Question 1

Galloping inflation is also known as

Accepted Answer

Galloping inflation is also known as jumping inflation. It refers to a type of inflation that occurs when the prices of goods and services increase at the two-digit or three-digit rate per annum.

Question 2

Explain the difference between fixed and flexible budgets ?

Accepted Answer

1 A fixed budget is established for a specific level of activity whereas flexible budget is prepared for various levels of activity 2 Fixed budget cannot be changed after the period commences, whereas a flexible budget can be changed after the period commence 3 Fixed budget is more suitable for fixed expenses whereas flexible budget takes both fixed as well as variable expenses in account 4 Fixed budget includes only fixed costs, whereas a flexible budget includes fixed costs, variable costs and semi variable costs 5 Fixed budget is mainly used in planning stage whereas flexible budget is used in controlling stage

Question 3

Financial management process deals with

Accepted Answer

Financial management refers to the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization. It is the specialized function directly associated with the top management. Hence, it deals with Financial decisions.

Question 4

Demand is said to be inelastic when

Accepted Answer

Demand is said to be inelastic, when the demand for the good doesn't change much or it is negotiable when the price of the good changed.

Question 5

RBI issued currency notes under which system

Accepted Answer

RBI issued currency notes under Fixed Minimum Reserve System.

Question 6

Comprehensive income includes all of the following except

Accepted Answer

Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available for sale securities and foreign currency translation gains or losses.

Question 7

Cheque deposited but not cleared means

Accepted Answer

A Bank Reconciliation Statement is a statement prepared periodically by a customer to explain the divergence (difference) between the bank balance as per cash book and the bank balance as per Pass Book It clearly shows the two differing balances and the outstanding items which causes the balances to disagree The objective of preparing such a statement is to know the causes of differences between the two balances and pass necessary correcting or adjusting entries in the books of the firm But it is to be noted that some differences are automatically adjusted For example - A cheque that has been sent for collection, but not yet collected, causes a difference between the balance as shown by the pass book and the balance as shown by the cash book, but no adjusting entry is required in the cash book for such a difference because, the bank will credit the firm’s account as soon as the cheque is collected

Question 8

What is RAROC?

Accepted Answer

RAROC is a risk-adjusted framework for profitability measurement and profitability management It is a tool for measuring risk-adjusted financial performance And it provides a uniform view of profitability across businesses (Strategic Business Units / divisions) RAROC and related concepts such as RORAC and RARORAC are mainly used within (business lines of) banks and insurance companies RAROC is defined as the ratio of risk-adjusted return to economic capital

Question 9

what is crossover rate?

Accepted Answer

Crossover rates have to do with the amount of earnings that are generated by two different but similar projects The crossover rate is the point at which the two projects achieve the same net present value In terms of investments, calculating a crossover rate between two similar securities can help an investor determine what to buy and what to sell

Question 10

What is Retained Earnings?

Accepted Answer

When a company or corporation earns a profit or surplus, that money can be put to two uses it can either be re-invested in the business called retained earnings or it can be paid to the shareholders as a dividends

Question 11

What is Bull Market?

Accepted Answer

Bull market is that market where stock value are expected rise and people will have tendency to sell their stock so as to earn profit out of it Thus sudden push from the suppliers will gradually niutalise the market

Question 12

what is the internal rate of return(IRR) of eurekaforbes?

Accepted Answer

Internal Rate of Return is that rate of Return at which the net present value is equal to Zero or it is the Rate which equates the present value of the cash inflows to the cash outflows NPV = Cash Inflow - Cash outflow NPV = Zero

Question 13

What Is EBIDTA?

Accepted Answer

EBITDA stands for earnings before interest, taxes, depreciation, and amortization EBITDA came into wide use among private capital firms, wanting to calculate what they should pay for a business

Question 14

Who is a more senior creditor, a bondholder or stockholder?

Accepted Answer

According to the classification, the claim of bond holder should be accounted first After fulfilling all the claims of bond holder company should look after the stock holder

Question 15

What is the primary reason to issue stock?

Accepted Answer

The primary reason to issue stock is to raise money to start and maintain an ongoing business Other Reasons:: The reasons that a company might want to raise money by issuing stock are: To develop new products To buy more advanced equipment To pay for new buildings and inventories To hire more employees To provide for a merger or acquisition To decrease debt To give company owners greater flexibility To place a value on the company

Question 16

Capitalism is characterized by which of the following?

Accepted Answer

Capitalism is an economic system followed by a country or a society which is characterized by Privately owned businesses, a market economy and profits. Capitalism is defined as "production for exchange" driven by the desire for personal accumulation of money receipts in such exchanges, mediated by free markets. The markets themselves are driven by the needs and wants of consumers and those of society as a whole in the form of the bourgeois state.

Question 17

What is true about personal financial planning?

Accepted Answer

Personal financial planning is the process of creating and achieving financial goals. True statements regarding personal financial planning: As we age, the number and complexity of the financial decisions that we make increases. There are two means for achieving financial goals—you either need to increase your savings or reduce spending. A family's resources are limited.

Question 18

Which of the following investment choices is least risky?

Accepted Answer

CDs are the least risky investment choice when compared to flipping, renting and bonds. A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks. CDs are issued by the bank and are guaranteed by the government. So even if the bank goes bankrupt the investor's money is guaranteed to a certain extent. Flipping and renting are subjected to market fluctuations while bonds are not insured.

Question 19

Which payment type can help you stick to a budget?

Accepted Answer

There are two payment types that will help you stick to your budget. 1. Cash 2. Debit Card The amount in the debit card is the only amount you can spend to stay within budget. These method work because once you spend your money, you are done. You don’t have anything else to spend. Credit cards, payday loans, and cash advances are all loans on future income. When you use a credit card, there is always just a little bit more you can spend. These types do not help you budget properly. In fact, these types encourage you to spend beyond your means and be out of budget.

Question 20

What is the objective of Financial Reporting?

Accepted Answer

Financial Reporting involves the disclosure of financial information to the various stakeholders about the financial performance and financial position of the organization over a specified period of time These stakeholders include – investors, creditors, public, debt providers, governments & government agencies Financial Reporting is very important and critical task of an organization It is vital part of Corporate Governance The objectives & purposes of financial reporting :– * Providing information to management of an organization which is used for the purpose of planning, analysis, benchmarking and decision making * Providing information to investors, promoters, debt provider and creditors which is used to enable them to male rational and prudent decisions regarding investment, credit etc * Providing information to shareholders & public at large in case of listed companies about various aspects of an organization * Providing information about the economic resources of an organization, claims to those resources (liabilities & owner’s equity) and how these resources and claims have undergone change over a period of time * Providing information as to how an organization is procuring & using various resources * Providing information to various stakeholders regarding performance management of an organization as to how diligently & ethically they are discharging their fiduciary duties & responsibilities * Providing information to the statutory auditors which in turn facilitates audit * Enhancing social welfare by looking into the interest of employees, trade union & Government

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