher operational risk and short production cycles prefer shorter term planning horizons. Longer term plans are generally used by the purposes of Research and Development, marketing and new product development, fixed investments and basic financing. These plans are supported by annual budgets and profit plans. Therefore, the correct option is C.
Long-term (Strategic) Financial Plans: These plans contain the envisaged long term financial activities and they figure out the effects of these activities on the financial position of the company. Although the time frame covered is 2-5 years, 5 year strategic plans which are revised as the new data arrives are used generally. Typically the companies that have higher operational risk and short production cycles prefer shorter term planning horizons. Longer term plans are generally used by the purposes of Research and Development, marketing and new product development, fixed investments and basic financing. These plans are supported by annual budgets and profit plans. Therefore, the correct option is C.
Soru 36
Which of the followings is among the purposes of short-term financial plans?
Seçenekler
A
New product development.
B
Basic financing.
C
Operational budgets for divisions.
D
Research and development.
E
Fixed investments.
Açıklama:
Page 194.
Short-term (Operational) Financial Plans: They consist of the envisaged financial activities and the projected effects of these activities on the financial position of the company. Short term financial plans cover generally 1-2 years and uses the sales forecasts, operational and financial data as inputs. The basic outputs, the operational budgets for divisions, cash budget and proforma financial reports. Therefore, the correct option is C.
Short-term (Operational) Financial Plans: They consist of the envisaged financial activities and the projected effects of these activities on the financial position of the company. Short term financial plans cover generally 1-2 years and uses the sales forecasts, operational and financial data as inputs. The basic outputs, the operational budgets for divisions, cash budget and proforma financial reports. Therefore, the correct option is C.
Soru 37
I. Managerial assessment method,
II. Product analysis,
III. Industry analysis.
Which of the ones listed above is among the special purpose methods in sales forecast methods?
II. Product analysis,
III. Industry analysis.
Which of the ones listed above is among the special purpose methods in sales forecast methods?
Seçenekler
A
Only I.
B
I & II.
C
II & III.
D
I, II & III.
E
Only III.
Açıklama:
Page 196.
There exist three special purpose methods to analyze the determinants of sales to make more realistic sales forecasts. The first one is industry analysis in which the individual company sales forecast is based on total industry sales. In the product analysis method, the focus is on individual product demand. It is also possible for some special sectors such as component manufacturing to use the forecast of the clients’ demand forecasts and this method is named as latest use method. Therefore, the correct option is C.
There exist three special purpose methods to analyze the determinants of sales to make more realistic sales forecasts. The first one is industry analysis in which the individual company sales forecast is based on total industry sales. In the product analysis method, the focus is on individual product demand. It is also possible for some special sectors such as component manufacturing to use the forecast of the clients’ demand forecasts and this method is named as latest use method. Therefore, the correct option is C.
Soru 38
Which of the followings is not one of the aspects that production budgets should address?
Seçenekler
A
The cost figures to determine the cost per unit.
B
The location of production.
C
The plans for labor, machinery and equipments and service requirements.
D
The timing of production of each product type.
E
The future product lines of rival companies in the same industry.
Açıklama:
Page 198.
The production budgets should be prepared in terms of volume of production as paralel to sales budget and in details of product types. It should address the following aspects of production:
• The term of production budget,
• The volume of production to substantiate the sales budget, as well as the required level of inventory,
• The timing of production of each product type,
• The location of production,
• The mandatory activities within the production process,
• The tools to measure the productivity of the production process,
• The plans for labor, machinery and equipments and service requirements,
• The cost figures to determine the cost per unit
Therefore, the correct option is E.
The production budgets should be prepared in terms of volume of production as paralel to sales budget and in details of product types. It should address the following aspects of production:
• The term of production budget,
• The volume of production to substantiate the sales budget, as well as the required level of inventory,
• The timing of production of each product type,
• The location of production,
• The mandatory activities within the production process,
• The tools to measure the productivity of the production process,
• The plans for labor, machinery and equipments and service requirements,
• The cost figures to determine the cost per unit
Therefore, the correct option is E.
Soru 39
I. To plan an effective collection policy,
II. To enable the control of cash inflows and outflows,
III. To determine the cash shortfall and/or excess,
IV. To define the minimum acceptable cash amount.
Which of the ones listed above is among the basic aims to prepare the cash budgets?
II. To enable the control of cash inflows and outflows,
III. To determine the cash shortfall and/or excess,
IV. To define the minimum acceptable cash amount.
Which of the ones listed above is among the basic aims to prepare the cash budgets?
Seçenekler
A
I, II, III & IV.
B
I, II & IV.
C
I, II & III.
D
II, III & IV.
E
I & IV.
Açıklama:
Page 202.
The cash budgets ensure the availability of cash in the required time and in the required amount to with the most favorable funding costs. Additionally, it helps to utilize the cash in the most effective manner. In order to serve for those purposes, the cash budgets should be prepared in short periods, even daily when the cash management is critical. The basic aims to prepare the cash budgets are:
• To make available the required amount of cash for the realization of planned activities,
• To determine the cash shortfall and/or excess,
• To coordinate the cash management for working capital, sales, liabilities and procurements,
• To define the funding sources when necessary,
• To plan an effective collection policy,
• To stipulate the availability of cash for investments,
• To define the minimum acceptable cash amount,
• To enable the control of cash inflows and outflows.
Therefore, the correct option is A.
The cash budgets ensure the availability of cash in the required time and in the required amount to with the most favorable funding costs. Additionally, it helps to utilize the cash in the most effective manner. In order to serve for those purposes, the cash budgets should be prepared in short periods, even daily when the cash management is critical. The basic aims to prepare the cash budgets are:
• To make available the required amount of cash for the realization of planned activities,
• To determine the cash shortfall and/or excess,
• To coordinate the cash management for working capital, sales, liabilities and procurements,
• To define the funding sources when necessary,
• To plan an effective collection policy,
• To stipulate the availability of cash for investments,
• To define the minimum acceptable cash amount,
• To enable the control of cash inflows and outflows.
Therefore, the correct option is A.
Soru 40
I. The ownership structure,
II. Operating expenses,
III. The receivables and payables,
IV. Net profit.
Which of the ones listed above is among the forecasts and estimations should be made in order to prepare the proforma financial reports?
II. Operating expenses,
III. The receivables and payables,
IV. Net profit.
Which of the ones listed above is among the forecasts and estimations should be made in order to prepare the proforma financial reports?
