567 (1).pdf

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 06:36:00 AM ) Total Marks: 1 Which of the following value of the shares changes with investors perception about the companys future and supply and demand situation? Select correct option:

Par value Market value Intrinsic value Face value

Question # 2 of 15 ( Start time: 06:36:23 AM ) Total Marks: 1 Which one of the following selects the combination of investment proposals that will provide the greatest increase in the value of the firm within the budget ceiling constraint? Select correct option:

Cash budgeting Capital budgeting Capital rationing Capital expenditure

Question # 3 of 15 ( Start time: 06:36:59 AM ) Total Marks: 1 Mutually Exclusive projects refer to what? Select correct option:

One can invest in one of the projects and not in both One can invest in both projects Cash flows of the two projects are not linked to each other Cash flows of the two projects are linked to each other

Question # 4 of 15 ( Start time: 06:37:46 AM ) Total Marks: 1 Which of the following is not the present value of the bond? Select correct option:

Intrinsic value Market price Fair price Theoretical price

Question # 5 of 15 ( Start time: 06:38:26 AM ) Total Marks: 1 When the zero coupon bond approaches to its maturity, the market value of the bond approaches to which of the following? Select correct option:

Intrinsic value

Book value Par value Historic cost

Question # 6 of 15 ( Start time: 06:38:53 AM ) Total Marks: 1 Who or what is a person or institution designated by a bond issuer as the official representative of the bondholders? Select correct option:

Indenture Debenture Bond Bond trustee

Question # 7 of 15 ( Start time: 06:39:25 AM ) Total Marks: 1 Which of the following is the percentage of interest charged at each compounding time? Select correct option:

Nominal interest Rate Effective interest Rate Annual percentage rate Periodic interest rate

Question # 8 of 15 ( Start time: 06:40:04 AM ) Total Marks: 1 Which of the following is/are the component(s) of working capital management? Select correct option:

Current assets Fixed assets Fixed assets and long-term liabilities Current assets and current liabilities

Question # 9 of 15 ( Start time: 06:40:28 AM ) Total Marks: 1 Which of the following refers to bringing the future cash flow to the present time? Select correct option:

Net present value Discounting Opportunity cost Internal rate of return

Question # 10 of 15 ( Start time: 06:40:55 AM ) Total Marks: 1 Which of the following is TRUE about IRR (Internal Rate of Return)? Select correct option:

It changes for each and every year over the life of the project

It remains same for each and every year over the life of the project It increases over the life of the project It decreases over the life of the project

Question # 11 of 15 ( Start time: 06:41:54 AM ) Total Marks: 1 What is the present value of Rs. 3,500,000 to be paid at the end of 50 years if the correct risk adjusted interest rate is 18%? Select correct option:

Rs.105,000 Rs.1,500,000 Rs.3975,000 Rs. 350,000

Question # 12 of 15 ( Start time: 06:42:42 AM ) Total Marks: 1 Effective interest rate is different from nominal rate of interest because: Select correct option:

Nominal interest rate ignores compounding Nominal interest rate includes frequency of compounding Periodic interest rate ignores the effect of inflation All of the given options

Question # 13 of 15 ( Start time: 06:43:40 AM ) Total Marks: 1 Which of the following refers to time value of money concept? Select correct option:

A rupee in ones hand at present is worth less than the rupee that one is going to receive tomorrow A rupee in ones hand at present is worth more than the rupee that one is going to receive tomorrow A rupee in ones hand at present is worth same as the rupee that one is going to receive tomorrow All of the given options

Question # 14 of 15 ( Start time: 06:44:27 AM ) Total Marks: 1 Which of the following are known as Discretionary Financing? Select correct option:

Current liabilities Current assets Fixed assets Long-term liabilities

Question # 15 of 15 ( Start time: 06:44:58 AM ) Total Marks: 1 If Net Present Value technique is used, what is the ranking criterion for projects?

Select correct option:

Choose the highest NPV Choose the lowest NPV Choose the project with longest term Choose the project with shortest term

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 06:45:57 AM ) Total Marks: 1 Which of the following is TRUE about IRR (Internal Rate of Return)? Select correct option:

It changes for each and every year over the life of the project It remains same for each and every year over the life of the project It increases over the life of the project It decreases over the life of the project

Question # 2 of 15 ( Start time: 06:46:17 AM ) Total Marks: 1 Which of the following equations is the correct one? Select correct option:

Net incremental after tax cash flows = net operating income + depreciation +Tax savings from depreciation + net working capital + other cash flow Net incremental after tax cash flows = net operating income - depreciation +Tax savings from depreciation + net working capital + other cash flow Net incremental after tax cash flows = net operating income + depreciation -Tax savings from depreciation - net working capital + other cash flow Net incremental after tax cash flows = net operating income + depreciation +Tax savings from depreciation + net working capital - other cash flow

Question # 3 of 15 ( Start time: 06:47:32 AM ) Total Marks: 1 Which of the following would be considered a cash-flow item from an "investing" activity? Select correct option:

Cash outflow to the government for taxesCash outflow to shareholders as dividendsCash outflow to lenders as interest Cash outflow to purchase bonds issued by another company

Question # 4 of 15 ( Start time: 06:48:28 AM ) Total Marks: 1 The objective of financial management is to maximize _________ wealth. Select correct option:

Stakeholders

Shareholders Bondholders Directors

Question # 5 of 15 ( Start time: 06:48:50 AM ) Total Marks: 1 Which if the following refers to capital budgeting? Select correct option:

Investment in long-term liabilities Investment in fixed assets Investment in current assets Investment in short-term liabilities

Question # 6 of 15 ( Start time: 06:49:10 AM ) Total Marks: 1 How "Shareholder wealth" is represented in a firm? Select correct option:

The number of people employed in the firm The book value of the firm's assets less the book value of its liabilities The market price per share of the firm's common stock

The amount of salary paid to its employees

Question # 7 of 15 ( Start time: 06:49:33 AM ) Total Marks: 1 What is difference between shares and bonds? Select correct option:

Bonds are representing ownership whereas shares are not Shares are representing ownership whereas bonds are not Shares and bonds both represent equity Shares and bond both represent liabilities



Question # 9 of 15 ( Start time: 06:50:09 AM ) Total Marks: 1 A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has _________. Select correct option:

An anticipated earnings growth rate which is less than that of the average firm A dividend yield which is less than that of the average firm Less predictable earnings growth than that of the average firm Greater cyclicality of earnings growth than that of the average firm

Question # 10 of 15 ( Start time: 06:50:56 AM ) Total Marks: 1 Which group of ratios shows the extent to which the firm is financed with debt? Select correct option:

Liquidity ratios Debt ratios Coverage ratios Profitability ratios

Question # 11 of 15 ( Start time: 06:51:19 AM ) Total Marks: 1 Which of the following is NOT an example of a financial intermediary? Select correct option:

Wisconsin S&L, a savings and loan association

Strong Capital Appreciation, a mutual fund

Microsoft Corporation, a software firm

College Credit, a credit union

Question # 12 of 15 ( Start time: 06:51:33 AM ) Total Marks: 1 Which of the following is the Double Entry Principle? Select correct option:

