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# MGT201 Solved MCQs - MGT201 Solved Online Quizzes - MGT201 Solved MCQs Bank - MGT201 MCQs Collection from Online Quizzes – MGT201 Mega Solved MCQs – MGT201 Mid Term Final Term Papers Solved MCQs

MGT201 Solved MCQs - MGT201 Solved Online Quizzes - MGT201 Solved MCQs Bank - MGT201 MCQs Collection from Online Quizzes – MGT201 Mega Solved MCQs – MGT201 Mid Term Final Term Papers Solved MCQs

# MGT201 Virtual University MCQs BANK - MCQs Collection from Online Quizzes

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

Company’s EVA (Economic Value Added) rises by the same value
Company’s MVA (Market Value Added) or market value rises
Company Shareholders’ Wealth rises
All of the given options

Market Value Added (MVA), Net Present Value (NPV), and Economic Value Added (EVA)
We use a measure called MVA in our assessment of a company’s net present value (NPV). In turn, we use a metric called EVA in our assessment of prospective  economic earnings. We begin with EVA, as it naturally leads to MVA, the market’s  efficient market assessment of NPV.
From a finance perspective, EVA is defined in terms of how it relates to the firm’s “market value added.”
In theory (market efficiency), MVA is equal to the net present value (NPV) of the firm’s expected future EVA.
If the marginal reduction in order costs exceeds the marginal carrying cost of inventory, then what should be done by the firm?
Select correct Option:
The firm has minimized its total carrying costs
The firm should increase its order size
The firm should decrease its order size
The firm has maximized its order costs

When marginal benefit (e.g., marginal reduction in order costs) exceeds marginal cost (e.g., marginal carrying cost of inventory) of increasing the order size, it worth doing it.

Which of the following is as EBIT?
Select correct option:
Funds provided by operations
Earnings before taxes
Net income
Operating profit

EBIT is also referred to as "operating earnings", "operating profit" and "operating income", as you can re-arrange the formula to be calculated as follows:

 EBIT = Revenue - Operating  Expenses

Also known as Profit Before Interest & Taxes (PBIT), and equals Net Income with interest and taxes added back to it

Security market line gives the relationship between _______ and _________.

Select correct option:
Market risk and the required return
Systematic risk and the required return
Non-diversified risk and the required return
All of the given options
 security market line A straight line that shows the equilibrium relationship between systematic risk and expected rates of return for individual securities. According to the SML, the excess return on a risky asset is equal to the excess return on the market portfolio multiplied by the beta coefficient.
In finance, systematic risk, sometimes called market risk, aggregate risk, or undiversifiable risk, is the risk associated with aggregate market returns

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
Limitation of NPV analysis in Uncertain settings

1. Requires information about cash flow that may often not be known Characterizing the level of risk and uncertainty associated with a new and innovative strategy is itself an uncertain and risky undertaking
2. Assumes uncertainty and risk associated with a strategy remain constant over the life of that strategy Risk level differs over different periods, and is itself affected by strategic actions
3.Fails to incorporate value of future strategies that are enabled by current strategy Path dependent nature of capability acquisition

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### Replies to This Discussion

The value of direct claim security is derived from which of the following?
Select correct MGT201 Option:

Fundamental analysis
Underlying real asset
Supply and demand of securities in the market
All of the given MGT201 Options

In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would ________.
Select correct MGT201 Option:

Fall
Rise
Remain unchanged
Incomplete information

Which of the following is an example of restructuring the firm?
Select correct MGT201 Option:

Dividends are increased from Rs.1 to Rs.2 per share
A new investment increases the firm's business risk
New equity is issued and the proceeds repay debt
A new Board of Directors is elected to the firm

Which of the following refers to financial risk?
Select correct MGT201 Option:

Risk of owning equity securities
Risk faced by equity holders when debt is used
General business risk of the firm
Possibility that interest rates will increase

Why companies invest in projects with negative NPV?
Select correct MGT201 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 MGT201 Options

Which of the following is called the tax savings of the firm derived from the deductibility of interest expense?
Select correct MGT201 Option:

Interest tax shield
Depreciable basis
Financing umbrella
Current yield

An annuity due is always worth ___a comparable annuity.
Select correct MGT201 Option:

Less than
More than
Equal to
Can not be found from the given information

Which of the following would be consistent with an aggressive approach to financing working capital?
Select correct MGT201 Option:

Financing short-term needs with short-term funds
Financing permanent inventory buildup with long-term debt
Financing seasonal needs with short-term funds
Financing some long-term needs with short-term funds

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How can a company improve (lower) its debt-to-total asset ratio?
Select correct MGT201 Option:

By borrowing more
By shifting short-term to long-term debt
By shifting long-term to short-term debt
By selling common stock

Which of the following factor(s) do NOT affects the movements in the market index?

Select correct MGT201 Option:

Macroeconomic factors

Socio political factors

Social factors

All of the given MGT201 Options

Which of the following is a major disadvantage of the corporate form of organization?

Select correct MGT201 Option:

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

To increase a given future value, the discount rate should be adjusted __________.

Select correct MGT201 Option:

Upward

Downward

First upward and then downward

None of the given MGT201 Options

Investors may be willing to pay a premium for stable dividends because of the informational content of __________, the desire of investors for __________, and certain __________.