Seçenekler
A
I, II & IV.
B
I & III.
C
II & IV.
D
II, III & IV.
E
I, II, III & IV.
Açıklama:
Page 206.
In order to prepare the proforma financial reports, the existing financial reports are used as starting point. The following forecasts and estimations should be made in order to prepare the proforma financial reports:
• Sales, direct materials, direct labor and manufacturing overhead budgets,
• The forecasted sales, management expenses budget,
• Existing funding structure,
• The ownership structure,
• The volume and amount of direct materials,
• The volume and amount of finished products,
• The existing amount of fixed assets,
• The receivables and payables,
• The sales and proceeds,
• Non operating and extraordinary expenses,
• Operating expenses,
• Net profit.
Therefore, the correct option is E.
In order to prepare the proforma financial reports, the existing financial reports are used as starting point. The following forecasts and estimations should be made in order to prepare the proforma financial reports:
• Sales, direct materials, direct labor and manufacturing overhead budgets,
• The forecasted sales, management expenses budget,
• Existing funding structure,
• The ownership structure,
• The volume and amount of direct materials,
• The volume and amount of finished products,
• The existing amount of fixed assets,
• The receivables and payables,
• The sales and proceeds,
• Non operating and extraordinary expenses,
• Operating expenses,
• Net profit.
Therefore, the correct option is E.
Soru 41
- Cash flow estimations
- Funding requirements
- Divisional proforma and realized budgets
- Divisional financial reports
Seçenekler
A
I and II
B
II and III
C
III and IV
D
I and IV
E
I, III and IV
Açıklama:
Divisional proforma and realized budgets and divisional financial reports are required for the financial planning process. Cash flow estimations and funding requirements are amongst the outputs of the financial planning process.
Soru 42
What is the first step of the short-term financial planning?
Seçenekler
A
Sales forecast
B
Production plan
C
Preparation of proforma income statement
D
Preparation of proforma balance sheet
E
Cash budgeting
Açıklama:
The first step of the short-term financial planning is sales forecast which is used to develop production plans.
Soru 43
Which budget is used to determine the required labor hours in order to produce the volume of products as stipulated in the production budget?
Seçenekler
A
Manufacturing overhead budget
B
Sales budget
C
Direct materials budget
D
Direct labor budget
E
Production budget
Açıklama:
The direct labor budget is used to determine the required labor hours in order to produce the volume of products as stipulated in the production budget. The responsibility to prepare the direct labor budget belongs to production managers
together with cost accounting, human resources and budget control divisions.
together with cost accounting, human resources and budget control divisions.
Soru 44
Which budget consists of any expenses directly related with the production except direct materials and direct labor?
Seçenekler
A
Sales budget
B
Production budget
C
Manufacturing overhead budget
D
Costs of goods sold budget
E
Cash budget
Açıklama:
Manufacturing overhead consist of any expenses directly related with the production except direct materials and direct labor. Structurally manufacturing overhead may be in the form of fixed or variable costs.
Soru 45
- Determining the amount of funds intrinsically generated
- Balancing the total of projected asset and liabilities
- Determining the equity of the company
- The forecast of sales and distribution of the sales proceeds to financial accounts
Seçenekler
A
I-III-II-IV
B
I-II-IV-III
C
IV-III-I-II
D
IV-I-III-II
E
III-II-I-IV
Açıklama:
Preparation of a proforma balance sheet involves four basic steps:
- The forecast of sales and distribution of the sales proceeds to financial accounts,
- Determining the amount of funds intrinsically generated,
- Determining the equity of the company,
- Balancing the total of projected asset and liabilities
Soru 46
What is the first step of a financial control infrastructure within a company?
Seçenekler
A
Preparation of forecasts and simulations
B
Analysis of the initial situation
C
Correction of deviations
D
Detection of deviations in the basic financial statements
E
Estimation of cash inflows and outflows
Açıklama:
An accepted router to establish a financial control infrastructure within a company involves the following steps:
- Analysis of the Initial Situation
- Preparation of Forecasts and Simulations
- Detection of Deviations in the Basic Financial Statements
- Correction of Deviations
Soru 47
The flexibility of financial planning by the use of the capabilities of information technology enables to realize ............... to evaluate the effects of the possible financial and environmental changes on corporate activities in the future.
Which of the followings fills in the blank above correctly?
Which of the followings fills in the blank above correctly?
Seçenekler
A
cash flows
B
departmental analysis
C
short and long-term time frame
D
working capital strategy
E
scenario analysis
Açıklama:
The flexibility of financial planning by the use of the capabilities of information technology enables to realize scenario analysis to evaluate the effects of the possible financial and environmental changes on corporate activities in the future.
Soru 48
Which of the followings is a method used for cash budget preparation?
Seçenekler
A
Combined method
B
Regression method
C
Special purpose method
D
Managerial assessment method
E
Adjusted net profit method
Açıklama:
There are two main methods for preparation of cash budgets:
- Direct estimation of cash inflows and outflows
- Adjusted net profit method
Soru 49
Which method is mostly preferred for the preparation of proforma balance sheets?
Seçenekler
A
Ratio method
B
Sales percentage method
C
Regression method
D
Latest use method
E
Product analysis method
Açıklama:
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.
Soru 50
Which of the followings is one of the major tools of financial control?
Seçenekler
A
Proforma financial statements
B
Labor productivity reports
C
Cost accounting data
D
Scenario analysis
E
Production plan
Açıklama:
Financial controls are the means by which an organization’s resources are directed, monitored, and measured. It is fact that budgets and proforma financial statements are the major tools of financial control.
Ünite 8
Soru 1
When components of working capital are taken into consideration, which of the following is one of the current assets?
Seçenekler
A
Sundry debtors
B
Bank payments
C
Tax payments
D
Sundry creditors
E
Outstanding expenses
Açıklama:
The components given in B, C, D and E are current liabilities. However, option A is one of the current assets. The correct answer is A.
Soru 2
When components of working capital are taken into consideration, which of the following is one of the current liabilities?
Seçenekler
A
Cash in hand
B
Cash in banks
C
Inventories
D
Pre-paid expenses
E
Bank payments
Açıklama:
The component given in the option A,B,C and D are current assets. Bank payments are one of the current liabilities. The correct answer is E.
Soru 3
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?
Seçenekler
A
Nature of business
B
Volume of business
C
Length of period of manufacture
D
Use of manual labor or mechanization
E
The proportion of the cost of raw materials to total cost
Açıklama:
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.