Assets + Liabilities = Shareholders Equity Assets = Liabilities + Shareholders Equity Liabilities = Assets + Shareholders Equity None of the given options

Question # 13 of 15 ( Start time: 06:51:56 AM ) Total Marks: 1 The statement of cash flows reports a firm's cash flows segregated into which of the following categorical order? Select correct option:

Operating, investing, and financing

Investing, operating, and financing

Financing, operating and investing

Financing, investing, and operating

Question # 14 of 15 ( Start time: 06:52:23 AM ) Total Marks: 1 When Investors want high plowback ratios? Select correct option:

Whenever ROE > k Whenever k > ROE Only when they are in low tax brackets Whenever bank interest rates are high

Question # 15 of 15 ( Start time: 06:52:42 AM ) Total Marks: 1 Which of the following should be included while calculating the cash flows associated with a project? Select correct option:

Cash flows at the time of investment Cash flows during the life of project Cash flows at the termination date All of the given options

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 06:56:01 AM ) Total Marks: 1 Which of the following is NOT the step of Percentage of sales to be used in Financial Forecasting? Select correct option:

Estimate year-by-year Sales Revenue and Expenses Estimate Levels of Investment Needs required to Meet Estimated Sales Estimate the Financing Needs Estimate the retained earnings

Question # 2 of 15 ( Start time: 06:56:39 AM ) Total Marks: 1 A technique that tells us the number of years required to recover our initial cash investment based on the projects expected cash flows is: Select correct option:

Pay back period Internal rate of return Net present value Profitability index

Question # 3 of 15 ( Start time: 06:57:11 AM ) Total Marks: 1 Which of the following allows to graphically depicting the timing of the cash flows as

well as their nature as either inflows or outflows? Select correct option:

Cash flow diagram Cash budget Cash flow statement None of the given options

Question # 4 of 15 ( Start time: 06:57:35 AM ) Total Marks: 1 Which of the following would generally have unlimited liability? Select correct option:

A limited partner in a partnership A shareholder in a corporation The owner of a sole proprietorship

A member in a limited liability company (LLC)

Question # 5 of 15 ( Start time: 06:57:57 AM ) Total Marks: 1 Which of the following is NOT true regarding the capital market? Select correct option:

Where long-term funds can be raised Money is invested for periods longer than a year Where TFCs and NIT are exchanged and traded Where overnight lending & borrowing takes place

Question # 7 of 15 ( Start time: 06:59:27 AM ) Total Marks: 1 Who determine the market price of a share of common stock? Select correct option:

The board of directors of the firm

The stock exchange on which the stock is listed

The president of the company

Individuals buying and selling the stock

Question # 8 of 15 ( Start time: 07:00:10 AM ) Total Marks: 1 Which of the following techniques would be used for a project that has nonnormal cash flows? Select correct option:

Internal rate of return

Multiple internal rate of return Modified internal rate of return Net present value

Question # 9 of 15 ( Start time: 07:01:20 AM ) Total Marks: 1 If we were to increase ABC company cost of equity assumption, what would we expect to happen to the present value of all future cash flows? Select correct option:

An increase A decrease No change Incomplete information

Question # 10 of 15 ( Start time: 07:02:12 AM ) Total Marks: 1 The current yield on a bond is equal to ______. Select correct option:

Annual interest divided by the current market price The yield to maturity Annual interest divided by the par value The internal rate of return

Question # 11 of 15 ( Start time: 07:02:40 AM ) Total Marks: 1 Choose the correct statement regarding the calculations of NPV (Net Present Value). Select correct option:

Exclude sunk costs and include opportunity costs and externalities Exclude sunk costs and externalities and include opportunity costs Include sunk costs, opportunity costs, and externalities Exclude sunk costs and opportunity costs and include externalities

Question # 12 of 15 ( Start time: 07:04:12 AM ) Total Marks: 1 To increase a given future value, the discount rate should be adjusted ________. Select correct option:

Upward

Downward

First upward and then downward None of the given options

Question # 13 of 15 ( Start time: 07:05:09 AM ) Total Marks: 1 Which of the following is the main objective of Financial Accounting? Select correct option:

Profit maximization Maximization of shareholders wealth To collect accurate, systematic, and timely financial data All of the given options

Question # 14 of 15 ( Start time: 07:05:35 AM ) Total Marks: 1 Which of the following value of the shares changes with investors perception about the companys future and supply and demand situation? Select correct option:

Par value Market value Intrinsic value Face value

Question # 15 of 15 ( Start time: 07:06:08 AM ) Total Marks: 1 MIRR (discount rate) equates which of the following? Select correct option:

Future value of cash inflows to the present value of cash outflows Future value of cash flows to the present value of cash flows Future value of all cash flows to zero Present value of all cash flows to zero

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 07:08:57 AM ) Total Marks: 1 Which of the following is NOT an example of a financial intermediary? Select correct option:

Wisconsin S&L, a savings and loan association

Strong Capital Appreciation, a mutual fund

Microsoft Corporation, a software firm

College Credit, a credit union

Question # 2 of 15 ( Start time: 07:09:09 AM ) Total Marks: 1 A technique that tells us the number of years required to recover our initial cash investment based on the projects expected cash flows is: Select correct option:

Pay back period Internal rate of return

Net present value Profitability index

Question # 3 of 15 ( Start time: 07:09:29 AM ) Total Marks: 1 Which of the following are the approaches used to make two projects with different life spans comparable? Select correct option:

Modified internal rate of return and equivalent annual annuity Common life and equivalent annual annuity Common life and modified internal rate of return None of the given options

Question # 4 of 15 ( Start time: 07:10:18 AM ) Total Marks: 1 When the bond approaches its maturity, the market value of the bond approaches to which of the following? Select correct option:

Intrinsic value Book value Par value Historic cost

Question # 5 of 15 ( Start time: 07:10:45 AM ) Total Marks: 1 Study the time line and accompanying 5-period cash-flow pattern below. 0 1 2 3 4 5 6 Time line |--------|--------|--------|--------|--------|--------| Rs.10 Rs.10 Rs.10 Rs.10 Rs.10 Cash flows A B The present value of the 5-period annuity shown above as of Point A isthe present value of a 5-period ______________ , whereas the future value of the same annuity as of Point B is the future value of a 5-period ______________ . Select correct option:

Ordinary annuity; ordinary annuity Ordinary annuity; annuity due Annuity due; annuity due Annuity due; ordinary annuity

Question # 6 of 15 ( Start time: 07:11:23 AM ) Total Marks: 1 As interest rates go up, the present value of a stream of fixed cash flows ___. Select correct option:

Goes down

Goes up

Stays the same

Can not be found from the given information

Question # 7 of 15 ( Start time: 07:12:41 AM ) Total Marks: 1 An investment proposal should be judged in whether or not it provides: Select correct option:

A return equal to the return require by the investor A return more than required by investor A return less than required by investor A return equal to or more than required by investor

Question # 8 of 15 ( Start time: 07:13:30 AM ) Total Marks: 1 Which of the following is the main objective of Economics? Select correct option:

