07-08-2010, 07:06 PM
Question # 1 of 15 ( Start time: 04:11:53 AM ) Total Marks: 1
Which of the following techniques would be used for a project that has non–normal cash flows?
Select correct option:
Internal rate of return
Multiple internal rate of return
Modified internal rate of return
Net present value
Question # 2 of 15 ( Start time: 04:13:15 AM ) Total Marks: 1
Which of the following can be used to calculate the risk of the larger portfolio?
Select correct option:
Standard deviation
EPS approach
Matrix approach
Gordon’s Approach
Question # 3 of 15 ( Start time: 04:14:25 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 # 4 of 15 ( Start time: 04:15:33 AM ) Total Marks: 1
The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as __________.
Select correct option:
Probability distribution
Expected return
Standard deviation
Coefficient of variation
Question # 5 of 15 ( Start time: 04:16:02 AM ) Total Marks: 1
What are the Indirect securities?
Select correct option:
The securities whose value depends on the cash flows generated by the underlying assets
The securities whose value depends on the value of the underlying assets
The securities that indirectly generate returns for its investors
All of the given options
Question # 6 of 15 ( Start time: 04:16:47 AM ) Total Marks: 1
What is the expected return of a zero-beta security?
Select correct option:
The risk-free rate
Zero rate of return
A negative rate of return
The market rate of return
Question # 7 of 15 ( Start time: 04:17:42 AM ) Total Marks: 1
Which statement is NOT true regarding the market portfolio?
Select correct option:
It includes all publicly traded financial assets
It is the tangency point between the capital market line and the indifference curve
All securities in the market portfolio are held in proportion to their market values
It lies on the efficient frontier
Question # 8 of 15 ( Start time: 04:19:12 AM ) Total Marks: 1
What does the law of conservation of value implies?
Select correct option:
The mix of senior and subordinated debt does not affect the value of the firm
The mix of convertible and non-convertible debt does not affect the value of the firm
The mix of common stock and preferred stock does not affect the value of the firm
All of the given options
Question # 9 of 15 ( Start time: 04:20:38 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 # 10 of 15 ( Start time: 04:21:25 AM ) Total Marks: 1
If risk and return combination of any stock is above the SML, what does it mean?
Select correct option:
It is offering lower rate of return as compared to the efficient stock
It is offering higher rate of return as compared to the efficient stock
Its rate of return is zero as compared to the efficient stock
It is offering rate of return equal to the efficient stock
Question # 11 of 15 ( Start time: 04:22:47 AM ) Total Marks: 1
What is the present value of Rs.1,000 to be paid at the end of 5 years if the correct risk adjusted interest rate is 8%?
Select correct option:
Rs.714 (Numeric mistake by Teacher. In Old paper value was 680.58)
Rs.1,462
Rs.322.69
Rs.401.98
Question # 12 of 15 ( Start time: 04:24:14 AM ) Total Marks: 1
The risk that covers events like unexpected changes in the economy refers to:
Select correct option:
Systematic risk
Unsystematic risk
Total risk
All of the above
Question # 13 of 15 ( Start time: 04:25:27 AM ) Total Marks: 1
The DuPont Approach breaks down the earning power on shareholders' book value (ROE) as follows: ROE = __________.
Select correct option:
Net profit margin × Total asset turnover × Equity multiplier
Total asset turnover × Gross profit margin × Debt ratio
Total asset turnover × Net profit margin
Total asset turnover × Gross profit margin × Equity multiplier
Question # 14 of 15 ( Start time: 04:26:23 AM ) Total Marks: 1
Which of the following is the maximum amount of debt (and other fixed-charge financing) that a firm can adequately service?
Select correct option:
Debt capacity
Debt-service burden
Adequacy capacity
Fixed-charge burden
Question # 15 of 15 ( Start time: 04:27:08 AM ) Total Marks: 1
The value of a bond is directly derived from which of the following?