Select correct MGT201 Option:

Institutional considerations; dividends; current income

Dividends; current income; institutional considerations

Current income; dividends; institutional considerations

Institutional considerations; current income; dividends

Which of the following is the stability of a firm's operating income?

Select correct MGT201 Option:

Financial leverage

Weighted-average cost of capital

Capital structure

Which of the following refers to financial risk?

Select correct MGT201 Option:

Risk of owning equity securities

Risk faced by equity holders when debt is used

General business risk of the firm

Possibility that interest rates will increase

Which of the following is simply the weighted average of the possible returns, with the weights being the probabilities of occurrence?

Select correct MGT201 Option:

Probability distribution

Expected return

Standard deviation

Coefficient of variation

Coefficient of variation is NOT the measure of __________.

Select correct MGT201 Option:

Risk

Probability

Relative dispersion

Risk per unit of expected return

becuase its dispersion of probability

If Deen Muhammad Suppliers receive an invoice for purchases dated 12/12/2002 subject to credit terms of "2/10, net 30", what is the last possible day the discount can be taken?

Select correct MGT201 Option:

January 11

January 22

January 30

December 30

The term "2/10" refers to a firm that can take the discount for only 10 days from the date of the invoice. Thus, goods shipped on the 12th are due no later than the 22nd if the discount is taken

Which of the following is related to the use Lower financial leverage?

Select correct MGT201 Option:

Fixed costs

Variable costs

Debt financing

Common equity financing

Which of the following is a basic principle of finance as it relates to the management of working capital?

Select correct MGT201 Option:

Profitability varies inversely with risk

Liquidity moves together with risk

Profitability moves together with risk

Profitability moves together with liquidity

Which of the following effects price of the bond?

Select correct MGT201 Option:

Market interest rate

Required rate of return

Interest rate risk

All of the given MGT201 Options

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__________ is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification.

Select correct MGT201 Option:

Systematic risk

Standard deviation

Unsystematic risk

Coefficient of variation

Which of the following will NOT equate the future value of cash inflows to the present value of cash outflows?

Select correct MGT201 Option:

Discount rate

Profitability index

Internal rate of return

Multiple Internal rate of return

What does the law of conservation of value implies?

Select correct MGT201 Option:

The mix of senior and subordinated debt does not affect the value of the firm

The mix of convertible and non-convertible debt does not affect the value of the firm

The mix of common stock and preferred stock does not affect the value of the firm

All of the given MGT201 Options

What is the present value of Rs.8,000 to be paid at the end of three years if the correct risk adjusted interest rate is 11%?

Select correct MGT201 Option:

Rs.5,850

Rs.4,872

Rs.6,725

Rs.1,842

Which of the following is a capital budgeting technique that is NOT considered as discounted cash flow method?

Select correct MGT201 Option:

Payback period

Internal rate of return

Net present value

Profitability index

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 MGT201 Option:

Cash budgeting

Capital budgeting

Capital rationing

Capital expenditure

Which of the following market in finance is referred to the market for short-term government and corporate debt securities?

Select correct MGT201 Option:

Money market

Capital market

Primary market

Secondary market

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How economic value is added (EVA) calculated?

Select correct MGT201 Option:

It is the difference between the market value of the firm and the book value of equity

It is the firm's net operating profit after tax (NOPAT) less a dollar cost of capital charge

It is the net income of the firm less a dollar cost that equals WAAC multiplied by the book value of liabilities and equities

None of the given MGT201 Option

In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would __________.

Select correct MGT201 Option:

Fall

Rise

Remain unchanged

Incomplete information

According to MM II, what happens when a firm's debt-to-equity ratio increases?

Select correct MGT201 Option:

Its financial risk increases

Its operating risk increases

The expected return on equity increases

The expected return on equity decreases

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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 MGT201 Option:

Long-term debt

Preferred stock

Common stock

None of the given MGT201 Options

How dividend yield on a stock is similar to the current yield on a bond?

Select correct MGT201 Option:

Both represent how much each security’s price will increase in a year

Both represent the security’s 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

Which group of ratios shows the extent to which the firm is financed with debt?

Select correct MGT201 Option:

Liquidity ratios

Debt ratios

Coverage ratios

Profitability ratios

At the termination of project, which of the following needs to be considered relating to project assets?

Select correct MGT201 Option:

Salvage value

Book value

Intrinsic value

Fair value

Which of the following would be considered a cash-flow item from an "operating" activity?

Select correct MGT201 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

Which of the following could be defined as the capital structure of the Company?

Select correct MGT201 Option:

The firm's mix of different securities

The firm's debt-equity ratio

The market imperfection that the firm's manager can exploit

All of the above

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Which statement is NOT true regarding the market portfolio?

Select correct MGT201 Option:

It includes all publicly traded financial assets

It is the tangency point between the capital market line and the indifference curve

All securities in the market portfolio are held in proportion to their market values

It lies on the efficient frontier

Which of the following could NOT be defined as the capital structure of the Company?

Select correct MGT201 Option:

The firm's mix of Assets and liabilities

The firm's common stocks only

The firm's debt-equity ratio

All of the given MGT201 Options

Which of the following refers to a policy of dividend "smoothing"?