Profit maximization Maximization of shareholders wealth Collection of accurate, systematic, and timely financial data All of the given options

Question # 9 of 15 ( Start time: 07:14:29 AM ) Total Marks: 1 If we were to increase ABC company cost of equity assumption, what would we expect to happen to the present value of all future cash flows? Select correct option:


Question # 10 of 15 ( Start time: 07:14:54 AM ) Total Marks: 1 When the zero coupon bond approaches to its maturity, the market value of the bond approaches to which of the following? Select correct option:



Net incremental after tax cash flows = net operating income + depreciation +Tax

savings from depreciation + net working capital + other cash flow Net incremental after tax cash flows = net operating income - depreciation +Tax savings from depreciation + net working capital + other cash flow Net incremental after tax cash flows = net operating income + depreciation -Tax savings from depreciation - net working capital + other cash flow Net incremental after tax cash flows = net operating income + depreciation +Tax savings from depreciation + net working capital - other cash flow

Question # 12 of 15 ( Start time: 07:15:28 AM ) Total Marks: 1 Which type of responsibilities are primarily assigned to Controller and Treasurer respectively? Select correct option:

Operational; financial management

Financial management; accounting

Accounting; financial management

Financial management; operations

Question # 13 of 15 ( Start time: 07:15:56 AM ) Total Marks: 1 To increase a given future value, the discount rate should be adjusted __________. Select correct option:

Upward

Downward

First upward and then downward None of the given options

Question # 14 of 15 ( Start time: 07:16:17 AM ) Total Marks: 1 ________ is paid by companies with lower grade bonds like CC or C ratings. Select correct option:

Default risk premium Sovereign Risk Premium Market risk premium Maturity risk premium


Nominal interest rate ignores compounding

Nominal interest rate includes frequency of compounding Periodic interest rate ignores the effect of inflation All of the given options

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 07:20:09 AM ) Total Marks: 1 Which of the following statements is TRUE regarding Permanent Accounts? Select correct option:

Accounts that are found on Income Statement Accounts that are found on Statement of Retained Earnings Accounts that are found on Balance Sheet All of the given options

Question # 2 of 15 ( Start time: 07:20:26 AM ) Total Marks: 1 Which of the following is the percentage of interest charged at each compounding time? Select correct option:

Nominal interest Rate Effective interest Rate Annual percentage rate Periodic interest rate

Question # 3 of 15 ( Start time: 07:20:42 AM ) Total Marks: 1 Why companies invest in projects with negative NPV? Select correct option:

Because there is hidden value in each project Because there may be chance of rapid growth Because they have invested a lot All of the given options

Question # 4 of 15 ( Start time: 07:21:24 AM ) Total Marks: 1 What is difference between shares and bonds? Select correct option:


Question # 5 of 15 ( Start time: 07:21:37 AM ) Total Marks: 1 A 5-year ordinary annuity has a present value of Rs.1,000. If the interest rate is 8 percent,the amount of each annuity payment is closest to which of the following? Select correct option:

Rs. 250.44 Rs. 231.91 Rs.181.62 Rs.184.08

Question # 6 of 15 ( Start time: 07:22:19 AM ) Total Marks: 1 All of the following are the reasons for Uncertain NPV calculations EXCEPT: Select correct option:

Estimated discount rate does not change with the markets Estimated Life of project is doubtful Annual after-tax cash flows are difficult to estimate Timing of cash flows is not exactly predictable

Question # 7 of 15 ( Start time: 07:23:42 AM ) Total Marks: 1 If Net Present Value technique is used, what is the minimum acceptance criterion for a project? Select correct option:

NPV0 NPV

Question # 10 of 15 ( Start time: 07:24:35 AM ) Total Marks: 1 _________ is equal to (common shareholders' equity/common shares outstanding). Select correct option:

Book value per share Liquidation value per share Market value per share None of the above

Question # 11 of 15 ( Start time: 07:24:56 AM ) Total Marks: 1 What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue? Select correct option:


Question # 12 of 15 ( Start time: 07:25:07 AM ) Total Marks: 1 Choose among the followings, the correct statement regarding every journal entry. Select correct option:

Sum of Debits = Sum of Credits Sum of Debits >Sum of Credits Sum of Debits < Sum of Credits None of the given options

Question # 13 of 15 ( Start time: 07:25:20 AM ) Total Marks: 1 When bonds are issued, under which of the following category the value of the bond appears? Select correct option:

Equity Fixed assets Short term loan Long term loan


Net incremental after tax cash flows = net operating income + depreciation +Tax savings from depreciation + net working capital + other cash flow Net incremental after tax cash flows = net operating income - depreciation +Tax savings from depreciation + net working capital + other cash flow

Net incremental after tax cash flows = net operating income + depreciation -Tax savings from depreciation - net working capital + other cash flow Net incremental after tax cash flows = net operating income + depreciation +Tax savings from depreciation + net working capital - other cash flow

Question # 15 of 15 ( Start time: 07:25:54 AM ) Total Marks: 1 Which if the following refers to capital budgeting? Select correct option:

Investment in long-term liabilities Investment in fixed assets Investment in current assets Investment in short-term liabilities

MGT201 QUIZ 2 BY NAVEED 22-11-2010 Question # 1 of 15 ( Start time: 05:10:33 AM ) Total Marks: 1 Which of the following is not the present value of the bond? Select correct option:


Question # 2 of 15 ( Start time: 05:11:50 AM ) Total Marks: 1 Which of the following is similar between Return on investment and Payback period techniques of Capital budgeting? Select correct option:

Involvement of interest rate while making calculations Do not account for time value of money Tricky and complicated methods All of the given options

Question # 3 of 15 ( Start time: 05:12:12 AM ) Total Marks: 1 Which of the following equation is NOT correct? Select correct option:

Gross Revenue Admin & Operating Expenses = Operating Revenue Other Expenses + Other Revenue = EBIT EBIT Financial Charges & Interest = EBT Net Income Dividends = Retained Earning

Question # 4 of 15 ( Start time: 05:12:31 AM ) Total Marks: 1 Which of the following is NOT a cash outflow for the firm?


