MGT201 Financial Management solved mcqs Fall 2010

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Question # 1 of 15 ( Start time: 06:45:57 AM ) Total Marks: 1
Which of the following is TRUE about IRR (Internal Rate of Return)?
Select correct option:

It changes for each and every year over the life of the project
It remains same for each and every year over the life of the project
It increases over the life of the project
It decreases over the life of the project

Question # 2 of 15 ( Start time: 06:46:17 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 # 3 of 15 ( Start time: 06:47:32 AM ) Total Marks: 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 # 4 of 15 ( Start time: 06:48:28 AM ) Total Marks: 1
The objective of financial management is to maximize _________ wealth.
Select correct option:

Stakeholders
Shareholders
Bondholders
Directors

Question # 5 of 15 ( Start time: 06:48:50 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

Question # 6 of 15 ( Start time: 06:49:10 AM ) Total Marks: 1
How "Shareholder wealth" is represented in a firm?
Select correct 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

Question # 7 of 15 ( Start time: 06:49:33 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 # 8 of 15 ( Start time: 06:49:56 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

Question # 9 of 15 ( Start time: 06:50:09 AM ) Total Marks: 1
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 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

Question # 10 of 15 ( Start time: 06:50:56 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 # 11 of 15 ( Start time: 06:51:19 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 # 12 of 15 ( Start time: 06:51:33 AM ) Total Marks: 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
None of the given options


Question # 13 of 15 ( Start time: 06:51:56 AM ) Total Marks: 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

Question # 14 of 15 ( Start time: 06:52:23 AM ) Total Marks: 1
When Investors want high plowback ratios?
Select correct option:

Whenever ROE > k
Whenever k > ROE
Only when they are in low tax brackets
Whenever bank interest rates are high

Question # 15 of 15 ( Start time: 06:52:42 AM ) Total Marks: 1
Which of the following should be included while calculating the cash flows associated with a project?
Select correct option:

Cash flows at the time of investment
Cash flows during the life of project
Cash flows at the termination date
All of the given options