Soru 4
On the worst case, a company may purchase all types of raw-materials for cash and sell all of its products on credit, the required amount of working capital will be very high.What is this factor affecting the level of working capital called?
Seçenekler
A
Nature of business
B
Volume of business
C
Terms of credit
D
Price level changes
E
Short term financing options
Açıklama:
Terms of credit: On the worst case, a company may purchase all types of raw-materials for cash and sell all of its products on credit, the required amount of working capital will be very high. On the best case, the company may have the capability to buy on credit and sell it for cash and it will need less amount of working capital. It is a fact that the companies stand at a situation in between these cases and the length of the period ofcredit has a direct bearing on working capital.The correct answer is C.
Soru 5
Which of the following is not about current assets at Working Capital?
Seçenekler
A
Cash in Hand
B
Cash in Banks
C
Inventories
D
Prepaid Expenses
E
Prepaid Expenses
Açıklama:
Figure 8.1 Components of Working Capital
Soru 6
Which of the following is not amongst the factors affecting the level of working capital?
Seçenekler
A
Volume of business
B
Price level changes
C
Accounting method used
D
Length of period of manufacture
E
Short term financing options
Açıklama:
A,B,D,E are amongst of factors
Soru 7
Which of the following is not amongst four dimensions at working capital management ?
Seçenekler
A
Manual Labor
B
Time
C
Investment
D
Growth
E
Credibility
Açıklama:
working capital management has the following four dimensions: • Time: As a means of survival in the market place, timing and availability of the required funds is critical. • Investment: Although working capital management focuses on short-term asset and liabilities, the relevant decisions indirectly determines the available funding for investments. • Credibility: Working capital management has great significance for all companies, but it is more critical for smaller companies which have more restricted funding capabilities. . • Growth: The availability of funds contributes to the activity level in the short- run and potential growth by realizing investments in the long-run.
Soru 8
Which of following policies aims to minimize the risks associated with the financing of the current assets ?
Seçenekler
A
Hedging Policy
B
Conservative Policy
C
Aggressive Policy
D
Matching Policy
E
None of them
Açıklama:
As the name implies, conservative policy aims to minimize the risks associated with the financing of the current assets.
Soru 9
Which of the following is true about Transaction Motive ?
Seçenekler
A
Holding cash or near cash to meet routine cash requirements of a company to finance transactions in the normal course of business.
B
Holding cash or near cash as a cushion to meet unexpected contingencies such as flood, strikes.
C
The situations in which there occurs extra ordinary opportunities for the companies to quickly take advantage.
D
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.
E
The length of time it takes the inventories are sold and the proceedings are collected in cash from customers.
Açıklama:
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
Soru 10
Which of the following is not amongst the assumptions of Baumol’s Economic Order Quantity Model?
Seçenekler
A
The cash is used evenly over a period of time.
B
The cash requirements of the firm are known with certainty in advance.
C
The transaction cost is known and is constant.
D
The short term marketable securities can be freely bought and sold.
E
The cash is used randomly over a period of time
Açıklama:
The Baumol model is based on the following assumptions: - The cash is used evenly over a period of time. - The cash requirements of the firm are known with certainty in advance. - The transaction cost is known and is constant. - By holding the cash balances, the firm would incur the opportunity cost of interest forgone by not investing in marketable securities. The rate of carrying cost is known and is assumed to be constant. - The short term marketable securities can be freely bought and sold.
Soru 11
Which of following management aims to keep the inventories on optimal level, without stockouts and excesses, by organizing, holding and replenishments for each item?
Seçenekler
A
Cash Flows Management
B
Inventory Management
C
Receivable Management
D
Time Management
E
None of them
Açıklama:
Inventory management aims to keep the inventories on optimal level, without stockouts and excesses, by organizing, holding and replenishments for each item.
Soru 12
Which of the following is not amongst the inventory types?
Seçenekler
A
Finished Goods
B
Spares
C
Company`s equipment
D
Consumables
E
Raw Material
Açıklama:
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. - Transaction costs
- 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. - Transaction costs
Soru 13
Which of the following is not amongst the inventory costs?
Seçenekler
A
Holding Costs
B
Setup Costs
C
Ordering Costs
D
Shortage Costs
E
Stock Costs
Açıklama:
1. Holding (or Carrying) Costs: This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, companies prefer to keep low inventory level for the items requiring high holding costs and frequent replenishment. Inventory management aims to keep the inventories on optimal level, without stockouts and excesses, by organizing, holding and replenishments for each item.
2. Setup (or production change) costs: Production of different types of products, especially the new product types, requires the arrangements for required amount and type of materials, specific equipment setups and filling out the required documents, all of which requires additional costs which are named as set up costs. While the set up costs may change according to the product type and production process, generally small lots are produced. This would reduce inventory levels, with a resulting savings in cost.
3. Ordering costs: These costs involve the transactional, managerial and clerical costs to prepare the purchase or production order. Ordering costs include all the details, such as counting items and calculating order quantities. The costs associated with maintaining the system needed to track orders are also included in ordering costs.
4. Shortage costs: When the stock of an item is run out, an order for that item must wait till the stock is replenished, and whenever no replenishment occurs, the order is cancelled. This is called stock out. A stock out may cause production process to fail. On the other hand, a backorder occurs when the order is held and filled at a later date when the inventory for the item is replenished. Both stock outs and backorders create implicit and explicit costs, some of which are hard to measure such as estimate of lost profits, the effects of lost customers, or lateness penalties.
2. Setup (or production change) costs: Production of different types of products, especially the new product types, requires the arrangements for required amount and type of materials, specific equipment setups and filling out the required documents, all of which requires additional costs which are named as set up costs. While the set up costs may change according to the product type and production process, generally small lots are produced. This would reduce inventory levels, with a resulting savings in cost.
3. Ordering costs: These costs involve the transactional, managerial and clerical costs to prepare the purchase or production order. Ordering costs include all the details, such as counting items and calculating order quantities. The costs associated with maintaining the system needed to track orders are also included in ordering costs.
4. Shortage costs: When the stock of an item is run out, an order for that item must wait till the stock is replenished, and whenever no replenishment occurs, the order is cancelled. This is called stock out. A stock out may cause production process to fail. On the other hand, a backorder occurs when the order is held and filled at a later date when the inventory for the item is replenished. Both stock outs and backorders create implicit and explicit costs, some of which are hard to measure such as estimate of lost profits, the effects of lost customers, or lateness penalties.