Depreciation

Dividends

Interest Taxes

Question # 5 of 15 ( Start time: 05:13:01 AM ) Total Marks: 1 Who or what is a person or institution designated by a bond issuer as the official representative of the bondholders? Select correct option:


Question # 6 of 15 ( Start time: 05:13:16 AM ) Total Marks: 1 MIRR (discount rate) equates which of the following? Select correct option:


Question # 7 of 15 ( Start time: 05:13:31 AM ) Total Marks: 1 At the termination of project, which of the following needs to be considered relating to project assets? Select correct option:

Salvage value Book value Intrinsic value Fair value



Question # 9 of 15 ( Start time: 05:14:55 AM ) Total Marks: 1 For Company A, plow back ratio is 30%. What will be its Pay-out ratio? Select correct option:

3.33% 30% 31% 70%

Question # 10 of 15 ( Start time: 05:15:13 AM ) Total Marks: 1 Which of the following needs to be excluded while we calculate the incremental cash flows? Select correct option:

Depreciation Sunk cost Opportunity cost Non-cash item

Question # 11 of 15 ( Start time: 05:15:27 AM ) Total Marks: 1 What is potentially the biggest advantage of a small partnership over a sole proprietorship? Select correct option:

Unlimited liability

Single tax filing

Difficult ownership resale

Raising capital

Question # 12 of 15 ( Start time: 05:16:01 AM ) Total Marks: 1 Which of the following statements is TRUE regarding Permanent Accounts? Select correct option:

Accounts that are found on Income Statement Accounts that are found on Statement of Retained Earnings Accounts that are found on Balance Sheet All of the given options

Question # 13 of 15 ( Start time: 05:16:26 AM ) Total Marks: 1 What is the present value of Rs.8,000 to be paid at the end of three years if interest rate is 11%? Select correct option:

Rs.6,015 Rs.4,872 Rs.6,725 Rs.1,842

Question # 14 of 15 ( Start time: 05:16:42 AM ) Total Marks: 1 What is the most important criteria in capital budgeting? Select correct option:

Return on investment Profitability index Net present value Pay back period

Question # 15 of 15 ( Start time: 05:16:57 AM ) Total Marks: 1 Where there is single period capital rationing, what is the most sensible way of making investment decisions? Select correct option:

Choose all projects with a positive NPV Group projects together to allocate the funds available and select the group of projects with the highest NPV Choose the project with the highest NPV Calculate IRR and select the projects with the highest IRRs

MGT201 QUIZ 2 BY NAVEED 22-11-2010 [left:3utnderv]My Quiz # 2[/left:3utnderv][left:3utnderv][/left:3utnderv][left:3utnderv][/left:3utnderv][left:3utnderv][/left:3utnderv][left:3utnderv]1.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Choose among the followings, the correct statementregarding every journal entry.[/justify:3utnderv]


Sum of Debits = Sum of Credits

Sum of Debits >Sum of Credits

Sum of Debits < Sum of Credits

None of the given options[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]2.[/left:3utnderv] [center:3utnderv][justify:3utnderv]What are the Direct claim securities?[/justify:3utnderv]


The securities whose value depends on the cash flows generated by the underlying assets

The securities whose value depends on the value of the underlying assets

The securities that do not directly generate any returns for its investors

All of the given options[/center:3utnderv] [right:3utnderv] [/right:3utnderv] [left:3utnderv][/left:3utnderv][left:3utnderv][/left:3utnderv][left:3utnderv]3.[/left:3utnderv] [center:3utnderv][justify:3utnderv]How dividend yield on a stock is similar to the current yield on a bond?[/justify:3utnderv]


Both represent how much each securitys price will increase in a year

Both represent the securitys annual income divided by its price

Both are an accurate representation of the total annual return an investor can expect to earn by owning the security

Both are quarterly yields that must be annualized[/center:3utnderv] [right:3utnderv]

[/right:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]4.[/left:3utnderv] [left:3utnderv][justify:3utnderv]According to timing difference problem a good project might suffer from _____ IRR even though its NPV is ________.[/justify:3utnderv]


Higher; lower

Lower; Lower

Lower; higher

Higher; higher[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]5.[/left:3utnderv] [center:3utnderv][justify:3utnderv]Which of the following includes the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization?[/justify:3utnderv]


Financial accounting

Financial management

Financial engineering

Financial budgeting[/center:3utnderv] [right:3utnderv] [/right:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]6.[/left:3utnderv] [center:3utnderv][justify:3utnderv]The value of direct claim security is derived from which of the following?[/justify:3utnderv]


Fundamental analysis

Underlying real asset

Supply and demand of securities in the market

All of the given options[/center:3utnderv] [right:3utnderv] [/right:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]7.[/left:3utnderv] [center:3utnderv][justify:3utnderv]Which of the following is the main objective of Economics?[/justify:3utnderv]


Profit maximization

Maximization of shareholders wealth

Collection of accurate, systematic, and timely financial data

All of the given options[/center:3utnderv] [right:3utnderv] [/right:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]8.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Study the time line and accompanying 5-period cash-flow patternbelow. 0 1 2 3 4 5 6 Time line |--------|--------|--------|--------|--------|--------| Rs.10 Rs.10 Rs.10 Rs.10 Rs.10 Cash flows A B The present value of the 5-period annuity shown above as of Point A is the present value of a 5-period ______________ , whereas the future value of the same annuity as of Point B is the future value of a 5-period ______________ .[/justify:3utnderv]


Ordinary annuity; ordinary annuity

Ordinary annuity; annuity due

Annuity due; annuity due

Annuity due; ordinary annuity[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]9.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Effective interest rate is different from nominal rate of interest because:[/justify:3utnderv]


Nominal interest rate ignores compounding

Nominal interest rate includes frequency of compounding

Periodic interest rate ignores the effect of inflation

All of the given options[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]10.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Which of the following is a major disadvantage of the corporate form of organization?[/justify:3utnderv]


Double taxation of dividends

Inability of the firm to raise large sums of additional capital

Limited liability of shareholders

Limited life of the corporate form[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]11.[/left:3utnderv] [center:3utnderv][justify:3utnderv]What is yield to maturity on a bond?[/justify:3utnderv]


Below the coupon rate when the bond sells at a discount, and equal to the coupon rate when the bond sells at a premium

The discount rate that will set the present value of the payments equal to the bond price

Based on the assumption that any payments received are reinvested at the coupon rate

None of the above[/center:3utnderv] [right:3utnderv] [/right:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]12.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Which of the following statements (in general) is correct?[/justify:3utnderv]


A low receivables turnover is desirable

The lower the total debt-to-equity ratio, the lower the financial risk for a firm

An increase in net profit margin with no change in sales or assets means a weaker ROI

The higher the tax rate for a firm, the lower the interest coverage ratio[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]13.[/left:3utnderv] [left:3utnderv][justify:3utnderv]_________ is equal to (common shareholders'equity/common shares outstanding).[/justify:3utnderv]


Book value per share

Liquidation value per share

Market value per share

None of the above[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]14.[/left:3utnderv] [left:3utnderv][justify:3utnderv]Which if the following is (are) true? I. The dividend growth model holds if, at some point in time, the dividend growth rate exceeds the stocks required return. II. A decrease in the dividend growth rate will increase a stocks market value, all else the same. III. An increase in the required return on a stock will decrease its market value, all else the same.[/justify:3utnderv]


I, II, and III

I only

III only

II and III only[/left:3utnderv] [left:3utnderv][/left:3utnderv] [left:3utnderv]15.[/left:3utnderv] [center:3utnderv][justify:3utnderv]Which of the following is similar between Return on investment and Payback period techniques of Capital budgeting?[/justify:3utnderv]


Involvement of interest rate while making calculations

Do not account for time value of money

Tricky and complicated methods[left:3utnderv][/left:3utnderv] All of the given options[/center:3utnderv]

Quiz Start Time: 04:48 PM

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Question # 1 of 20 ( Start time: 04:48:11 PM ) Total Marks: 1 In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, thepresent value of that future amount to you would __________.



