Finance Questions

Q:

What Is EBIDTA?

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.

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Subject: Finance

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Q:

What is the difference between JOURNAL ENTRY & LEDGER?

Answer

A journal is also called as a book of prime entry.Transactions occurred are first entered in this book to show which accounts should be debited and which should be credited.


on the basis of entries made in the journal, accounts are prepared, the book which contains the accounts is called a ledger. Transactions entered in the journal are classified according to their nature and posted in their respective accounts in ledger. it is also called as book of final entry.

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Subject: Finance

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Q:

What is Secondary Market?

Answer

Secondary market refers to market where securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange.

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Subject: Finance

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Q:

What Is EFT?

Answer

Exchange Traded Funds (ETFs) are a relatively new phenomenon and are gaining popularity rapidly. This post outlines the key features of an ETF.


ETFs are like mutual funds because they hold an underlying asset like stocks, debt, commodities future contracts etc. If you are new to the concept of an ETF, think of it as a mutual fund, and build your understanding from thereon. An example of an ETF is the SBI Gold ETF, which holds physical gold as its underlying asset.

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Subject: Finance

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Q:

Someone who loans money is called

A) Lender B) Borrower
C) Investee D) Investor
 
Answer & Explanation Answer: A) Lender

Explanation:

Someone who receives money in exchange for a promise to pay it back later is called a borrower1, and the person making the loan is the lender.

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Filed Under: Finance
Exam Prep: AIEEE , Bank Exams , CAT
Job Role: Analyst , Bank Clerk , Bank PO

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Q:

What is hedging?

Answer

Hedging is a tool to minimize the risks. It is thus like an 'insurance' where one pays a premium but gets an assured amount in case of some uncertain event to the extent of the loss actually suffered on an equally opposite position for which the hedge was done. Thus, hedger is different from arbitrageur and speculators, as the intention here is not to maximize the profit but to minimize the loss.


E.g. In Capital Markets, suppose an investor has an equity portfolio of Rs. 2 lacs and the portfolio consists of all the major stocks of NIFTY. He thinks the market will improve in the long run but might go on a downside in the shortrun. NIFTY today stands at 4300. To minimize the risk of downfall, he enters into an option contract by buying NIFTY-PUT of strike 4300 at a premium of, say, Rs. 100. Thus, the actual amount paid is Rs. 5,000(lot size of NIFTY is 50). Also, the number of NIFTY-PUTs to be bought will vary on the beta of the portfolio so as to completely hedge the positon. 

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Subject: Finance

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Q:

What is Trial Balance?

Answer

It is statement of balances of all the accounts in the ledger prepared to prove the arithmetical accuracy of the books of accounts.


A trial Balance is a list of Debit and Credit or a list of Debit & Credit Balance of all the ledger accounts prepared on any particular date

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Subject: Finance

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Q:

Explain the difference between fixed and flexible budgets ?

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.

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Subject: Finance Exam Prep: Bank Exams , CAT
Job Role: Bank Clerk , Bank PO

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