MCQs On VALUATION APPLICATION SITUATION SPECIFIC VALUATION part - 3

Q.1:- Which of the following factors are to be considered by the valuer while making valuation if the investment entity:

• Compensation and expense Management
• Client Demographic
• None of the above
• Both (a) and (b)

Q.2:- Which one of the following is not the characteristic of investment company?

• Fair value management
• Investment service
• Bench marking of non-financial value
• Business purpose

Q.3:- Which of the following is correct statement regarding cyclical firms:

• The revenue is generally higher in the period of economic prosperity and lower in times of economic downturn and contraction
• A firm is classified as cyclical generally first on the basis of the historical performance of the industry and later on the basis of the firm's own performance in relation to the overall economic performance
• Which are sensitive to business cycle
• All of the above

Q.4:- Which of the following is not considered while selecting the region?

• Availability of raw materials
• Proximity to the product market
• Law and order
• Price of land

Q.5:- The period of business when an entrepreneur must position the venture in a market and make necessary adjustments to assure survival is called the:

• startup stage
• later growth stage.
• pre-startup stage.
• early growth stage.

Q.6:- While using the discounted cash flow method for the valuation of a startup, the rate of discount used is________.

• High
• any rate, as suggested by the promoters.
• Low
• Same as in any other similar business

Q.7:- Under the., the average pre-money valuation of other startups in the same vertical is arrived at and this valuation is then used to value the startups that is looking for investment:

• Scorecard valuation method
• The book value method
• Venture capital method
• Valuation by stage

Q.8:- Now a firm or business is valued as a distressed business?

• It can be valued as a going concern and the discounted cash flow method can be used
• It can be valued at liquidation value, with the assumption that the business is closing down
• None of the above
• Both (a) and (b)

Q.9:- Firms deal with financial distress by:

• Merging with another firm
• Issuing new securities and exchanging debt for equity
• Selling major assets
• All of the above

Q.10:- Under risk factor summation method, the initial value for the pre-revenue startup is estimated and then the value so arrived at is adjusted for .inherent to the startup:

• 10 risk factors
• 5 risk factors
• 12 risk factors
• 8 risk factors

Q.11:- Which of the following standards are partially applicable to small and medium sized company?

• Related party disclosures
• Leases
• Discontinuing operations
• Borrowing costs

Q.12:- Which of these statements best describes the context for entrepreneurship:

• Entrepreneurship takes place in a wide variety of contexts
• Entrepreneurship takes place in small businesses
• Entrepreneurship takes place in large businesses
• Entrepreneurship does not take place in social enterprises

Q.13:- Indrayani Jungle wants to start a small business importing some products from her native Kenya. Before she starts, some good advice to Indrayani would be:

• incorporate immediately.
• find a business to buy as soon as possible.
• get a loan right away.
• talk to others who have been or are in the import business.

Q.14:- In which of the following situation the company is considered to be on breakeven point?

• Expenses are higher then profits
• Profits are higher then expenses
• No Profit no loss
• None of the given options

Q.15:- A service enterprise is considered as medium enterprise:

• Where the investment in equipment is more than Rs. 2 Crore but does not exceed Rs. 5 Crore
• Where the investment in equipment is more than Rs. 2 Crore but does not exceed Rs. 10 Crore
• Where the investment in equipment is more than Rs. 10 lakh but does not exceed Rs. 1 Crore
• None of the above

Q.16:- An entity has committed to its investor that its business purpose is to invest fund solely for return from capital appreciation, investment income or both:

• Fair value market
• Investment service condition
• Bench mark condition
• Business Investment service condition

Q.17:- _____is an effective tool to make good the losses occurring to a business due to unforeseen circumstances

• Insurance
• Bond
• Indemnity
• Equity

Q.18:- Example of financial asset:

• Investment in debenture
• Investment in Machinery
• Investment in land
• All of the above .

Q.19:- Which one of the following statements about market and book value is correct?

• All firm sell at market to book ratio greater than or equal to 1.
• All firm sell at market to book ratio below 1.
• Most firm have a market to book ratio above 1 but not all.
• All firm sell at market to book ratio above 1.

Q.20:- Which of the following are financial asset?

• Stocks
• Machine
• Bonds
• Both (a) & (b)

Q.21:- Which of the following represent the three major categories of risks faced by a business organization?

• Project risks, technical risks, business risks
• Management risks, technical risks, design risks
• Business risks, personnel risks, budget risks
• Planning risks, technical risks, personnel risks

Q.22:- A franchise can be valued using

• Relative Valuation
• Market Approach
• DCF method
• Any of the above

Q.23:- Bringing together companies with businesses that bear no relation to one another

• Circular expansion
• Forming conglomerate
• Amalgamations
• Vertical integration

Q.24:- It is prudent to take weighted average of quoted price for:

• Past 12 months
• Past 6 months
• Past 2 months
• Past 4 months

Q.25:- Which of the following is NOT likely to be a source of synergy in mergers and acquisition?