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Question # 2 of 20 ( Start time: 04:49:39 PM ) Total Marks: 1 An annuity due is always worth _____ a comparable annuity.



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Question # 4 of 20 ( Start time: 04:51:58 PM ) Total Marks: 1 What is the present value of Rs.8,000 to be paid at the end of three years if interest rate is11%? Select correct option:


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Question # 5 of 20 ( Start time: 04:53:29 PM ) Total Marks: 1 In percentage of sales method, which of the following current assets do not generallygrow in proportion to Sales? Select correct option:

not sure


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Question # 6 of 20 ( Start time: 04:54:43 PM ) Total Marks: 1 Which of the following is the general assumption of Percent of Sales Forecasting? Select correct option:


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Question # 8 of 20 ( Start time: 04:56:13 PM ) Total Marks: 1 What are the 'Indirect Securities'? Select correct option:


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Question # 9 of 20 ( Start time: 04:56:31 PM ) Total Marks: 1 ________ is paid by companies with lower grade bonds like CC or C ratings. Select correct option:


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Question # 11 of 20 ( Start time: 04:58:48 PM ) Total Marks: 1 Which of the following would be considered a cash-flow item from an "operating"activity? Select correct option:


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Question # 12 of 20 ( Start time: 05:00:10 PM ) Total Marks: 1 To increase a given future value, the discount rate should be adjusted __________. Select correct option:


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Question # 13 of 20 ( Start time: 05:01:39 PM ) Total Marks: 1 Which of the following are known as Discretionary Financing? Select correct option:


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Question # 14 of 20 ( Start time: 05:02:14 PM ) Total Marks: 1 All are the advantages of sole proprietorship, except: Select correct option:


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Question # 17 of 20 ( Start time: 05:04:37 PM ) Total Marks: 1 Which of the following is NOT the type of Hybrid organizations? Select correct option:


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Question # 18 of 20 ( Start time: 05:05:32 PM ) Total Marks: 1 Which of the following statements is TRUE regarding Permanent Accounts?



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Question # 19 of 20 ( Start time: 05:06:59 PM ) Total Marks: 1 What is the additional amount a borrower must pay to lender to compensate forassuming the risk associated with non-payment? Select correct option:


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Question # 20 of 20 ( Start time: 05:08:30 PM ) Total Marks: 1 Which group of ratios measures a firm's ability to meet short-term obligations? Select correct option:


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Question # 3 of 20 ( Start time: 06:09:51 PM ) Total Marks: 1 Which of the following is the Double Entry Principle? Select correct option:

correct


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Question # 4 of 20 ( Start time: 06:11:09 PM ) Total Marks: 1 Which of the following is the percentage of interest charged at each compounding time? Select correct option:

correct


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Question # 5 of 20 ( Start time: 06:12:39 PM ) Total Marks: 1 Identify the statement that (in general) is correct. Select correct option:

correct


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Question # 6 of 20 ( Start time: 06:13:19 PM ) Total Marks: 1 ________ are also known as Spontaneous Financing. Select correct option:

correct


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Question # 7 of 20 ( Start time: 06:13:43 PM ) Total Marks: 1 Which of the following is type a Temporary Account? Select correct option:

correct


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Question # 10 of 20 ( Start time: 06:16:17 PM ) Total Marks: 1 Which of the following includes the planning, directing, monitoring, organizing, andcontrolling of the monetary resources of an organization? Select correct option:

correct


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Question # 13 of 20 ( Start time: 06:17:49 PM ) Total Marks: 1 ____________ is a financial statement that shows the profitability of a company over aspecific accounting period. Select correct option:

correct


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Question # 14 of 20 ( Start time: 06:19:20 PM ) Total Marks: 1 Which of the following market in finance is referred to the market for short-termgovernment and corporate debt securities? Select correct option:

correct


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Question # 17 of 20 ( Start time: 06:22:04 PM ) Total Marks: 1 Identify the option that best describes the simple rule of a double entry system. Select correct option:


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Question # 18 of 20 ( Start time: 06:23:34 PM ) Total Marks: 1 Identify the component(s) of working capital management. Select correct option:

correct


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Question # 19 of 20 ( Start time: 06:24:54 PM ) Total Marks: 1 Balance Sheet of a company reflects:


correct


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Question # 20 of 20 ( Start time: 06:26:25 PM ) Total Marks: 1 Determine the main focus of financial management in a firm. Select correct option:

correct


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Question # 3 of 20 ( Start time: 06:48:40 PM ) Total Marks: 1 How can a company improve (lower) its debt-to-total asset ratio? Select correct option:

correct


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Question # 6 of 20 ( Start time: 06:50:21 PM ) Total Marks: 1 Nominal Interest Rate is also known as: Select correct option:

correct


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Question # 7 of 20 ( Start time: 06:50:58 PM ) Total Marks: 1 Which of the following is an asset in which the possibility of an economic benefitdepends solely upon future events that can't be controlled by the company? Select correct option:

correct


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Question # 9 of 20 ( Start time: 06:51:42 PM ) Total Marks: 1 The formula to calculate future value of an amount using continuous compounding is: Select correct option:

correct


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Question # 11 of 20 ( Start time: 06:53:53 PM ) Total Marks: 1 Which of the following refers to bringing the future cash flow to the present time? Select correct option:

correct


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Question # 12 of 20 ( Start time: 06:54:18 PM ) Total Marks: 1 Which of the following is not a Profitability ratio? Select correct option:

correct


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Question # 13 of 20 ( Start time: 06:54:47 PM ) Total Marks: 1 Which of the following is NOT an example of a financial intermediary? Select correct option:

I think


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Question # 14 of 20 ( Start time: 06:56:00 PM ) Total Marks: 1 All of the following are the financial statements used for the purpose of reporting andanalysis EXCEPT: Select correct option:


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Question # 16 of 20 ( Start time: 06:58:50 PM ) Total Marks: 1 Which of the following is a major disadvantage of the corporate form of organization? Select correct option:

I think


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Question # 17 of 20 ( Start time: 06:59:50 PM ) Total Marks: 1 Which of the following would be considered a cash-flow item from an "investing"activity? Select correct option:

correct


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Question # 20 of 20 ( Start time: 07:03:09 PM ) Total Marks: 1 In financial accounting, assets are recorded on the basis of __________ in the balancesheet. Select correct option:

correct

My Today quizMgt 201

Which of the following is not the present value of the bond? Select correct option:


Which of the following needs to be excluded while we calculate the incremental cash flows? Select correct option:

Depreciation Sunk cost Opportunity cost Non-cash item

Which of the following refers to the cost of taking up one option while sacrificing theother? Select correct option:

Opportunity cost Operating cost Sunk cost Floatation cost

What is the long-run objective of financial management? Select correct option:

Maximize earnings per share

Maximize the value of the firm's common stock Maximize return on investment

Maximize market share

Which of the following refers to bringing the future cash flow to the present time? Select correct option:

Net present value Discounting Opportunity cost Internal rate of return Which of the following is NOT an example of hybrid equity Select correct option:

