Attempt CAIIB ABFM Module D Practice Quiz & Download PDF

1. Which of the following best describes a ‘hybrid security’ in corporate finance?

2. Which of the following is a key ADVANTAGE of issuing hybrid securities from the perspective of the issuing company?

3. Preference shares are classified as hybrid securities because they combine features of both debt and equity. Which of the following is a feature UNIQUE to preference shares and NOT found in equity shares?

4. A warrant gives its holder the right to purchase the company’s equity shares at a predetermined price. Which of the following correctly describes the ‘exercise price’ (strike price) of a warrant?

5. Statement 1: Convertible debentures give holders the option to convert their debt into equity shares at a predetermined conversion ratio. Statement 2: Upon conversion of convertible debentures, the debt obligation is extinguished and the company’s equity base expands. Statement 3: The coupon rate on convertible debentures is typically higher than on non-convertible debentures of the same issuer. Which statements are correct?

6. What is the key difference between a warrant and a convertible debenture?

7. A company has issued a warrant that allows the holder to buy 1 share at ₹150. The current market price of the share is ₹200 and the warrant is trading at ₹40. What is the theoretical minimum (intrinsic) value of the warrant?

8. Foreign Currency Convertible Bonds (FCCBs) are characterized by which of the following features?

9. Mezzanine financing occupies which position in a company’s capital structure?

10. Which of the following is a DISADVANTAGE of hybrid securities from the investor’s perspective?

11. Under the Startup India initiative, a company is eligible to be recognized as a ‘startup’ if it satisfies which of the following conditions? 1. The entity has been incorporated or registered in India for not more than 10 years from the date of incorporation. 2. Annual turnover has not exceeded ₹100 crore in any financial year since incorporation. 3. The entity is working towards innovation, development, or improvement of products/services/processes. Which are correct?

12. Under the Startup India Action Plan, startups are entitled to an 80% rebate on patent registration fees. What is the rebate percentage available on trademark registration fees?

13. A startup’s ‘pitch presentation’ to investors should typically include which of the following key elements? 1. Problem being solved and proposed solution 2. Market size (TAM, SAM, SOM) 3. Business model and revenue streams 4. Team background and expertise 5. Financial projections and funding requirement How many of these are essential components of a pitch deck?

14. The ‘Fund of Funds for Startups’ (FFS) scheme in India is managed by:

15. Which of the following is NOT a recognized challenge faced by startups in India?

16. The ‘Atal Innovation Mission’ (AIM) under NITI Aayog is primarily designed to:

17. Under Section 80-IAC of the Income Tax Act, an eligible startup can claim 100% tax deduction on profits for any 3 consecutive assessment years. Which of the following is a mandatory eligibility condition?

18. The ‘Startup India Yatra’ initiative specifically focuses on:

19. Which of the following most accurately distinguishes Venture Capital (VC) from Private Equity (PE)?

20. A Venture Capital fund is evaluating a startup. The startup is expected to generate revenues of ₹500 crore in Year 5. Industry peers trade at a P/Sales multiple of 4x. The VC requires a 35% IRR. What is the pre-money valuation of the startup today if the VC invests ₹50 crore for a 20% stake?