• Elimination of waiting time in the supply chain.
• Combining new expertise and resources.
• Economies of scale in operations.
• Having the best work culture from the two companies.

Q.26:- Which of the following is NOT a feature of a public listed company?

• Performance and activities are closely watched and monitored by the regulatory authorities.
• The shares may be completely held by families of the founding members or their close associates.
• The shares are normally listed on stock exchange for public trading
• Needs a large capital base that can be raised through the capital market.

Q.27:- A patent is granted for a specified amount of time because of the assumption:

• That firm will earn a sufficient profit during this period
• That it will stimulate idea and development of a better product
• That during this time firm will cover its development costs
• To limit the monopoly of the firm

Q.28:- Which of the following is alternatively called corporate venturing?

• Intrapreneurship
• Offering new products by an existing company
• Entrepreneurship
• Act of stating a new venture

Q.29:- A business plan for a new business does not need to include:

• a discussion of the purpose of the business.
• the name of the lending bank.
• a marketing plan.
• a description of the company background.

Q.30:- Individuals who help the entrepreneur in business activities are called:

• Professional support networks
• Role models
• Business support networks
• Moral support networks

Q.31:- Which of these offers the advantage that the entrepreneur has the ability to develop and design the business in the entrepreneur's own way?

• Buy a franchise
• Buy an existing business
• Start a new business
• Participate in a business incubator

Q.32:- Barriers to new product creation and development are known as:

• Opportunity parameters
• Trial anderr or
• Intrapreneurship culture
• Opportunity cost

Q.33:- implies that women entrepreneurs are now economically independent and take decisions independently.

• Improved quality life
• Employment generation
• Better utilization of resources
• Economic development

Q.34:- Which of the following are described as one of the ‘Big Five’ personality traits?

• extravert personality
• tolerance of others
• propensity to leadership
• need for achievement

Q.35:- Which one of the following is the step involved in setting up a new enterprises?

• Setting up infrastructure
• Selecting the location
• Making a product choice
• Creating a business plan

Q.36:- Entrepreneurship can best be described as:

• taking a significant risk in a business context
• A process involving innovation, new products or services, and value creation
• a process that requires setting up a business
• having a strong vision

Q.37:- Type of unit which guarantees that all buying and selling will be made by traders of exchange is called.........:

• clearing house
• trading house
• professional house
• guarantee house

Q.38:- Formula for venture capitalist method:

• Terminal value = Post money valuation
• ROI = Terminal Value / Post Money Valuation
• Post Money Valuation = Terminal Value
• None of the above

Q.39:- Is the expected price of the startup if it is sold in future, the same is arrived at by projecting the revenues expected in the year of sate:

• Enterprise value
• Market value
• Book value
• Terminal value

Q.40:- When a distressed business is valued at liquidation value?

• The net present worth of the business as going concern is less than the total value of its assets
• The longer the assets constituting that business remain harnessed to their current use, the more money that will be lost by all those with claim against the company
• business become economically distressed
• All of the above

Q.41:- A distressed asset can be defined as:

• One which is in major financial difficulty either in default or close to default
• An asset that is put on sale, usually at a cheap price, because its owner is forced to sell it
• None of the above
• Both (a) and(b)

Q.42:- Which of the following factors need to be considered while valuation of star-ups?

• Track record of promoters
• Investors willingness to invest
• Leverage
• All of the above

Q.43:- Under which of the following method three scenarios for valuation provided:

• Valuation by stage.
• The book value method
• The First Chicago method
• Berks method

Q.44:- Uncertainties in valuation can be addressed by .......................:

• Valuation ranges
• Probalistic statements
• Better valuation models
• All the above

Q.45:- Entrepreneurs and ventures capitalists:

• Are cordial friends
• Get along well
• Are in conflict
• Are the best friends

Q.46:- __________________ requires proper review and reconsideration of the selected alternative before implementing it.

• Checking the decision
• Developing possible alternatives
• Exploring the developed alternatives
• Selecting the best alternative

Q.47:- ___________ implies that women entrepreneurs are now economically independent and take decisions independently.

• Economic development
• Employment generation
• Better utilization of resources
• Improved quality life

Q.48:- A business where an individual is both the owner and conductor of the business affairs is called ……………….:

• Corporation
• Sole Proprietorship
• Partnership
• None of the above

Q.49:- ........................ can be defined as psychological features that enable an individual to take action toward a desired goal?

• Trait
• Ego
• Motive
• Attitude

Q.50:- Entrepreneur actually starts setting up of an enterprise by

• Directing
• Staffing
• Organizing
• Planning