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FIN622 ONLINE  QUIZ # 4 ANNOUCED. DUE DATE Jan 28, 2014 11:59 PM

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Fin622 online quiz # 4.


+ Israr - MBA✔  thanks 

1-Which of the following is the principal advantage of high debt financing?
Select correct option:
Tax savings
Low bankruptcy costs
Minimum financial risk
Low financial leverage
2-Which of the following is tax deductible?
Select correct option:
Dividend on preferred shares
Dividend on common stocks
Coupon payments on bonds
Capital gain on common stocks
3-Which of the following describes the hedging approach to financing?
Select correct option:
Maturity dates of financing instruments are spread over a period of time so that they mature in a steady, predictable fashion
Each asset is offset with a financing instrument of the same approximate maturity.
Each asset is offset with a put or call option.
The firm takes out insurance to protect itself against uneven cash flows.
4-Which one of the following transactions take place in a primary financial market?
Select correct option:
Initial Public Offering
Buying Mutual Funds Certificates
Selling old shares
Buying Bonds issued in previous year
5-Holmes Aircraft recently announced an increase in its net income, yet its net cash flow declined relative to last year. Which of the following could explain this performance?
Select correct option:
The company’s taxes increased.
The company’s depreciation expense declined.
The company’s operating income declined.
All of the given statements are correct
6-Which of the following changes will increase the Net Present Value (NPV ) of a project?
Select correct option:

A decrease in the discount rate
A decrease in the size of the cash inflows
An increase in the initial cost of the project
A decrease in the number of cash inflows
7-Which of the following technique of stock evaluation considers quantitative
factors as well as qualitative factors for valuation?
Select correct option:
Technical Analysis
Fundamental Analysis
Constant Growth Model
No Growth Model
8-The formula for the break-even quantity of output (QBE), given the price per
unit (P), fixed costs (FC), and variable cost per unit (V), is:
Select correct option:
QBE = (P - V)/FC.
QBE = (P/FC) - V.
QBE = (FC/P) - V.
QBE = FC/ (P - V).
9-With respect to Cash flow statement, “Decrease in current liability” would be
considered as a:
Select correct option:
Cash outflow
Cash inflow
Sometimes as cash inflow and sometimes as cash outflow
Cannot be determined
10-Which of the following statement is CORRECT regarding residual dividend
Select correct option:
Shareholders are paid dividend from capital
Dividend are paid after meeting all the financial needs of the firm
The management sets a fixed payout ratio
Shareholders are paid fixed dividend every year

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