Select correct MGT201 Option:

Maintaining a constant dividend payout ratio

Keeping the regular dividend at the same level indefinitely

Maintaining a steady progression of dividend increases over time

Alternating cash dividends with stock dividends

Where the stock points will lie, if a stock is a part of totally diversified portfolio?

Select correct MGT201 Option:

It will lie below the regression line

It will line above the regression line

It will line exactly on the regression line not sure

It will be tangent to the regression line

Where the stock points will lie, if a stock is a part of totally diversified portfolio?

Select correct MGT201 Option:

It will lie below the regression line

It will line above the regression line

It will line exactly on the regression line

It will be tangent to the regression line

Which of the following is the characteristic of a well diversified portfolio?

Select correct MGT201 Option:

Its market risk is negligible

Its unsystematic risk is negligible

Its systematic risk is negligible

All of the given MGT201 Options

Which of the following portfolio statistics statements is correct?

Select correct MGT201 Option:

A portfolio's expected return is a simple weighted average of expected returns of the individual securities comprising the portfolio.

A portfolio's standard deviation of return is a simple weighted average of individual security return standard deviations.

The square root of a portfolio's standard deviation of return equals its variance.

The square root of a portfolio's standard deviation of return equals its coefficient of variation

What should be used to calculate the proportional amount of equity financing employed by a firm?

Select correct MGT201 Option:

The common stock equity account on the firm's balance sheet

The sum of common stock and preferred stock on the balance sheet

The book value of the firm

The current market price per share of common stock times the number of shares Outstanding

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The value of a bond is directly derived from which of the following?

Select correct MGT201 Option:

Cash flows

Coupon receipts

Par recovery at maturity

All of the given MGT201 Options

MGT201 Financial Management Solved MCQS from  Quiz # 3

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 MGT201 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 is called the tax savings of the firm derived from the deductibility of interest expense?

Select correct MGT201 option:

Interest tax shield

Depreciable basis

Financing umbrella

Current yield

The reduction in income taxes that results from the tax-deductibility of interest payments.

Tax benefits derived from creative structuring of a financing arrangement. For example, usingloan capital instead of equity capital because interest paid on the loans is generally tax deductible whereas the dividend paid on equity is not

Upon which of the following a firm's degree of operating leverage (DOL) depends primarily?

Select correct MGT201 option:

Sales variability

Level of fixed operating costs

Closeness to its operating break-even point

Debt-to-equity ratio

Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:

Select correct MGT201 option:

Magnitude of expected cash flows

Timing of expected cash flows

None of the given MGT201 options

Ref It discounts the cash flow to take into the account the time value of money.

Expected Portfolio Return = ___________.

Select correct MGT201 option:

rP * = xA rA + xB rB

rP * = xA rA - xB rB

rP * = xA rA / xB rB

rP * = xA rA * xB rB

What is the most important criteria in capital budgeting?

Select correct MGT201 option:

Return on investment

Profitability index

Net present value

Pay back period

If stock is a part of totally diversified portfolio then its company risk must be equal to:

Select correct MGT201 option:

0

0.5

1

-1

For most firms, P/E ratios and risk_________.

Select correct MGT201 option:

Will be directly related

Will have an inverse relationship

Will be unrelated

None of the above.

Which of the following is the cash required during a specific period to meet interest expenses and principal payments?

Select correct MGT201 option:

Debt capacity

Debt-service burden

Fixed-charge burden

Which of the following stipulate a relationship between expected return and risk?

Select correct MGT201 option:

APT stipulates

CAPM stipulates

Both CAPM and APT stipulate

Neither CAPM nor APT stipulate

=====

Which of the following factors might affect stock returns?

Select correct MGT201 option:

 Business cycle Interest rate fluctuations Inflation rates All of the above

If all things equal, when diversification is most effective?

Select correct MGT201 option:

 Securities' returns are positively correlated Securities' returns are uncorrelated Securities' returns are high Securities' returns are negatively correlated

Which of the followings expressed the proposition that the value of the firm is independent of its capital structure?

Select correct MGT201 option:

 The Capital Asset Pricing Model M&M Proposition I M&M Proposition II The Law of One Price

Which of the following will NOT equate the future value of cash inflows to the present value of cash outflows?

Select correct MGT201 option:

 Discount rate Profitability index Internal rate of return Multiple Internal rate of return

Which of the following is related to the use Lower financial leverage?

Select correct MGT201 option:

 Fixed costs Variable costs Debt financing Common equity financing

Why markets and market returns fluctuate?

Select correct MGT201 option:

 Because of political factors Because of social factors Because of socio-political factors Because of macro systematic factors

Which of the following is NOT an example of hybrid equity

Select correct MGT201 option:

 Convertible Bonds Convertible Debenture Common shares Preferred shares

A project that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:

Select correct MGT201 option:

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

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

Select correct MGT201 option:       https://vustudents.ning.com/

 (Rs.100)(PVIFA at 8% for 4 periods) + Rs.100 (Rs.100)(PVIFA at 8% for 4 periods)(1.08) (Rs.100)(PVIFA at 8% for 6 periods) - Rs.100 Can not be found from the given information

To increase a given future value, the discount rate should be adjusted __________.

