MGT 201 Financial Management - 1

20 Questions | Total Attempts: 884

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MGT Quizzes & Trivia

Financial Management


Questions and Answers
  • 1. 
    Who determine the market price of a share of common stock?
    • A. 

      The board of directors of the firm

    • B. 

      The stock exchange on which the stock is listed

    • C. 

      The president of the company

    • D. 

      Individuals buying and selling the stock

  • 2. 
    What should be the focal point of financial management in a firm
    • A. 

      The number and types of products or services provided by the firm

    • B. 

      The minimization of the amount of taxes paid by the firm

    • C. 

      The creation of value for shareholders

    • D. 

      The dollars profits earned by the firm

  • 3. 
    Which of the following would generally have unlimited liability?
    • A. 

      A limited partner in a partnership

    • B. 

      A shareholder in a corporation

    • C. 

      The owner of a sole proprietorship

    • D. 

      A member in a limited liability company (LLC)

  • 4. 
    Which of the following is equal to the average tax rate?
    • A. 

      Total tax liability divided by taxable income

    • B. 

      Rate that will be paid on the next dollar of taxable income

    • C. 

      Median marginal tax rate

    • D. 

      Percentage increase in taxable income from the previous period

  • 5. 
    Felton Farm Supplies, Inc., has an 8 percent return on total assets of Rs.300,000 and a net profit margin of 5 percent. What are its sales?
    • A. 

      Rs.3, 750,000

    • B. 

      Rs.480, 000

    • C. 

      Rs.300, 000

    • D. 

      Rs.1, 500,000

  • 6. 
    Which of the following would not improve the current ratio?
    • A. 

      Borrow short term to finance additional fixed assets

    • B. 

      Issue long-term debt to buy inventory

    • C. 

      Sell common stock to reduce current liabilities

    • D. 

      Sell fixed assets to reduce accounts payable

  • 7. 
    With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs.20,000 initial investment?
    • A. 

      Rs.52,000

    • B. 

      Rs.93,219

    • C. 

      Rs.99,061

    • D. 

      Rs.915,240

  • 8. 
    In 2 years you are to receive Rs.10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would __________.
    • A. 

      Fall

    • B. 

      Rise

    • C. 

      Remain unchanged

    • D. 

      Incomplete information

  • 9. 
    Cash budgets are prepared from past:
    • A. 

      Balance sheets

    • B. 

      Income statements

    • C. 

      Income tax and depreciation data

    • D. 

      None of the given options

  • 10. 
    Which of the following is part of an examination of the sources and uses of funds?
    • A. 

      A forecasting technique

    • B. 

      A funds flow analysis

    • C. 

      A ratio analysis

    • D. 

      Calculations for preparing the balance sheet

  • 11. 
    An annuity due is always worth _____ a comparable annuity.
    • A. 

      Less than

    • B. 

      More than

    • C. 

      Equal to

    • D. 

      Can not be found

  • 12. 
    As interest rates go up, the present value of a stream of fixed cash flows _____.
    • A. 

      Goes down

    • B. 

      Goes up

    • C. 

      Stays the same

    • D. 

      Can not be found

  • 13. 
    ABC company is expected to generate Rs.125 million per year over the next three years in free cash flow. Assuming a discount rate of 10%, what is the present value of that cash flow stream?
    • A. 

      Rs.375 million

    • B. 

      Rs.338 million

    • C. 

      Rs.311 million

    • D. 

      Rs. 211 million

  • 14. 
    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?
    • A. 

      An increase

    • B. 

      A decrease

    • C. 

      No change

    • D. 

      Incomplete information

  • 15. 
    In proper capital budgeting analysis we evaluate incremental __________ cash flows.
    • A. 

      Accounting

    • B. 

      Operating

    • C. 

      Before-tax

    • D. 

      Financing

  • 16. 
    A capital budgeting technique through which discount rate equates the present value of the future net cash flows from an investment project with the project’s initial cash outflow is known as:
    • A. 

      Payback period

    • B. 

      Internal rate of return

    • C. 

      Net present value

    • D. 

      Profitability index

  • 17. 
     Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:
    • A. 

      Magnitude of expected cash flows

    • B. 

      Timing of expected cash flows

    • C. 

      Both timing and magnitude of cash flows

    • D. 

      None of the given options

  • 18. 
    Which of the followings make the calculation of NPV difficult?
    • A. 

      Estimated cash flows

    • B. 

      Discount rate

    • C. 

      Anticipated life of the business

    • D. 

      All of the given options

  • 19. 
    From which of the following category would be the cash flow received from sales revenue and other income during the life of the project?
    • A. 

      Financing activity

    • B. 

      Operating activity

    • C. 

      Investing activity

    • D. 

      All of the given options

  • 20. 
    Which of the following technique would be used for a project that has non –normal cash flows?
    • A. 

      Multiple internal rate of return

    • B. 

      Modified internal arte of return

    • C. 

      Net present value

    • D. 

      Internal rate of return

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