FIN622 Current Quiz 24 June 2010

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Question # 1 of 15 ( Start time: 11:20:12 AM ) Total Marks: 1
Which of the following statement best describe the term Market Correction?
Select correct option:

• Market Correction refers to the situation where equilibrium of supply & demand of shares occurs in the market
  
• Market correction occurs when shares’ intrinsic values becomes equal to face values
  
• Market Correction occurs when there is a boom in the economy
  
• Market Correction occurs when inflation rate is above the market interest rate
  

Question # 2 of 15 ( Start time: 11:21:25 AM ) Total Marks: 1
Which of the following illustrates the use of a hedging (maturity matching) approach to financing?
Select correct option:

• Permanent working capital financed with long-term liabilities.
  
• Short-term assets financed with equity.
  
• All assets financed with 50 percent equity, 50 percent long-term debt mixture.
  
• Short-term assets financed with long-term liabilities.
  

Question # 3 of 15 ( Start time: 11:22:31 AM ) Total Marks: 1
If two projects offer the same, positive NPV, then which of the following would be a reasonable conclusion?
Select correct option:

• The projects would have the same IRR.
  
• The projects would have the same payback period.
  
• The projects are mutually exclusive.
  
• The projects would add the same amount to the value of the firm.
  

Question # 4 of 15 ( Start time: 11:23:57 AM ) Total Marks: 1
If a creditor wanted to know if a potential customer paid its bills on time, the creditor could look at the potential customer's:
Select correct option:

• Current ratio.
  
• Acid ratio.
  
• Average age of accounts payable.
  
• Average age of accounts receivable
  

Question # 5 of 15 ( Start time: 11:25:18 AM ) Total Marks: 1
Which of the following is closely related to a sales budget?
Select correct option:

• Miscellaneous income
  
• Future profits
  
• Cash outflow
  
• Cash inflow
  

Question # 6 of 15 ( Start time: 11:26:43 AM ) Total Marks: 1
What is the future value of Rs.1 invested for 10 years if the 12 percent annual rate of interest is compounded quarterly?
Select correct option:

• Rs.2.30
  
• Rs.3.26
  
• Rs.3.25
  
• Rs.2.93
  

Question # 7 of 15 ( Start time: 11:28:05 AM ) Total Marks: 1
Which of the following methods would be most suitable for calculating the return on stocks of a non-listed company?
Select correct option:

• Dividend Growth model
  
• Capital Asset Pricing Model
  
• Security Market Line
  
• Characteristics line
  

Question # 8 of 15 ( Start time: 11:29:20 AM ) Total Marks: 1
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
  

Question # 9 of 15 ( Start time: 11:30:30 AM ) Total Marks: 1
Suppose a stock is selling today for Rs.35 per share. At the end of the year, it pays a dividend of Rs.2.00 per share and sells for Rs.39.00. What is the dividend yield on the stock?
Select correct option:

• 2%
  
• 3%
  
• 4%
  
• 5%
  

Question # 10 of 15 ( Start time: 11:31:31 AM ) Total Marks: 1
Which of the following would lower a firm's operating break-even point?
Select correct option:

• An increase in the cost of goods sold
  
• An increase in selling price
  
• An increase in wages paid to employees
  
• An increase in total sales
  

Question # 11 of 15 ( Start time: 11:32:42 AM ) Total Marks: 1
If two projects are independent, that means that ___________.
Select correct option:

• Selection of one precludes selection of the other.
  
• You should analyze the projects independently.
  
• Both the given options may apply
  
• None of the given options
  

Question # 12 of 15 ( Start time: 11:33:54 AM ) Total Marks: 1
Which of the following is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume?
Select correct option:

• Technical analysis
  
• Fundamental analysis
  
• Common size analysis
  
• Ration analysis
  

Question # 13 of 15 ( Start time: 11:34:59 AM ) Total Marks: 1
The variance of an investment's returns is a measure of the:
Select correct option:

• Volatility of the rates of return.
  
• Probability of a negative return.
  
• Historic return over long periods.
  
• Average value of the investment.
  

Question # 14 of 15 ( Start time: 11:36:05 AM ) Total Marks: 1
Which of the following statement is CORRECT regarding residual dividend policy?
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
  

Question # 15 of 15 ( Start time: 11:37:10 AM ) Total Marks: 1
Juan is starting a software writing company. He is the owner and has only 3 employees. He wants a simple inexpensive form of ownership that leaves him in control and that he can quickly dissolve if he decides to change to another business. His best choice of form of ownership would be:
Select correct option:

• S-corporation.
  
• Partnership.
  
• Corporation
  
• Sole proprietorship