Select correct MGT201 option:

 Upward Downward First upward and then downward None of the given MGT201 options

Which of the following is NOT the form of cash flow generated by the investments of the shareholders?

Select correct MGT201 option:

 Income Capital loss Capital gain Operating income

According to the Capital Asset Pricing Model (CAPM), a well-diversified portfolio's rate of return is a function of which of the following:

Select correct MGT201 option:

 Unique risk Reinvestment risk Market risk Unsystematic risk

What is the most important criteria in capital budgeting?

Select correct MGT201 option:

 Return on investment Profitability index Net present value Pay back period

Which of the following factors might affect stock returns?

Select correct MGT201 option:

 Business cycle Interest rate fluctuations Inflation rates All of the above

If all things equal, when diversification is most effective?

Select correct MGT201 option:

 Securities' returns are positively correlated Securities' returns are uncorrelated Securities' returns are high Securities' returns are negatively correlated

Which of the followings expressed the proposition that the value of the firm is independent of its capital structure?

Select correct MGT201 option:

 The Capital Asset Pricing Model M&M Proposition I M&M Proposition II The Law of One Price

Which of the following will NOT equate the future value of cash inflows to the present value of cash outflows?

Select correct MGT201 option:

 Discount rate Profitability index Internal rate of return Multiple Internal rate of return

Which of the following is related to the use Lower financial leverage?

Select correct MGT201 option:

 Fixed costs Variable costs Debt financing Common equity financing

Why markets and market returns fluctuate?

Select correct MGT201 option:

 Because of political factors Because of social factors Because of socio-political factors Because of macro systematic factors

Which of the following is NOT an example of hybrid equity

Select correct MGT201 option:

 Convertible Bonds Convertible Debenture Common shares Preferred shares

A project that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:

Select correct MGT201 option:

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

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

Select correct MGT201 option:        https://vustudents.ning.com/

 (Rs.100)(PVIFA at 8% for 4 periods) + Rs.100 (Rs.100)(PVIFA at 8% for 4 periods)(1.08) (Rs.100)(PVIFA at 8% for 6 periods) - Rs.100 Can not be found from the given information

To increase a given future value, the discount rate should be adjusted __________.

Select correct MGT201 option:

 Upward Downward First upward and then downward None of the given MGT201 options

Which of the following is NOT the form of cash flow generated by the investments of the shareholders?

Select correct MGT201 option:

 Income Capital loss Capital gain Operating income

According to the Capital Asset Pricing Model (CAPM), a well-diversified portfolio's rate of return is a function of which of the following:

Select correct MGT201 option:

 Unique risk Reinvestment risk Market risk Unsystematic risk

What is the most important criteria in capital budgeting?

Select correct MGT201 option:

 Return on investment Profitability index Net present value Pay back period

If all things equal, when diversification is most effective?

Select correct MGT201 option:

 Securities' returns are positively correlated Securities' returns are uncorrelated Securities' returns are high Securities' returns are negatively correlated

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 stock’s required return. II. A decrease in the dividend growth rate will increase a stock’s 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 MGT201 option:

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

As interest rates go up, the present value of a stream of fixed cash flows _____.

Select correct MGT201 option:

 Goes down Goes up Stays the same Can not be found from the given information

Which of the following could be taken same as minimizing the weighted average cost of capital?

Select correct MGT201 option:

 Maximizing the market value of the firm Maximizing the market value of the firm only if MM's Proposition I Minimizing the market value of the firm only if MM's Proposition I holds Maximizing the profits of the firm

Which of the following formulas represents a correct calculation of the degree of operating leverage?

Select correct MGT201 option:

 (Q - QBE)/Q (EBIT) / (EBIT - FC) [Q(P-V) + FC] /[Q(P-V)] Q(P-V) / [Q(P-V) - FC]

The value of a bond is directly derived from which of the following?

Select correct MGT201 option:

 Cash flows Coupon receipts Par recovery at maturity All of the given MGT201 options

Which statement is NOT true regarding the market portfolio?

Select correct MGT201 option:

 It includes all publicly traded financial assets It is the tangency point between the capital market line and the indifference curve All securities in the market portfolio are held in proportion to their market values It lies on the efficient frontier

In the dividend discount model, _____ which of the following are not incorporated into the discount rate?
Select correct MGT201 option:
Real risk-free rate
Return on assets
Expected inflation rate

Which of the following is NOT an example of hybrid equity
Select correct MGT201 option:
Convertible Bonds
Convertible Debenture
Common shares
Preferred shares

For which of the following costs is it generally necessary to apply a tax adjustment to a yield measure?
Select correct MGT201 option:
Cost of debt
Cost of preferred stock
Cost of common equity
Cost of retained earnings

The value of the bond is NOT directly tied to the value of which of the following assets?
Select correct MGT201 option:
Lon term assets of the business

What are two major areas of capital budgeting?
Select correct MGT201 option:
Net present value, profitability index
Net present value; internal rate of return
Net present value; payback period
Pay back period; profitability index

Which of the followings are the propositions of Modigliani and Miller's?
Select correct MGT201 option:
The market value of a firm's common stock is independent of its capital structure
The market value of a firm's debt is independent of its capital structure
The market value of any firm is independent of its capital structure
None of the given MGT201 options

