(Papers) ACET Paper May 2010 "CT2 – Finance and Financial Reporting"

Q. 1) A business made a loss during the financial year just ended but has more cash at the end of the year than it did at the beginning. Which of the following could be a reason for this?

A. Dividends were lower this year than last year.
B. Some fixed assets were sold during the year.
C. Debtors took longer to pay this year than last.
D. Creditors were lower at the end of this year.

Q. 2) Soham Son’s conducted a financial analysis of its restaurant business, the analysis did not improve the actual fortunes of the business, and it may not be able to achieve any one of the following issues:-

A. Improve the profitability of this project.
B. Delineate the risks involved in the project.
C. Highlights the salient factors that lead to the greatest uncertainty.
D. Possibly suggest methods by which the risks might be reduced.

Q. 3) The needs and the objectives of these shareholders will NOT vary according to which one of the following factor:

A. Attitude towards risk.
B. Time preference and consumption needs.
C. Balance between the need for income and capital growth.
D. Attitude towards growth

Q. 4) Please read the following statements with respect to Put Option carefully and answer the question below.

I. – The buyer of the option has the right but not the obligation to sell the underlying asset at a specific point in the future at a specific price.
II. – The buyer of the option has the obligation but not the right to sell the underlying asset at a specific point in the future at a specific price.
III. – The seller of the option has the right but not the obligation to sell the underlying asset at a specific point in the future at a specific price.
IV. – The seller of the option has the obligation but not the right to sell the underlying asset at a specific point in the future at a specific price.

Which of the following is correct?

A. II and III only are correct
B. I and IV only are correct
C. I and III only are correct
D. All are incorrect

Q. 5) The decision made from a Payback Method may not be the optimum decision for maximizing the Profit or Returns because:

A. It ignores income beyond the payback period
B. The payback period is difficult to calculate
C. The returns in later years are uncertain
D. Of the emphasis placed on the interest factor

Q. 6) A reduction in risk in the context of a Capital Project Appraisal will lead to:-

A. Increase in the Risk Discount Rate and decrease in the Net Present Value
B. No change in the Risk Discount Rate and increase in the Net Present Value
C. Decrease in the Risk Discount Rate and increase in the Net Present Value
D. Decrease in the Risk Discount Rate and decrease in the Net Present Value