Convertible Bonds Convertible Debenture Common shares Preferred shares

Which of the following is likely to be correct for a company which invests in projectswith Positive NPV? Select correct option:

Companys EVA (Economic Value Added) rises by the same value Companys MVA (Market Value Added) or market value rises Company Shareholders Wealth rises

All of the following are the reasons for Uncertain NPV calculations EXCEPT: Select correct option:

Estimated discount rate does not change with the markets Estimated Life of project is doubtful Annual after-tax cash flows are difficult to estimate Timing of cash flows is not exactly predictable Given no change in required returns, the price of a stock whose dividend is constant will________. Select correct option:

Decrease over time at a rate of r% Remain unchanged Increase over time at a rate of r% Decrease over time at a rate equal to the dividend growth rate

A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has _______. Select correct option:

An anticipated earnings growth rate which is less than that of the average firm A dividend yield which is less than that of the average firm Less predictable earnings growth than that of the average firm Greater cyclicality of earnings growth than that of the average firm

Which of the following would generally have unlimited liability? Select correct option:

A limited partner in a partnership A shareholder in a corporation The owner of a sole proprietorship

A member in a limited liability company (LLC)

Which group of ratios shows the extent to which the firm is financed with debt? Select correct option:

Liquidity ratios Debt ratios Coverage ratios Profitability ratios

A 5-year annuity due has periodic cash flows of Rs.100 each year. If the interest rate is 8 percent, the future value of this annuity is closest to which of the following equations? Select correct option:

(Rs.100)(FVIFA at 8% for 5 periods) (Rs.100)(FVIFA at 8% for 4 periods)(1.08) (Rs.100) (FVIFA at 8% for 5 periods)(1.08) (Rs.100)(FVIFA at 8% for 4 periods) + Rs.100

What type of long-term financing most likely has the following features: 1) it has an infinite life, 2) it pays dividends, and 3) its cash flows are expected to be a constant annuity stream? Select correct option:

Long-term debt Preferred stock Common stockNone of the given options

All of the following are the financial statements used for the purpose of reporting and analysis EXCEPT: Select correct option:

Balance Sheet Income Statement Cash budget Statement of Retained Earnings

Question # 1 of 15 ( Start time: 01:35:10 AM ) Total Marks: 1 When two products are manufactured during a common process, the factor that determine whether the products are joint productor one main product and one is by product is the:


Potential marketability for each product

Amount of work expended in the production of each

Relative total sales value of each product

CORRECT

Management policy

Question # 2 of 15 ( Start time: 01:36:03 AM ) Total Marks: 1 A high inventory turnover may indicate:


An eff icient use of the investment in inventory

A high risk of stock-outs

CORRECT

Stock posit ion of store room

All of the given options

Question # 3 of 15 ( Start time: 01:37:15 AM ) Total Marks: 1 Consider the following data for the month of May: Sales 150 units, Opening units 120 units,Closing 80 units Based on the data,production in May will have to be?


150 units

50 units

190 units

110 units

CORRECT

Question # 4 of 15 ( Start time: 01:38:45 AM ) Total Marks: 1

Company A's fixed costs were Rs.45,000, its variable costs were Rs. 24,000, and its sales were Rs.80,000. What is thecompany's break-even point in sales Rs?


Rs. 33,000

Rs. 57,000

Rs. 79,000

None of the given options

CORRECT

Question # 5 of 15 ( Start time: 01:40:15 AM ) Total Marks: 1 Opportunity cost is the best example of:


Sunk Cost

Standard Cost

Relevant Cost

CORRECT

Irrelevant Cost

Question # 6 of 15 ( Start time: 01:40:55 AM ) Total Marks: 1 A method by which the good used are priced out at average cost is known as:


BCVO

AVCO

CORRECT

c.FIFO

LIFO

Question # 7 of 15 ( Start time: 01:41:57 AM ) Total Marks: 1 The Process of cost apportionment is carried out so that:


Cost may be controlled

Cost unit gather overheads as they pass through co

Whole items of cost can be charged to cost centers

Common costs are shared among cost centers

CORRECT

Question # 8 of 15 ( Start time: 01:42:37 AM ) Total Marks: 1 Which of the following items of expense are to be add in FOH cost


Rent of factory + Head off ice rent + salaries to fact

Rent of factory + factory lighting bill + Directors sala

Rent of factory + factory lighting bill + Factory empl

CORRECT

Head office rent + Factory property tax + Factory s

Question # 9 of 15 ( Start time: 01:43:43 AM ) Total Marks: 1 If, COGS = Rs. 50,000 GP Margin = 25% of sales What will be the value of Sales?


Rs. 200,000

Rs. 66,667

CORRECT

Rs. 62,500

None of the given options

Question # 10 of 15 ( Start time: 01:44:48 AM ) Total Marks: 1 Which of the following best describes the manufacturing costs?


Direct materials, direct labor and factory overhead

CORRECT

Direct materials and direct labor

Direct materials, direct labor, factory overhead, and administrat ive overhead

Direct labor and factory overhead

Question # 11 of 15 ( Start time: 01:45:53 AM ) Total Marks: 1 A cost centre is


A unit of product or service in relat ion to which costs are ascertained

CORRECT

An amount of expenidure attributable to an activity

A production or service location,function,activity or i

A centre for which an indvidual budget is drawn up

# 12 of 15 ( Start time: 01:47:22 AM ) Total Marks: 1 Information concerning Label Corporations Product A is as follows: Sales price Rs. 300,000,Variable cost Rs. 240, 000, FixedCost is Rs. 40,000.If Label increased sales of Product A by 20%, the profit of the product A would be which of the following?


Rs. 20,000

Rs. 24,000

Rs. 32,000

CORRECT

Rs. 80,000

Question # 13 of 15 ( Start time: 01:48:13 AM ) Total Marks: 1

Profit under absorption costing will be higher than under marginal costing if:


Produced units > Units sold

CORRECT

Produced units < Units sold

Produced units =Units sold

Profit cannot be determined with given statement

Question # 14 of 15 ( Start time: 01:49:07 AM ) Total Marks: 1 What will be the impact of normal loss on the overall per unit cost?


Per unit cost will increase

CORRECT

Per unit cost will decrease

Per unit cost remain unchanged

Normal loss has no relat ion to unit cost

Question # 15 of 15 ( Start time: 01:49:51 AM ) Total Marks: 1 If, Gross profit = Rs. 40,000 GP Margin = 20% of sales What will be the value of cost of goods sold?