The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as ________.
Select correct MGT201 option:
Probability distribution
Expected return
Standard deviation
Coefficient of variation

In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas?
Select correct MGT201 option:
Common stock
Debt
Preferred stock
None of the above

A statistical measure of the variability of a distribution around its mean is referred to as ________.
Select correct MGT201 option:
Probability distribution
Expected return
Standard deviation
Coefficient of variation

How "Shareholder wealth" is represented in a firm?
Select correct MGT201 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

What is potentially the biggest advantage of a small partnership over a sole proprietorship?
Select correct MGT201 option:
Unlimited liability
Single tax filing
Difficult ownership resale
Raising capital

Total M - 1
The benefit we expect from a project is expressed in terms of:
Select correct MGT201 option:
Cash in flows
Cash out flows
Cash flows
None of the given MGT201 option

Upon which of the following a firm's degree of operating leverage (DOL) depends primarily?
Select correct MGT201 option:
Sales variability
Level of fixed operating costs
Closeness to its operating break-even point
Debt-to-equity ratio

Which of the following is the value of beta for the market portfolio?
Select correct MGT201 option:
0.25
-1.0
1.0
0.5

Which of the following is related to the use Lower financial leverage?
Select correct MGT201 option:
Fixed costs
Variable costs
Debt financing
Common equity financing

Why common stock of a company must provide a higher expected return than the debt of the same company?
Select correct MGT201 option:
There is less demand for stock than for bonds
There is greater demand for stock than for bonds
There is more systematic risk involved for the common stock
There is a market premium required for bonds

_______ is equal to (common shareholders' equity/common shares outstanding).
Select correct MGT201 option:

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

When a bond will sell at a discount?
Select correct MGT201 option:

The coupon rate is greater than the current yield and the current yield is greater than 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

In order for the investor to earn more than the current yield the bond must be selling for a discount. Yield to maturity will be greater than current yield as investor will have purchased the bond at discount and will be receiving the coupon payments over the life of the bond.

Which of the following would be considered a cash-flow item from an "operating" activity?
Select correct MGT201 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

Upon which of the following a firm's degree of operating leverage (DOL) depends primarily?
Select correct MGT201 option:

Sales variability
Level of fixed operating costs
Closeness to its operating break-even point
Debt-to-equity ratio

Which of the following is simply the weighted average of the possible returns, with the weights being the probabilities of occurrence?
Select correct MGT201 option:

Probability distribution
Expected return
Standard deviation
Coefficient of variation

Why companies invest in projects with negative NPV?
Select correct MGT201 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 MGT201 options

Cash budgets are prepared from past:
Select correct MGT201 option:

Balance sheets
Income statements
Income tax and depreciation data
None of the given MGT201 options

The cash budget is prepared from forecasted cash collections and disbursements rather

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 MGT201 option:

An increase
A decrease
No change
Incomplete information

Which of the followings expressed the proposition that the cost of equity is a positive linear function of capital structure?
Select correct MGT201 option:

The Capital Asset Pricing Model
M&M Proposition I
M&M Proposition II
The Law of One Price

http://www.financescholar.com/modigliani-miller-propositions.html

MGT201 Solved MCQ4 from Quiz

Question # 1 of  10

An annuity due is always worth _____ a comparable annuity.

Select correct option:

Less than

More than

Equal to

Can not be found from the given information

Question # 2 of 10 ( Start time: 04:11:40 PM )  Total M - 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 taxes

Cash outflow to shareholders as dividends

Cash outflow to lenders as interest

Cash outflow to purchase bonds issued by another company

Question # 3 of 10 ( Start time: 04:13:04 PM )  Total M - 1

Which of the following effects price of the bond?

Select correct option:

Market interest rate

Required rate of return

Interest rate risk

All of the given options

Question # 4 of 10 ( Start time: 04:13:54 PM )  Total M - 1

Where there is single period capital rationing, what 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

Question # 5 of 10 ( Start time: 04:15:07 PM )  Total M - 1

Which of the following statements is correct in distinguishing between serial bonds and sinking-fund bonds?

Select correct option:

Serial bonds mature at a variety of dates, but sinking-fund bonds mature at a single date.

Serial bonds provide for the deliberate retirement of bonds prior to maturity, but sinking-fund bonds do not provide for the deliberate retirement of bonds prior to maturity

Serial bonds do not provide for the deliberate retirement of bonds prior to maturity, but sinking-fund bonds do provide for the deliberate retirement of bonds prior to maturity.

None of the above are correct since

Question # 6 of 10 ( Start time: 04:16:37 PM )  Total M - 1

Which group of ratios measures a firm's ability to meet short-term obligations?

Select correct option:

Liquidity ratios

Debt ratios

Coverage ratios

Profitability ratios

Debt ratios show the extent to which the firm is financed with debt.

Question # 7 of 10 ( Start time: 04:17:10 PM )  Total M - 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 # 8 of 10 ( Start time: 04:18:03 PM )  Total M - 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 # 9 of 10 ( Start time: 04:19:01 PM )  Total M - 1

A project that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:

Select correct option:

Pay back period

Internal rate of return

Net present value

Profitability index

MGT201 Solved MCQ3 from Quiz

The objective of financial management is to maximize _________ wealth.

