MGT201 Financial Management solved mcqs and quiz Fall 2010

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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 project’s 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 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 ______________ .
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:

An increase
A decrease
No change
Incomplete information

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:

Intrinsic value
Book value
Par value
Historic cost

Question # 11 of 15 ( Start time: 07:15:16 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 # 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

Question # 15 of 15 ( Start time: 07:16:39 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