MGT 201 Financial Management - 1
Financial Management
- 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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