Select correct option:
Cash flows
Coupon receipts
Par recovery at maturity
All of the given options
Which of the following techniques would be used for a project that has non–normal cash flows?
Select correct option:
Internal rate of return
Multiple internal rate of return
Modified internal rate of return
Net present value
Question # 2 of 15 ( Start time: 04:13:15 AM ) Total Marks: 1
Which of the following can be used to calculate the risk of the larger portfolio?
Select correct option:
Standard deviation
EPS approach
Matrix approach
Gordon’s Approach
Question # 3 of 15 ( Start time: 04:14:25 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 # 4 of 15 ( Start time: 04:15:33 AM ) Total Marks: 1
The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as __________.
Select correct option:
Probability distribution
Expected return
Standard deviation
Coefficient of variation
Question # 5 of 15 ( Start time: 04:16:02 AM ) Total Marks: 1
What are the Indirect securities?
Select correct option:
The securities whose value depends on the cash flows generated by the underlying assets
The securities whose value depends on the value of the underlying assets
The securities that indirectly generate returns for its investors
All of the given options
Question # 6 of 15 ( Start time: 04:16:47 AM ) Total Marks: 1
What is the expected return of a zero-beta security?
Select correct option:
The risk-free rate
Zero rate of return
A negative rate of return
The market rate of return
Question # 7 of 15 ( Start time: 04:17:42 AM ) Total Marks: 1
Which statement is NOT true regarding the market portfolio?
Select correct option:
It includes all publicly traded financial assets
It is the tangency point between the capital market line and the indifference curve
All securities in the market portfolio are held in proportion to their market values
It lies on the efficient frontier
Question # 8 of 15 ( Start time: 04:19:12 AM ) Total Marks: 1
What does the law of conservation of value implies?
Select correct option:
The mix of senior and subordinated debt does not affect the value of the firm
The mix of convertible and non-convertible debt does not affect the value of the firm
The mix of common stock and preferred stock does not affect the value of the firm
All of the given options
Question # 9 of 15 ( Start time: 04:20:38 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 # 10 of 15 ( Start time: 04:21:25 AM ) Total Marks: 1
If risk and return combination of any stock is above the SML, what does it mean?
Select correct option:
It is offering lower rate of return as compared to the efficient stock
It is offering higher rate of return as compared to the efficient stock
Its rate of return is zero as compared to the efficient stock
It is offering rate of return equal to the efficient stock
Question # 11 of 15 ( Start time: 04:22:47 AM ) Total Marks: 1
What is the present value of Rs.1,000 to be paid at the end of 5 years if the correct risk adjusted interest rate is 8%?
Select correct option:
Rs.714 (Numeric mistake by Teacher. In Old paper value was 680.58)
Rs.1,462
Rs.322.69
Rs.401.98
Question # 12 of 15 ( Start time: 04:24:14 AM ) Total Marks: 1
The risk that covers events like unexpected changes in the economy refers to:
Select correct option:
Systematic risk
Unsystematic risk
Total risk
All of the above
Question # 13 of 15 ( Start time: 04:25:27 AM ) Total Marks: 1
The DuPont Approach breaks down the earning power on shareholders' book value (ROE) as follows: ROE = __________.
Select correct option:
Net profit margin × Total asset turnover × Equity multiplier
Total asset turnover × Gross profit margin × Debt ratio
Total asset turnover × Net profit margin
Total asset turnover × Gross profit margin × Equity multiplier
Question # 14 of 15 ( Start time: 04:26:23 AM ) Total Marks: 1
Which of the following is the maximum amount of debt (and other fixed-charge financing) that a firm can adequately service?
Select correct option:
Debt capacity
Debt-service burden
Adequacy capacity
Fixed-charge burden
Question # 15 of 15 ( Start time: 04:27:08 AM ) Total Marks: 1
The value of a bond is directly derived from which of the following?
Select correct option:
Cash flows
Coupon receipts
Par recovery at maturity
All of the given options