Rs. 160,000

Rs. 120,000

CORRECT

Rs. 40,000

Rs. 90,000

MGT201 Quiz 2 Solved (Dated:24-11-2010)

Published on Friday, 26 November 2010 23:04 Written by Fuad Hasan

Question # 1 of 15 ( Start time: 09:47:52 PM ) Total M - 1 An investment proposal should be judged in whether or not it provides:


A return equal to the return require by the investor A return more than required by investor A return less than required by investor A return equal to or more than required by investor Question # 2 of 15 ( Start time: 09:47:52 PM ) Total M - 1 In which of the following approach you need to bring all the projects to the samelength in time? Select correct option: MIRR approach Going concern approach Common life approach Equivalent annual approach Question # 3 of 15 ( Start time: 09:48:26 PM ) Total M - 1 Which of the following is the general assumption of Percent of Sales Forecasting? Select correct option: Current Assets usually grow in proportion to Revenues

http://www.vuzs.net/mcqs/209-mgt201-financial-management/2824-mgt201-quiz-2-solved-dated24-11-2010.htmlhttp://www.vuzs.net/mcqs/209-mgt201-financial-management/2824-mgt201-quiz-2-solved-dated24-11-2010.html?tmpl=component&print=1&page=

Current Assets usually grow in proportion to Expenses Current Assets usually grow in proportion to Liabilities Current Assets usually grow in proportion to Sales Question # 4 of 15 ( Start time: 09:49:18 PM ) Total M - 1 Which of the following is correct, if a firm has a required rate of return equal to the ROE? Select correct option: The firm can increase market price and P/E by retaining more earnings. The firm can increase market price and P/E by increasing the growth rate. The amount of earnings retained by the firm does not affect market price or the P/E. None of the given options Question # 5 of 15 ( Start time: 09:50:02 PM ) Total M - 1 Which of the following is NOT true regarding an ordinary annuity? Select correct option: It is a series of equal cash flows Cash flows occur for a specific time period Payments are made at the start of each period It is also known as deferred annuity Question # 6 of 15 ( Start time: 09:50:50 PM ) Total M - 1 ________ is paid by companies with lower grade bonds like CC or C ratings. Select correct option: Default risk premium Sovereign Risk Premium Market risk premium Maturity risk premium Question # 7 of 15 ( Start time: 09:51:29 PM ) Total M - 1 Which of the following are the approaches used to make two projects with different life spans comparable? Select correct option: Modified internal rate of return and equivalent annual annuity Common life and equivalent annual annuity Common life and modified internal rate of return None of the given options Question # 8 of 15 ( Start time: 09:52:26 PM ) Total M - 1 Which of the following will NOT equate the future value of cash inflows to the present value of cash outflows? Select correct option: Discount rate Profitability index

Internal rate of return Multiple Internal rate of return Question # 9 of 15 ( Start time: 09:53:06 PM ) Total M - 1 When a bond will sell at a discount? Select correct option: The coupon rate is greater than the current yield and the current yield is greaterthan yield to maturity The coupon rate is greater than yield to maturity The coupon rate is less than the current yield and the current yield is greater than the yield to maturity The coupon rate is less than the current yield and the current yield is less than yield to maturity Question # 10 of 15 ( Start time: 09:53:45 PM ) Total M - 1 When Investors want high plowback ratios? Select correct option: Whenever ROE > k Whenever k > ROE Only when they are in low tax brackets Whenever bank interest rates are high Question # 11 of 15 ( Start time: 09:54:28 PM ) Total M - 1 ________ are also known as Spontaneous Financing. Select correct option: Current liabilities Current assets Fixed assets Long-term liabilities Question # 12 of 15 ( Start time: 09:55:01 PM ) Total M - 1 Which type of responsibilities are primarily assigned to Controller and Treasurer respectively? Select correct option: Operational; financial management Financial management; accounting Accounting; financial management Financial management; operations Question # 13 of 15 ( Start time: 09:55:42 PM ) Total M - 1 What is a legal agreement, also called the deed of trust, between the corporationissuing bonds and the bondholders that establish the terms of the bond issue? Select correct option:

Indenture Debenture Bond Bond trustee Question # 14 of 15 ( Start time: 09:56:19 PM ) Total M - 1 Which of the following is type a Temporary Account? Select correct option: Asset Liability Reserves Revenue

Which of the following is TRUE about IRR (Internal Rate of Return)? Select correct option: It changes for each and every year over the life of the project It remains same for each and every year over the life of the project It increases over the life of the project It decreases over the life of the project The risk that covers events like unexpected changes in the economy refers to: Select correct option: Systematic risk Unsystematic risk Total risk All of the above

Mgt201 mcqzz Q#1: Which of the following is the Double Entry Principle? Select correct option:

Assets + Liabilities = Shareholders Equity Assets = Liabilities + Shareholders Equity Liabilities = Assets + Shareholders Equity None of the given options

Q#2 Given no change in required returns, the price of a stock whose dividend is constant will________. Select correct option:

Decrease over time at a rate of r% Remain unchanged Increase over time at a rate of r% Decrease over time at a rate equal to the dividend growth rate

Q#3: Nominal Interest Rate is also known as: Select correct option:

Effective interest Rate Annual percentage rate Periodic interest rate Required interest rate

Q#4: Which one of the following selects the combination of investment proposals that will provide the greatest increase in the value of the firm within the budget ceiling constraint? Select correct option:

Cash budgeting Capital budgeting Capital rationing Capital expenditure

Q#5: MIRR (discount rate) equates which of the following? Select correct option:


Q#6: With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs. 20,000 initial investment? Select correct option:

Rs.52,000 Rs.93,219 Rs.99,061 Rs.915,240

Q#7:Which of the following is a capital budgeting technique that is NOT considered as discounted cash flow method? Select correct option:

Payback period Internal rate of return Net present value Profitability index

Q#8 A 5-year annuity due has periodic cash flows of Rs.100 each year. If the interest rate is 8 percent, the future value of this annuity is closest to which of the following equations? Select correct option:

(Rs.100)(FVIFA at 8% for 5 periods) (Rs.100)(FVIFA at 8% for 4 periods)(1.08) (Rs.100) (FVIFA at 8% for 5 periods)(1.08) (Rs.100)(FVIFA at 8% for 4 periods) + Rs.100

Q#9 What is difference between shares and bonds? Select correct option:


Q#10 All of the following are the financial statements used for the purpose of reporting and analysis EXCEPT: Select correct option:

Balance Sheet Income Statement Cash budget Statement of Retained Earnings

Q#11he statement of cash flows reports a firm's cash flows segregated into which of the followingcategorical order? Select correct option:

Operating, investing, and financing Investing, operating, and financing Financing, operating and investing Financing, investing, and operating

Q#12 When the zero coupon bond approaches to its maturity, the market value of the bond approaches to which of the following? Select correct option:


Q#13 What is potentially the biggest advantage of a small partnership over a sole proprietorship? Select correct option:

Unlimited liability Single tax filing Difficult ownership resale Raising capital

Q#14 Why we need Capital rationing? ( Select correct option:

Because, there are not enough positive NPV projects Because, companies do not always have access to all of the funds they could make use of Because, managers find it difficult to decide how to fund projects Because, banks require very high returns on projects

Q#15 ______ are also known as Spontaneous Financing. Select correct option:

Current liabilities Current assets Fixed assets Long-term liabilities

Q#16 Which of the following would be considered a cash-flow item from an "operating" activity? Select correct option:

Cash outflow to the government for taxes Cash outflow to shareholders as dividends Cash inflow to the firm from selling new common equity shares Cash outflow to purchase bonds issued by another company

Q#17 ______ is paid by companies with lower grade bonds like CC or C ratings. Select correct option:

Default risk premium Sovereign Risk Premium Market risk premium Maturity risk premium