Select correct option:

Stakeholders

Shareholders

Bondholders

Directors

Where there is single period capital rationing, what 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

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

The RBS pays 5.60%, compounded daily (based on 360 days), on a 9-month certificate of deposit, if you deposit Rs.20, 000 you would expect to earn around __________ in interest.

Select correct option:

Rs.840

Rs.858

Rs.1,032

Rs.1,121

{ [ 1 + (.056/360) ] ^ [270] - 1 } = .042891 or 4.2891%. Thus, \$20,000 (.042891) = \$857.82.

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

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

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

Amount =  P*(1+i/n)^n

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

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:

Indenture

Debenture

Bond

Bond trustee

MGT201 Solved MCQ2 from Quiz

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 # 2 of 10 ( Start time: 04:05:43 PM ) Total M - 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 # 3 of 10 ( Start time: 04:06:35 PM ) Total M - 1

In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would __________.

Select correct option:

 Fall Rise Remain unchanged Incomplete information

Question # 4 of 10 ( Start time: 04:07:25 PM ) Total M - 1

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

Select correct option:

 (Rs.100)(PVIFA at 8% for 4 periods) + Rs.100 (Rs.100)(PVIFA at 8% for 4 periods)(1.08) (Rs.100)(PVIFA at 8% for 6 periods) - Rs.100 Can not be found from the given information

Question # 5 of 10 ( Start time: 04:08:40 PM ) Total M - 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 # 6 of 10 ( Start time: 04:09:27 PM ) Total M - 1

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

Question # 7 of 10 ( Start time: 04:09:56 PM ) Total M - 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 # 8 of 10 ( Start time: 04:10:16 PM ) Total M - 1

Which of the following effects price of the bond?

Select correct option:

 Market interest rate Required rate of return Interest rate risk All of the given options

uestion # 9 of 10 ( Start time: 04:10:31 PM ) Total M - 1

An annuity due is always worth _____ a comparable annuity.

Select correct option:

 Less than More than Equal to Can not be found from the given information

Question # 10 of 10 ( Start time: 04:10:53 PM ) Total M - 1

A capital budgeting technique through which discount rate equates the present value of the future net cash flows from an investment project with the project’s initial cash outflow is known as:

Select correct option:

 Payback period Internal rate of return Net present value Profitability index

## MGT201 75 MCQs from Past Quizzes lec 1-18

MGT201 vuzs.info Question # 1 of 15 ( Start time: 09:14:05 PM ) Total M - 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 (Correct)
Historic cost

MGT201 vuzs.info Question # 2 of 15 ( Start time: 09:14:35 PM ) Total M - 1
Which of the following refers to the risk associated with interest rate uncertainty?
Select correct option:

MGT201 vuzs.info Question # 3 of 15 ( Start time: 09:15:38 PM ) Total M - 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 (Correct)
Par value
Historic cost

MGT201 vuzs.info Question # 4 of 15 ( Start time: 09:17:00 PM ) Total M - 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 (Correct)
Shares and bonds both represent equity
Shares and bond both represent liabilities

MGT201 vuzs.info Question # 5 of 15 ( Start time: 09:18:04 PM ) Total M - 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 (Correct)
Periodic interest rate ignores the effect of inflation
All of the given options

MGT201 vuzs.info Question # 6 of 15 ( Start time: 09:18:48 PM ) Total M - 1
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
Select correct option:

Capital market
Efficient market (Correct)
Money market
Real asset market

MGT201 vuzs.info Question # 7 of 15 ( Start time: 09:20:10 PM ) Total M - 1
A technique that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:
Select correct option:

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

MGT201 vuzs.info Question # 9 of 15 ( Start time: 09:22:03 PM ) Total M - 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 (Correct)
Cash budget
Cash flow statement
None of the given options

MGT201 vuzs.info Question # 10 of 15 ( Start time: 09:22:45 PM ) Total M - 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
MGT201 vuzs.info Question # 11 of 15 ( Start time: 09:24:06 PM ) Total M - 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

MGT201 vuzs.info Question # 12 of 15 ( Start time: 09:25:15 PM ) Total M - 1
Which of the following needs to be excluded while we calculate the incremental cash flows?
Select correct option:

Depreciation
Sunk cost (Correct)
Opportunity cost
Non-cash item

MGT201 vuzs.info Question # 13 of 15 ( Start time: 09:26:33 PM ) Total M - 1
Which of the following is a capital budgeting technique that is NOT considered as discounted cash flow method?
Select correct option:

Payback period (Correct)
Internal rate of return
Net present value
Profitability index

MGT201 vuzs.info Question # 14 of 15 ( Start time: 09:27:40 PM ) Total M - 1
The value of a bond is directly derived from which of the following?
Select correct option:

Cash flows
Coupon receipts (Correct)
Par recovery at maturity
All of the given options

MGT201 vuzs.info Question # 14 of 15 ( Start time: 09:27:40 PM ) Total M - 1
The value of a bond is directly derived from which of the following?
Select correct option:

Cash flows
Coupon receipts (Correct)
Par recovery at maturity
All of the given options
--------------------------------------------------------------------------

MGT201 vuzs.info Question # 1 of 15 ( Start time: 09:32:06 PM ) Total M - 1
A technique that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:
Select correct option:
Pay back period (Correct)
Internal rate of return
Net present value
Profitability index