Soru 14
There exist many types of costs incurred in the course of receivables management. Which of following is amongst them ?
Seçenekler
A
Delinquency Cost
B
Setup Cost
C
Ordering cost
D
Shortage cost
E
Holding Cost
Açıklama:
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.
Soru 15
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?
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?
Seçenekler
A
Only I
B
I, II and III
C
I and III
D
I and II
E
II and III
Açıklama:
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.
Soru 16
_______ aims to keep the inventories on optimal level, without stockouts and excesses, by organizing, holding and replenishments for each item.
Which option completes the definition above?
Which option completes the definition above?
Seçenekler
A
Inventory Management
B
Baumol’s Economic Order Quantity Model
C
Cash/Bank Reconciliation
D
Miller-Orr Model
E
Cash Flows Management
Açıklama:
Inventory management aims to keep the inventories on optimal level, without stockouts and excesses, by organizing, holding and replenishments for each item.
Soru 17
These are the materials which are needed for smooth running of the manufacturing process.
What kind of inventory is defined above?
What kind of inventory is defined above?
Seçenekler
A
Raw Material
B
Work in Progress
C
Consumables
D
Finished Goods
E
Spares
Açıklama:
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.
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.
Soru 18
Order quantity of inventories can be determined with reference to the determinations of inventory peculiarly calculated for each company. Which calculation represents the average holding of inventories?
Seçenekler
A
Danger Level
B
Average Stock Level
C
Maximum Level
D
Re-order Level
E
Minimum Level
Açıklama:
Order quantity of inventories can be determined with reference to the determinations of inventory peculiarly calculated for each company.Minimum Level: The minimum allowable level of inventory that should be hold at all times. If the stock level on a point of time is less than the minimum level, then the work will stop due to shortage of material.Re-order Level: Re-ordering level is fixed amount between the minimum and maximum level. Maximum Level: It is the maximum limit of the quantity of inventories to be maintained. Danger Level: It is the level below the minimum level. Average Stock Level: It represents the average holding of inventories. The correct answer is B.
Soru 19
_________is an arrangement whereby a bank helps its customer to obtain credit from its (customer’s) suppliers.
Which option completes the definition of a financing alternative given above best?
Which option completes the definition of a financing alternative given above best?
Seçenekler
A
Accruals
B
Trade Credit
C
Working Capital Advance by Commercial Banks
D
Factoring
E
Letter of Credit
Açıklama:
Letter of Credit: A letter of credit is an arrangement whereby a bank helps its customer to obtain credit from its (customer’s) suppliers. When a bank opens a letter of credit in favor of its customer for some specific purchases, the bank undertakes the responsibility to honor the obligation of its customer, should the customer fail to do so.The correct answer is E.
Soru 20
Which of the following financing alternatives entails the sale of accounts receivable to another firm who then collects payment from the customer?
Seçenekler
A
Accruals
B
Factoring
C
Letter of Credit
D
Trade Credit
E
Working Capital Advance by Commercial Banks
Açıklama:
Factoring : Factoring entails the sale of accounts receivable to another firm, called the factor, who then collects payment from the customer. Through factoring, a business can shift the costs of collection and the risk of nonpayment to a third party. In a factoring arrangement, a company and the factor work out a credit limit and average collection period for each customer. As the company makes new sales to a customer, it provides an invoice to the factor. The customer pays the factor directly, and the factor then pays the company based on the agreed upon average collection period, less a slight discount that covers the factor’s collection costs and credit risk. The correct answer is B.
Soru 21
_____________ refers to the total current asset holdings of a company which can be converted into cash in less than a year time.
Seçenekler
A
Net working capital
B
Re-paid expense
C
Gross working capital
D
Inventory
E
Temporary working capital
Açıklama:
The gross working capital refers to the total current asset holdings of a company which can be converted into cash in less than a year time. The current assets include but are not limited to cash, cash in banks, marketable securities, receivables with a term less than 1 year which are mainly from clients, but also from others, inventory of raw materials, work-in-progress, finished goods, and prepayments received.
Soru 22
"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.
Seçenekler
A
Nature of business
B
Inventory level for raw materials
C
Volume of business
D
Length of period of manufacture
E
Use of manuel labor
Açıklama:
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.
Soru 23
______________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.
Seçenekler
A
Turnover of the goods
B
Terms of credit
C
Price level change
D
Short term financial options
E
Seasonality of product demand
Açıklama:
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.
Soru 24
I. Inverstment
II. Tİme
III. Risk
IV. Growth
Which ones are among the dimensions of working capital management?
II. Tİme
III. Risk
IV. Growth
Which ones are among the dimensions of working capital management?
Seçenekler
A
I and II
B
II and III
C
I, II and III
D
I, II and IV
E
II, III and IV
Açıklama:
• Time: As a means of survival in the market place, timing and availability of the required funds is critical.
• Investment: Although working capital management focuses on short-term asset and
liabilities, the relevant decisions indirectly determines the available funding for investments.
• Credibility: Working capital management has great significance for all companies, but it is more critical for smaller companies which have more restricted funding capabilities. .
• Growth: The availability of funds contributes to the activity level in the short- run and potential growth by realizing investments in the long-run.
• Investment: Although working capital management focuses on short-term asset and
liabilities, the relevant decisions indirectly determines the available funding for investments.
• Credibility: Working capital management has great significance for all companies, but it is more critical for smaller companies which have more restricted funding capabilities. .
• Growth: The availability of funds contributes to the activity level in the short- run and potential growth by realizing investments in the long-run.
Soru 25
The main source of financing secured internally has been by means of ________. The major items or them are wages and taxes which in turn create obligations to payments to the employees and to the government.
Seçenekler
A
Factoring
B
Letter of credit
C
Trade credit
D
Accruals
E
Working capital advance by commercial banks
Açıklama:
Accruals: The main source of financing secured internally has been by means of Accruals. The major accrual items are wages and taxes which in turn create obligations to payments to the employees and to the government.
Soru 26
Companies should establish clear principles with regards to trade credits which includes the following aspects. Which one is among these aspects?
