MGT201 Financial Management solved mcqs and quiz Fall 2010

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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:

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 # 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:

NPV<0
NPV=0
NPV>0
NPV<=0

Question # 8 of 15 ( Start time: 07:23:54 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 # 9 of 15 ( Start time: 07:24:14 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 # 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:

Indenture
Debenture
Bond
Bond trustee

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

Question # 14 of 15 ( Start time: 07:25:43 AM ) Total Marks: 1
Which of the following equations is the correct one?
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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