Q#18 A capital budgeting technique through which discount rate equates the present value of thefuture net cash flows from an investment project with the projects initial cash outflow is known as: Select correct option:

Payback period

Internal rate of return Net present value Profitability index

Q#19 If we were to increase ABC company cost of equity assumption, what would we expect to happen to the present value of all future cash flows? Select correct option:


Q#20 Which of the following includes the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization? Select correct option:

Financial accounting Financial management Financial engineering Financial budgeting

Q#21 What is the long-run objective of financial management? Select correct option:

Maximize earnings per share Maximize the value of the firm's common stock Maximize return on investment Maximize market share

Q#22 Why companies invest in projects with negative NPV? Select correct option:

Because there is hidden value in each projectBecause there may be chance of rapid growth Because they have invested a lot All of the given options

Q#23 Which of the following is NOT the step of Percentage of sales to be used in Financial Forecasting? Select correct option:

Estimate year-by-year Sales Revenue and Expenses Estimate Levels of Investment Needs required to Meet Estimated Sales Estimate the Financing Needs Estimate the retained earnings

Q#24 The logic behind _______is that instead of looking at net cash flows you look at cash inflows and outflows separately for each point in time. Select correct option:

IRR MIRR PV NPV

Q#25 Which of the following is NOT the type of Hybrid organizations? Select correct option:

S-Type Corporation Limited Liability Partnership Sole Proprietorship Professional Corporation

Q#26 Which of the following techniques would be used for a project that has nonnormal cash flows? Select correct option:

Internal rate of return Multiple internal rate of return Modified internal rate of return Net present value

Q#27 Which if the following is (are) true? I. The dividend growth model holds if, at some point in time, the dividend growth rate exceeds the stocks required return. II. A decrease in the dividend growth rate will increase a stocks market value, all else the same. III. An increase in the required return on a stock will decrease its market value, all else the same. Select correct option:

I, II, and III I only III only II and III only

Q#28 In which of the following approach you need to bring all the projects to the same length in time? Select correct option:

MIRR approach Going concern approach Common life approach Equivalent annual approach

Q#29 Why companies invest in projects with negative NPV?Select correct option:

Because there is hidden value in each projectBecause there may be chance of rapid growth Because they have invested a lotAll of the given options Q@30 At the termination of project, which of the following needs to be considered relating toproject assets?

Select correct option:Salvage valueBook valueIntrinsic valueFair value

MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 QUIZ 2 BY NAVEED 22-11-2010MGT201 Quiz 2 Solved (Dated:24-11-2010)

DefaultOcxName1: fallDefaultOcxName3: riseDefaultOcxName5: remain unchangedDefaultOcxName7: DefaultOcxName11: DefaultOcxName31: more thanDefaultOcxName51: DefaultOcxName71: DefaultOcxName12: 6,015DefaultOcxName32: DefaultOcxName52: DefaultOcxName72: DefaultOcxName13: DefaultOcxName33: marketable securities and prepaid expensesDefaultOcxName53: DefaultOcxName73: DefaultOcxName14: DefaultOcxName34: DefaultOcxName54: DefaultOcxName74: current assests usually grow in proportion to salesDefaultOcxName16: the securities whose value work on the cash flowsDefaultOcxName35: DefaultOcxName55: DefaultOcxName75: DefaultOcxName18: default risk premiumDefaultOcxName36: DefaultOcxName56: DefaultOcxName76: DefaultOcxName110: cash outflow to the government for taxesDefaultOcxName37: DefaultOcxName57: DefaultOcxName77: DefaultOcxName111: upwardDefaultOcxName38: DefaultOcxName58: DefaultOcxName78: DefaultOcxName112: DefaultOcxName39: DefaultOcxName59: DefaultOcxName79: long term liabilitiesDefaultOcxName113: DefaultOcxName310: limited liability ownershipDefaultOcxName510: DefaultOcxName710: DefaultOcxName114: DefaultOcxName311: DefaultOcxName511: sole propertishipDefaultOcxName711: DefaultOcxName115: DefaultOcxName312: DefaultOcxName512: accounts that are found on balance sheetDefaultOcxName712: DefaultOcxName116: default risk premiumDefaultOcxName313: DefaultOcxName513: DefaultOcxName713: DefaultOcxName117: liquidity ratiosDefaultOcxName314: DefaultOcxName514: DefaultOcxName714: DefaultOcxName118: DefaultOcxName315: assets=liabilities + shareholders equityDefaultOcxName515: DefaultOcxName715: DefaultOcxName119: DefaultOcxName316: effective interest rateDefaultOcxName516: DefaultOcxName716: DefaultOcxName120: the lower the debt ratio ,the lower theDefaultOcxName317: DefaultOcxName517: DefaultOcxName717: DefaultOcxName121: current liabilitiesDefaultOcxName318: DefaultOcxName518: DefaultOcxName718: DefaultOcxName122: DefaultOcxName319: DefaultOcxName519: DefaultOcxName719: revenueDefaultOcxName123: DefaultOcxName320: financial managmentDefaultOcxName520: DefaultOcxName720: DefaultOcxName124: income statementDefaultOcxName321: DefaultOcxName521: DefaultOcxName721: DefaultOcxName125: money marketDefaultOcxName322: DefaultOcxName522: DefaultOcxName722: DefaultOcxName126: sun of debit = sum of creditDefaultOcxName323: DefaultOcxName523: DefaultOcxName723: DefaultOcxName127: DefaultOcxName324: current assets and current liabilitiesDefaultOcxName524: DefaultOcxName724: DefaultOcxName128: DefaultOcxName325: organizational financial health at a specificDefaultOcxName525: DefaultOcxName725: DefaultOcxName129: DefaultOcxName326: DefaultOcxName526: creating value for the shareholdersDefaultOcxName726: DefaultOcxName130: DefaultOcxName327: DefaultOcxName527: DefaultOcxName727: by selling common stockDefaultOcxName131: DefaultOcxName328: annual percent rateDefaultOcxName528: DefaultOcxName728: DefaultOcxName132: current assetsDefaultOcxName329: DefaultOcxName529: DefaultOcxName729: DefaultOcxName133: DefaultOcxName330: DefaultOcxName530: FV = PV (e) i * nDefaultOcxName730: DefaultOcxName134: DefaultOcxName331: discountingDefaultOcxName531: DefaultOcxName731: DefaultOcxName135: DefaultOcxName332: inventory turnoverDefaultOcxName532: DefaultOcxName732: DefaultOcxName136: DefaultOcxName333: DefaultOcxName533: Microsoft corporation : the firmDefaultOcxName733: DefaultOcxName137: DefaultOcxName334: DefaultOcxName534: DefaultOcxName734: DefaultOcxName138: DefaultOcxName335: DefaultOcxName535: DefaultOcxName735: double taxation on the profitDefaultOcxName139: DefaultOcxName336: DefaultOcxName536: DefaultOcxName736: cash flow to purchase bonds issued by anotherDefaultOcxName140: DefaultOcxName337: historical valueDefaultOcxName537: DefaultOcxName737:

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