MGT201 vuzs.info Question # 2 of 15 ( Start time: 09:33:11 PM ) Total M - 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 (Correct)
College Credit, a credit union

MGT201 vuzs.info Question # 3 of 15 ( Start time: 09:33:49 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 greater than 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 (Correct)

MGT201 vuzs.info Question # 4 of 15 ( Start time: 09:34:34 PM ) Total M - 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 (Correct)

MGT201 vuzs.info Question # 6 of 15 ( Start time: 09:35:46 PM ) Total M - 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 (Correct)
A return less than required by investor
A return equal to or more than required by investor
MGT201 vuzs.info Question # 7 of 15 ( Start time: 09:36:51 PM ) Total M - 1
Which of the following is a major disadvantage of the corporate form of organization?
Select correct option:
Double taxation of dividends (Correct)
Inability of the firm to raise large sums of additional capital
Limited liability of shareholders
Limited life of the corporate form

MGT201 vuzs.info Question # 8 of 15 ( Start time: 09:37:49 PM ) Total M - 1
Which of the following is NOT an example of hybrid equity
Select correct option:
Convertible Bonds
Convertible Debenture
Common shares (Correct)
Preferred shares
MGT201 vuzs.info Question # 9 of 15 ( Start time: 09:38:55 PM ) Total M - 1
Which of the following is/are the component(s) of working capital management?
Select correct option:
Current assets (Correct)
Fixed assets
Fixed assets and long-term liabilities
Current assets and current liabilities

MGT201 vuzs.info Question # 10 of 15 ( Start time: 09:40:18 PM ) Total M - 1
Which of the following statements (in general) is correct?
Select correct option:
A low receivables turnover is desirable
The lower the total debt-to-equity ratio, the lower the financial risk for a firm (Correct)
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

MGT201 vuzs.info Question # 11 of 15 ( Start time: 09:41:43 PM ) Total M - 1
What should be the focal point of financial management in a firm?
Select correct option:
The number and types of products or services provided by the firm
The minimization of the amount of taxes paid by the firm
The creation of value for shareholders
The dollars profits earned by the firm

MGT201 vuzs.info Question # 12 of 15 ( Start time: 09:42:43 PM ) Total M - 1
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 (Correct)
Rs.99,061
Rs.915,240

MGT201 vuzs.info Question # 13 of 15 ( Start time: 09:43:14 PM ) Total M - 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 (Correct)

MGT201 vuzs.info Question # 14 of 15 ( Start time: 09:44:04 PM ) Total M - 1
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)
None of the given options

MGT201 vuzs.info Question # 15 of 15 ( Start time: 09:45:14 PM ) Total M - 1
Which of the following refers to bringing the future cash flow to the present time?
Select correct option:
Net present value
Discounting (Correct)
Opportunity cost
Internal rate of return

MGT201 vuzs.info Question # 1 of 15 ( Start time: 09:49:12 PM ) Total M - 1
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 (Correct)
Increase over time at a rate of r%
Decrease over time at a rate equal to the dividend growth rate

MGT201 vuzs.info Question # 2 of 15 ( Start time: 09:50:02 PM ) Total M - 1
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
Select correct option:
Capital market
Efficient market (Correct)
Money market
Real asset market

Virtual: 2

zahid.famous: 2

saadkhan545: MGT201 vuzs.info Question # 3 of 15 ( Start time: 09:50:40 PM ) Total M - 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 (Correct)
None of the given options

MGT201 vuzs.info Question # 4 of 15 ( Start time: 09:51:21 PM ) Total M - 1
Which of the following equation is NOT correct?
Select correct option:
Gross Revenue – Admin & Operating Expenses = Operating Revenue
Other Expenses + Other Revenue = EBIT  (Correct)
EBIT – Financial Charges & Interest = EBT
Net Income – Dividends = Retained Earning

MGT201 vuzs.info Question # 5 of 15 ( Start time: 09:52:38 PM ) Total M - 1
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 (Correct)
Rs.99,061
Rs.915,240
5:53 PM
MGT201 vuzs.info Question # 6 of 15 ( Start time: 09:54:01 PM ) Total M - 1
To increase a given future value, the discount rate should be adjusted ________.
Select correct option:
Upward
Downward  (Correct)
First upward and then downward
None of the given options

MGT201 vuzs.info Question # 7 of 15 ( Start time: 09:55:36 PM ) Total M - 1
Which of the following value of the shares changes with investor’s perception about the company’s future and supply and demand situation?
Select correct option:
Par value
Market value (Correct)
Intrinsic value
Face value

MGT201 vuzs.info Question # 8 of 15 ( Start time: 09:57:06 PM ) Total M - 1
Which of the following refers to time value of money concept?
Select correct option:
A rupee in one’s hand at present is worth less than the rupee that one is going to receive tomorrow (Correct)
A rupee in one’s hand at present is worth more than the rupee that one is going to receive tomorrow
A rupee in one’s hand at present is worth same as the rupee that one is going to receive tomorrow
All of the given options

MGT201 vuzs.info Question # 9 of 15 ( Start time: 09:57:59 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 (Correct)
Payments are made at the start of each period
It is also known as deferred annuity