Seçenekler
A
Credit policy
B
Allocation of authority
C
The volume of the credit sales
D
Stability of sales
E
Administrative cost
Açıklama:
The primary objective of management of receivables should not be limited to expansion of sales but should involve maximization of overall returns on investment. So, receivables management should not be the only focus on the collection within the shortest possible period but also other possible related benefit and costs should be considered. Companies should establish clear principles with regards to trade credits which includes the following aspects (Mishra, 1973):
1. Allocation of Authority: The efficiency of a credit management in formulation and execution of sound and effective credit and collection policies largely depends on the location of credit department in the organizational structure. As credit and collection policies directly influence the solvency of the firm, they are considered to be under the responsibility of the chief finance officer. The other approach, referring to the receivables as a representation of sales and the value is not created until the collection is realized, proposes placing the authority of allocation under the direct charge of the marketing executive or the sales department. The choice of allocation of authority to administer credit and collection policies depends on either to a financial executive or the marketing executive or both of them jointly depending upon the organizational structure and the objectives of the company.
1. Allocation of Authority: The efficiency of a credit management in formulation and execution of sound and effective credit and collection policies largely depends on the location of credit department in the organizational structure. As credit and collection policies directly influence the solvency of the firm, they are considered to be under the responsibility of the chief finance officer. The other approach, referring to the receivables as a representation of sales and the value is not created until the collection is realized, proposes placing the authority of allocation under the direct charge of the marketing executive or the sales department. The choice of allocation of authority to administer credit and collection policies depends on either to a financial executive or the marketing executive or both of them jointly depending upon the organizational structure and the objectives of the company.
Soru 27
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?
receivables by the customer when they fall due and become doubtful debts?
Seçenekler
A
Default cost
B
Capital cost
C
Delinquency cost
D
Credit investigation and supervision cost
E
Collection cost
Açıklama:
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.
Soru 28
_____________is used to determined the required inventory level for each item or a product during a particular period.
Seçenekler
A
Inventory budget
B
Inventory reports
C
Just-in-time inventory
D
Zero-inventory
E
Avarage Price method
Açıklama:
Inventory budget is used to determined the required inventory level for each item or a product during a particular period. By the virtue of production process, three main costs of production exist to form the unit cost per product as to determine the monetary amount of the finished products under both generally accepted accounting
principles and international financial reporting standards.
principles and international financial reporting standards.
Soru 29
_____________is a system of inventory control which is also named as Selective Inventory Control, or SIC.
Seçenekler
A
Fast moving inventories
B
FNSD analysis
C
Aging schedule of inventories
D
HML analysis
E
ABC analysis
Açıklama:
ABC analysis is a system of inventory control which is also named as Selective Inventory Control, or SIC. ABC analysis is a system of categorization by using three classes: s or categories used in the system. The first class of A, is the category for items that are considered to be important or critical. The second category of B, is the classification for items of average importance. Finally, category C is the designation for relatively unimportant items.
Soru 30
_______________ assumes that the cashflow of a company has a stochastic structure, as different amounts of cash payments are made on different points of time.
Seçenekler
A
Baumol’s economic order quantity model
B
Miller-Orr model
C
Cash flows management
D
Cash position report
E
Cash/Bank reconciliation
Açıklama:
Unlike Baumol, Miller and Orr model (1966) assumes that the cashflow of a company has a stochastic structure, as different amounts of cash payments are made on different points of time. It is assumed that the movements in cash balance occur randomly. Miller and Orr also suggest that there exist control limits, which sets control points for time and size of transfers between Investment Account and Cash Accounts.
Soru 31
An increase in which of the following causes a decrease in net working capital?
Seçenekler
A
Cash
B
Cash in Banks
C
Inventories
D
Prepaid expenses
E
Tax payments
Açıklama:
Since tax payments is a liabily item, an increase in tax payments causes to a decrease in net working capital since it is the difference between assets and liabilities.
Soru 32
For which of the following the ratio of working capital to fixed capital is higher than others?
Seçenekler
A
Manufacturer of automobiles
B
Manufacturer of aircraft
C
Producer of farming machines
D
Producer of biscuits
E
Producer of vehicles
Açıklama:
In industries producing capital or semicapital goods the ratio of working capital o fixed capial is relatively low. However, in industries producing consumption goods such as biscuits, the ratio of working capital to fixed capital would be relatively high.
Soru 33
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?
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?
Seçenekler
A
I, II and IV
B
II, III and IV
C
I, II and III
D
I,III and IV
E
II and III
Açıklama:
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.
Soru 34
Which of the following is not a dimension of working capital management?
Seçenekler
A
Time
B
Transparency
C
Investment
D
Credibility
E
Growth
Açıklama:
Transparency is not a dimension of working capital management.
Soru 35
I-Hedging Policy
II-Conservative Policy
III-Depressive Policy
IV-Aggressive Policy
Which of the above are among working capital management policies?
II-Conservative Policy
III-Depressive Policy
IV-Aggressive Policy
Which of the above are among working capital management policies?
Seçenekler
A
I, II and III
B
I and IV
C
II and III
D
I, II and IV
E
Only II
Açıklama:
Hedging, conservative and aggressive policies are among working capital management policies but there is no depressive policy.
Soru 36
I-Transaction Motive
II-Manipulative Motive
III-Precautionary Motive
IV-Speculative Motive
Which of above are among motives for companies to hold cash?
II-Manipulative Motive
III-Precautionary Motive
IV-Speculative Motive
Which of above are among motives for companies to hold cash?
Seçenekler
A
I, III and IV
B
I, II and III
C
II, III and IV
D
Ony I
E
III and IV
Açıklama:
Companies do not hold cash for manipulation. All others are motives for holding cash.
Soru 37
Which of the following statements is false according to Baumol’s Economic Order Quantity Model?
Seçenekler
A
The cash is used evenly over a period of time.
B
The cash requirements of the firm are known with certainty in advance.
C
The transaction cost is unknown and is variable
D
The rate of carrying cost is known and is assumed to be constant.
E
The short term marketable securities can be freely bought and sold.
Açıklama:
According to Baumol's model transaction cost is known and is constant. So C is the answer.
Soru 38
...... is a methodological procedure of comparing two sets of related cash/bank accounts or records gathered from either internal systems or from the banks.
Seçenekler
A
Cash/Bank Reconciliation
B
Double Check
C
Cash Position Report
D
Miller-Orr Model
E
Average Cash Balance
Açıklama:
Given sentence is definition of Cash/Bank Reconciliation.
Soru 39
I-Holding (or Carrying) costs
II-Setup (or production change) costs
III-Ordering costs
IV-Promotion costs
V-Shortage costs
Which of the above are amongst the inventory costs?
II-Setup (or production change) costs
III-Ordering costs
IV-Promotion costs
V-Shortage costs
Which of the above are amongst the inventory costs?
Seçenekler
A
I, II, III and IV
B
I, II, III and V
C
I, II, IV and V
D
II, III, IV and V
E
I, III, IV and V
Açıklama:
There is not a cost called promotion cost among the inventory costs.
Soru 40
What will be economic order quantity if usage inventories in units is 9, buying cost per order is 4 and carrying cost per unit is 2.
Seçenekler
A
10
B
9
C
8
D
7
E
6
Açıklama:
Economic order quantity is calculated by the formula
where D=usage inventories in units
H=buying cost per order
S=carrying cost per unit.
Thus EOQ=sqroot(2*9*4/2)=sqroot(36)=6
where D=usage inventories in units H=buying cost per order
S=carrying cost per unit.
Thus EOQ=sqroot(2*9*4/2)=sqroot(36)=6
Soru 41
Which of the following represents working capital?
Seçenekler
A
Current liablities
B
Equity
C
Current assets
D
Fixed assets
E
Long-term liabilities
Açıklama:
Working capital is also defined as the available capital for day-to-day production of goods to be sold by a company represented by its net current assets
Soru 42
All of the following is a part of current assets, except...
Seçenekler
A
Cash in hand
B
Invetories
C
Prepaid expenses
D
Accounts payable
E
Accurues income
Açıklama:
Accounts payable belongs to current liabilities.
Soru 43
I. Time
II. Investment
III. Credibility
Which of these can be dimensions of working capital management?
II. Investment
III. Credibility
Which of these can be dimensions of working capital management?
Seçenekler
A
I only
B
II only
C
I and II only
D
II and III only
E
I, II and III
Açıklama:
All of them are the dimensions of working capital management.
Soru 44
I. Transaction motive
II. Precautionary motive
III. Austerity motive
Which of these can be motivations of holding cash for companies?
II. Precautionary motive
III. Austerity motive
Which of these can be motivations of holding cash for companies?
Seçenekler
A
I only
B
II only
C
I and II only
D
II and III only
E
I, II and III
Açıklama:
Only two of them can be motivations of holding cash which are transaction and precautionary motives.
Soru 45
Which policy of working capital management creates the lowest risk?
Seçenekler
A
Conservative policy
B
Matching policy
C
Agressive policy
D
Hedging policy
E
None of above
Açıklama:
Conservative policy of working capital management creates the lowest level of risk.
Soru 46
Which of the following can be said for conservative policy of working capital management?
Seçenekler
A
It is also named as matching policy.
B
It fails to ensure optimum utilization of funds.
C
It is specified as the most risky policy.
D
It proposes to finance all of current assets by the long term sources.
E
It proposes the fixed assets should be financed mostly through short-term sources.
Açıklama:
While the conservative policy of working capital management creates the lowest level of risk, it fails to ensure optimum utilization of funds.
Soru 47
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?
II. Cash holding cost
III. Total cash required
Which of these can be a component of Baumol's optimum cash balance formula?
Seçenekler
A
I only
B
II only
C
I and III only
D
II and III only
E
I, II and III
Açıklama:
In the formulation all of them are used.
Soru 48
All of the followings are inventory-related cost, except...
Seçenekler
A
Transaction costs
B
Holding costs
C
Setup costs
D
Shortage costs
E
Ordering costs
Açıklama:
Transaction cost is mainly cash-related cost. Inventories have nothing to do with it.
Soru 49
Which of the following types of cost arise on account in relation with the delay in payment of receivables by the customer when they fall due and become doubtful debts?
Seçenekler
A
Holding cost
B
Administrative cost
C
Capital cost
D
Delinquency cost
E
Default cost
Açıklama:
Delinquency cost is a 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.
Soru 50
All of the followings financing sources of working capital, except...
Seçenekler
A
Factoring
B
Corporate bonds
C
Trade credit
D
Accruals
E
Letter of credit
Açıklama:
Corporate bonds are long term credit source, thus cant be considered as financing source of working capital.
Soru 51
Which of the followings is not a component of "current liabilities"?
Seçenekler
A
Accounts Payable
B
Sundry Creditors
C
Accounts Receivable
D
Outstanding Expenses
E
Bank Payments
Açıklama:
THE CONCEPT OF WORKING CAPITAL
Accounts Receivable is a component of "Current Assets".
Accounts Receivable is a component of "Current Assets".
Soru 52
Which of the followings is a component of "current assets"?
Seçenekler
A
Dividend Payments
B
Prepaid Expenses
C
Sundry Creditors
D
Tax Payments
E
Outstanding Expenses
Açıklama:
THE CONCEPT OF WORKING CAPITAL
Prepaid Expenses are a component of current assets
Prepaid Expenses are a component of current assets
Soru 53
Which of the following factors affecting the level of working capital create a strong positive relationship between the size of the company and the working capital needs?
Seçenekler
A
Nature of business
B
Volume of business
C
Length of period of manufacture
D
The proportion of the cost of raw materials to total cost
E
Use of manual labor or mechanization
Açıklama:
The Level of Adequate Working Capital
Volume of business: Generally, there exists a strong positive relationship between the size of the company and the working capital needs.
Volume of business: Generally, there exists a strong positive relationship between the size of the company and the working capital needs.
Soru 54
Which of the following dimensions is not a part of "working capital management"?
Seçenekler
A
Productivity
B
Time
C
Investment
D
Credibility
E
Growth
Açıklama:
Working capital management has the following four dimensions:Growth, Credibility, Investment,Time
Soru 55
Which of the following "Working Capital Management Policies" aims to minimize the risks associated with the financing of the current assets?
Seçenekler
A
Conservative Policy
B
Hedging Policy
C
Matching Policy
D
Aggressive Policy
E
Radical Policy
Açıklama:
Working Capital Management Policies
As the name implies, conservative policy aims to minimize the risks associated with the financing of the current assets. It proposes to finance a higher proportion of current assets by the long- term sources.
As the name implies, conservative policy aims to minimize the risks associated with the financing of the current assets. It proposes to finance a higher proportion of current assets by the long- term sources.
Soru 56
Which of the following "Working Capital Management Policies" 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?
Seçenekler
A
Hedging Policy
B
Matching Policy
C
Conservative Policy
D
Radical Policy
E
Aggressive Policy
Açıklama:
Working Capital Management Policies
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.