MGT201 vuzs.info Question # 10 of 15 ( Start time: 09:58:47 PM ) Total M - 1
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 (Correct)
Financial engineering
Financial budgeting
5:59 PM
MGT201 vuzs.info Question # 11 of 15 ( Start time: 09:59:08 PM ) Total M - 1
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)
None of the given options

MGT201 vuzs.info Question # 12 of 15 ( Start time: 10:00:31 PM ) Total M - 1
Which of the following term may be defined as incidental cash flows that arise because of the effect of new project on the running business?
Select correct option:
Sunk cost
Opportunity cost
Externalities (Correct)
Contingencies

MGT201 vuzs.info Question # 13 of 15 ( Start time: 10:01:09 PM ) Total M - 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

saadkhan545: MGT201 vuzs.info Question # 14 of 15 ( Start time: 10:02:19 PM ) Total M - 1
Which if the following refers to capital budgeting?
Select correct option:
Investment in long-term liabilities  (Correct)
Investment in fixed assets
Investment in current assets
Investment in short-term liabilities
MGT201 vuzs.info Question # 15 of 15 ( Start time: 10:03:16 PM ) Total M - 1
An annuity due is always worth ___ a comparable annuity.
Select correct option:
Less than
More than (Correct)
Equal to
Can not be found from the given information

----------------------------------------------------------------------------------------------------------
MGT201 vuzs.info Question # 1 of 15 ( Start time: 10:22:47 PM ) Total M - 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 (Correct)
Financing, operating and investing
Financing, investing, and operating

MGT201 vuzs.info Question # 2 of 15 ( Start time: 10:23:52 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 greater than 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 (Correct)

MGT201 vuzs.info Question # 3 of 15 ( Start time: 10:24:25 PM ) Total M - 1
If Net Present Value technique is used, what is the minimum acceptance criterion for a project?
Select correct option:
NPV
NPV=0
NPV>0
NPV
MGT201 vuzs.info Question # 4 of 15 ( Start time: 10:25:44 PM ) Total M - 1
Which if the following refers to capital budgeting?
Select correct option:
Investment in long-term liabilities
Investment in fixed assets (Correct)
Investment in current assets
Investment in short-term liabilities

MGT201 vuzs.info Question # 5 of 15 ( Start time: 10:26:13 PM ) Total M - 1
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)
None of the given options
MGT201 vuzs.info Question # 1 of 15 ( Start time: 10:58:08 PM ) Total M - 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
6:59 PM

MGT201 vuzs.info Question # 3 of 15 ( Start time: 11:00:17 PM ) Total M - 1
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   (Correct)
PV
NPV

MGT201 vuzs.info Question # 5 of 15 ( Start time: 11:02:10 PM ) Total M - 1
_______ is equal to (common shareholders' equity/common shares outstanding).
Select correct option:

Book value per share
Liquidation value per share   (Correct)
Market value per share
None of the above

MGT201 vuzs.info Question # 7 of 15 ( Start time: 11:03:42 PM ) Total M - 1
Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:
Select correct option:

Magnitude of expected cash flows
Timing of expected cash flows
Both timing and magnitude of cash flows
None of the given options

MGT201 vuzs.info Question # 7 of 15 ( Start time: 11:03:42 PM ) Total M - 1
Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:
Select correct option:

Magnitude of expected cash flows
Timing of expected cash flows
Both timing and magnitude of cash flows
None of the given options

MGT201 vuzs.info Question # 8 of 15 ( Start time: 11:04:28 PM ) Total M - 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  (Correct)

MGT201 vuzs.info Question # 9 of 15 ( Start time: 11:05:08 PM ) Total M - 1
Which of the following is/are the characteristic(s) of Perpetuity?
Select correct option:

It is an annuity
It has no definite end   (Correct)
It is a constant stream of identical cash flows
All of the given options

MGT201 vuzs.info Question # 10 of 15 ( Start time: 11:06:02 PM ) Total M - 1
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 stock
None of the given options

MGT201 vuzs.info Question # 11 of 15 ( Start time: 11:06:58 PM ) Total M - 1
What is the most important criteria in capital budgeting?
Select correct option:

Return on investment
Profitability index   (Correct)
Net present value
Pay back period

mehak: MGT201 vuzs.info Question # 12 of 15 ( Start time: 11:08:07 PM ) Total M - 1
What is the additional amount a borrower must pay to lender to compensate for assuming the risk associated with non-payment?
Select correct option:

MGT201 vuzs.info Question # 13 of 15 ( Start time: 11:08:46 PM ) Total M - 1
What is the present value of Rs.1,000 to be paid at the end of 5 years if the correct risk adjusted interest rate is 8%?
Select correct option:

Rs.714
Rs.1,462
Rs.322.69
Rs.401.98

MGT201 vuzs.info Question # 14 of 15 ( Start time: 11:10:09 PM ) Total M - 1
______ are also known as Spontaneous Financing.
Select correct option:

Current liabilities
Current assets   (Correct)
Fixed assets
Long-term liabilities

MGT201 vuzs.info Question # 15 of 15 ( Start time: 11:11:06 PM ) Total M - 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   (Correct)
Periodic interest rate ignores the effect of inflation
All of the given options

1

2

3

4

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