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.
Soru 57
Which of the followings is the length of time it takes the inventories are sold and the proceedings are collected in cash from customers?
Seçenekler
A
Cash Holding Cost
B
Transaction Cost
C
Operating Cycle
D
Cash Conversion Cycle
E
Net Operating Cycle
Açıklama:
Under the framework of cash management, the operating cycle is defined as the length of time it takes the inventories are sold and the proceedings are collected in cash from customers.
Soru 58
Which of the followings is the purpose of "inventory management"?
Seçenekler
A
To determine the optimal cash level.
B
To hold the cash balances.
C
To restore balance to minimum cash.
D
To keep the inventories on optimal level.
E
To determined the required inventory level for each item or a product during a particular period.
Açıklama:
Inventory management aims to keep the inventories on optimal level, without stock- outs and excesses, by organizing, holding and replenishments for each item.
Soru 59
Which of the following inventory-related costs includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital?
Seçenekler
A
Holding Costs
B
Setup costs
C
Ordering costs
D
Shortage costs
E
Production change costs
Açıklama:
Kinds of Inventories
Holding (or Carrying) Costs: This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.
Holding (or Carrying) Costs: This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital.
Soru 60
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?
Seçenekler
A
Administrative Cost
B
Capital Cost
C
Delinquency Cost
D
Default Cost
E
Shortage Cost
Açıklama:
Costs of Maintaining Receivables
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.
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.
Soru 61
What is the difference between current assets and current liabilities?
Seçenekler
A
Gross working capital
B
Net working capital
C
Current working capital
D
Fixed working capital
E
Adequate working capital
Açıklama:
Net Working Capital refers to the difference between the current assets and the current liabilities. Net working capital is a measure of company’s liquidity and ability to survive in case the only funding source is current assets.
Soru 62
Which of the followings is a component of current liabilities?
Seçenekler
A
Prepaid expenses
B
Outstanding expenses
C
Sundry deptors
D
Accounts receivable
E
Inventories
Açıklama:
Outstanding expenses are current liabilities. The other options are current assets.
Soru 63
Which of the followings is not one of the main dimensions of working capital management?
Seçenekler
A
Time
B
Credibility
C
Investment
D
Profitability
E
Growth
Açıklama:
Working capital management has the following four dimensions:
- Time
- Investment
- Credibility
- Growth
Soru 64
What should be the main focus of a working capital management policy of a company?
Seçenekler
A
Maintenance of sufficient liquidity
B
Maximization of shareholders' wealth
C
Control of financial plans
D
Minimization of financial risks
E
Management of inventory level
Açıklama:
The working capital policy of a company should focus on maintaining sufficient liquidity. It is a fact that in ideal cases, companies determine their optimal working capital level and also their funding strategy in order to create value. In this regard, the decision makers should decide about not only the amount of current assets but also the proportions of short-term and long-term sources for financing these current assets.
Soru 65
What is the most risky working capital financing policy?
Seçenekler
A
Conservative policy
B
Dividend policy
C
Aggresive policy
D
Progressive policy
E
Hedging policy
Açıklama:
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.
Soru 66
Which of the followings is not amongst the inventory costs?
Seçenekler
A
Holding costs
B
Ordering costs
C
Setup costs
D
Shortage costs
E
Capital costs
Açıklama:
There four types of inventory costs:
- Holding costs
- Setup costs
- Ordering costs
- Shortage costs
Soru 67
Which of the followings is not a type of costs incurred in the course of receivables management?
Seçenekler
A
Default cost
B
Capital cost
C
Delinquency cost
D
Carrying cost
E
Administrative cost
Açıklama:
There ara four types of costs ncurred in the course of receivables management:
- Administrative cost
- Capital cost
- Delinquency cost
- Default cost
Soru 68
Costs incurred in getting the marketable securities converted into cash or visa versa is called what?
Seçenekler
A
Cash holding cost
B
Capital cost
C
Shortage cost
D
Transaction cost
E
Operation cost
Açıklama:
Transaction costs are the costs incurred in getting the marketable securities converted into cash or vice versa.
Soru 69
Which inventory level is below of the minimum level?
Seçenekler
A
Average stock level
B
Maximum level
C
Re-order level
D
Default level
E
Danger level
Açıklama:
Danger level is the level below the minimum level. It leads to stoppage of the production process. It is calculated as the formula below:
Danger Level = (Average Consumption)x(Maximum reorder period for emergency purchase)
Danger Level = (Average Consumption)x(Maximum reorder period for emergency purchase)
Soru 70
What is the main internal financing source of working capital?
Seçenekler
A
Accruals
B
Letter of Credit
C
Factoring
D
Trade Credit
E
Working Capital Advance by Commercial Banks
Açıklama:
The main source of financing secured internally has been by means of Accruals. The major accrual items are wages and taxes which in turn create obligations to payments to the employees and to the government.
Soru 71
What does gross working capital refer to?
Seçenekler
A
the working capital that is financed by short-term sources
B
the minimum level of investment in the current assets that is carried by the business at all times to carry out its activities
C
a stable amount of working capital requirement
D
the total current asset holdings of a company which can be converted into cash in less than a year time
E
the difference between the current assets and the current liabilities
Açıklama:
The gross working capital refers to the total current asset holdings of a company which can be converted into cash in less than a year time. The current assets include but are not limited to cash, cash in banks, marketable securities, receivables with a term less than 1 year which are mainly from clients, but also from others, inventory of raw materials, work-in-progress, finished goods, and prepayments received.
Soru 72
Which of the following is one of the liabilities in working capital?
Seçenekler
A
sundry creditor
B
sundry debtors
C
prepaid expenses
D
cash in hand
E
cash in banks
Açıklama:
Soru 73
_____ represents the minimum level of investment in the current assets that is carried by the business at all times.
Which of the following best fills the blank above?
Which of the following best fills the blank above?
Seçenekler
A
Accounts payable
B
Divident payments
C
Accrues income
D
Temporary working capital
E
The permanent working capital
Açıklama:
The permanent working capital represents the minimum level of investment in the current assets that is carried by the business at all times to carry out its activities.
Soru 74
Which of the following is not one of the important factors in determining the amount of the working capital?
Seçenekler
A
Volume of business
B
Bank payments
C
Length of period of manufacture
D
Turnover of working capital
E
Terms of credit
Açıklama:
The important factors in determining the amount of the working capital are:
Length of period of manufacture
Volume of business
The proportion of the cost of raw materials to total cost
Use of manual labor or mechanization
Inventory level for raw materials of finished goods
Turnover of working capital
Terms of credit
Short term financing options
Seasonality of product demand
Price level changes
Length of period of manufacture
Volume of business
The proportion of the cost of raw materials to total cost
Use of manual labor or mechanization
Inventory level for raw materials of finished goods
Turnover of working capital
Terms of credit
Short term financing options
Seasonality of product demand
Price level changes
Soru 75
Which of the following explains the credibility dimension of working capital management?
Seçenekler
A
It proposes a strategy by which the fluctuating part of the current assets are financed by the current liabilities.
B
Although working capital management focuses on short-term asset and liabilities, the relevant decisions indirectly determines the available funding for investments.
C
Working capital management has great significance for all companies, but it is more critical for smaller companies which have more restricted funding capabilities.
D
As a means of survival in the market place, timing and availability of the required funds is critical.
E
The availability of funds contributes to the activity level in the short- run and potential growth by realizing investments in the long-run.
Açıklama:
Credibility: Working capital management has great significance for all companies, but it is more critical for smaller companies which have more restricted funding capabilities.
Soru 76
_____ proposes a strategy by which the fluctuating part of the current assets are financed by the current liabilities.
Which of the following best fills the blank above?
Which of the following best fills the blank above?
Seçenekler
A
Timing
B
Investment
C
Aggressive policy
D
Hedging policy
E
Conservative policy
Açıklama:
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.
Soru 77
The length of the company’s operating and cash conversion cycles determines the level of _____.
Which of the following best fills the blank above?
Which of the following best fills the blank above?
Seçenekler
A
Accounts payable
B
Cash in hand
C
Inventories
D
Operating cycle
E
Liquidity
Açıklama:
The length of the company’s operating and cash conversion cycles determines the level of liquidity.
Soru 78
Which of the following is not one of the categories of inventories?
Seçenekler
A
Cash holding costs
B
Raw material
C
Consumables
D
Finished goods
E
Spares
Açıklama:
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.
- 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.
Soru 79
Which of the following is one of the types of costs incurred in the course of receivables management?
Seçenekler
A
Overhead allocation
B
Capital Cost
C
Direct materials cost
D
Danger level cost
E
Direct labor cost
Açıklama:
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.
Soru 80
What is the main source of financing secured internally?
Seçenekler
A
Trade credit
B
Working Capital Advance by Commercial Banks
C
Accruals
D
Factoring
E
Letter of credit
Açıklama:
The main source of financing secured internally has been by means of Accruals. The major accrual items are wages and taxes which in turn create obligations to payments to the employees and to the government.
Soru 81
Which assets are financed by long-term financing sources according to the hedging (matching) policy of working capital management?
Seçenekler
A
Fluctuating current assets
B
Permanent current assets
C
Fluctuating and permanent current assets
D
Fixed assets
E
Permanent current assets and fixed assets
Açıklama:
According to the hedging (matching) policy of working capital management, permanent current assets and fixed assetsare financed by long-term financing sources.
Soru 82
Net working capital includes........
Seçenekler
A
All current assets
B
All fixed assets
C
Fixed assets minus current assets
D
Current assets minus current liabilities
E
Total liabilities minus current liabilities
Açıklama:
Net working capital refers to current assets minus current liabilities
Soru 83
Gross working capital includes the following items EXCEPT........
Seçenekler
A
Accounts receivable
B
Inventory
C
Accounts payable
D
Cash
E
Accrued expenses
Açıklama:
Gross working capital refers to total current assets of a company. Current assets include cash, marketable securities, accounts receivabl, inventory, accrued expenses.
Soru 84
Which assets are financed by short term funds according to the aggresive financing policy of working capital finance?
Seçenekler
A
Seasonal current assets
B
Permanent current assets
C
All current assets
D
Fixed assets
E
Total assets
Açıklama:
Policies for financing of working capital are divided into three categories as given in Figure 8.11. Firstly, by a conservative financing policy, the firm mainly utilizes the long term funds. Secondly, by an aggressive financing policy, the firm mainly utilizes the short term funds, and third by a moderate financing policy, the firm mainly utilizes the short and long term funds almost equally
Soru 85
Cash conversion cycle refers to ............
Seçenekler
A
inventory period + collection period + payables period
B
inventory period + collection period - payables period
C
inventory period - collection period - payables period
D
collection period - inventory period - payables period
E
payables period - collection period - inventory period
Açıklama:
Cash conversion cycle is : collection period - inventory period - payables period.
Soru 86
Which of the following statements is TRUE?
Seçenekler
A
Working capital management is more important for big companies compared to small companies.
B
Working capital management mainly involves planning fixed asset investments.
C
One of the main goals of working capital management policy is to ensure that the company has suffiecient liquidity.
D
Conservative working management policy proposes that a lower proportion of current assets should be financed by longterm sources in comparison to agressive working management policy.
E
Conservative working management policy is the riskiest working management policy.
Açıklama:
The working capital policy of a company should focus on maintaining sufficient liquidity.
Soru 87
As the the longer ......... gets, company’s need for liquidity decreases, other things being constant.
Seçenekler
A
cash conversion cycle
B
inventory to product conversion time
C
receivables collection time
D
payables payment time
E
operating cycle
Açıklama:
Generally, it can be said that the longer the cash conversion cycle, the greater the company’s need for liquidity.The payables payment time and cash conversion cycle is inversely related.
Soru 88
The procedure of comparing two sets of related cash/ bank accounts or records gathered from either internal systems or from the banks is referred to as ...........
Seçenekler
A
cash budget
B
cash flow statement
C
cash reconciliation
D
cash position
E
proforma statement
Açıklama:
The procedure of comparing two sets of related cash/ bank accounts or records gathered from either internal systems or from the banks is referred to as ...........
Soru 89
Carrying costs of inventory include costs related with the following items EXCEPT ............
Seçenekler
A
storage
B
insurance
C
depreciation
D
handling
E
stock out
Açıklama:
Stock out cost is an item categorized as shortage costs. All other costs are categorized as carrying costs.
Soru 90
Which of the following is related with maintaining receivables?
Seçenekler
A
default cost
B
ordering cost
C
set up cost
D
shortage cost
E
holding cost
Açıklama:
Deafult cost related with maintaing receivables. All other costs are related with invesntory management.