Mgt201- Financial Management (Session - 3) Fall 2009

11 Questions | Total Attempts: 52

Settings
Please wait...
Financial Management Quizzes & Trivia

This quiz is from the paper of Virtual University Fall 2009 Session 3 of Financial Management


Questions and Answers
  • 1. 
    ABC’s and XYZ’s debt-to-total assets ratio is 0.4. What is its debt-to-equity ratio? 
    • A. 

      ► 0 .2

    • B. 

      ► 0 .77

    • C. 

      ► 0.667

    • D. 

      ► 0.333

  • 2. 
    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. 

      ► Cannot be found

  • 3. 
    A 5-year ordinary annuity has a future value of Rs.1,000.  If the interest rate is 8 percent, the amount of each annuity payment is closest to which of the following?
    • A. 

      ► Rs.231.91

    • B. 

      ► Rs.184.08

    • C. 

      ► Rs.181.62

    • D. 

      ► Rs.170.44

  • 4. 
    Managers prefer IRR over net present value because they evaluate investments: 
    • A. 

      ► In terms of dollars

    • B. 

      ► In terms of Percentages

    • C. 

      ► Intuitively

    • D. 

      ► Logically

  • 5. 
    When there is single period capital rationing, what would be the most sensible way of making investment decisions? 
    • A. 

      ► Choose all projects with a positive NPV

    • B. 

      ► Group projects together to allocate the funds available and select the group of projects with the highest NPV

    • C. 

      ► Choose the project with the highest NPV

    • D. 

      ► Calculate IRR and select the projects with the highest IRRs

  • 6. 
    Which of the following is the value of bond that we expect the bond to be?
    • A. 

      ► Intrinsic value

    • B. 

      ► Fair value

    • C. 

      ► Both intrinsic and fair value

    • D. 

      ► Market price

  • 7. 
    An investment opportunity set formed with two securities that are perfectly negatively correlated. What will be standard deviation in the global minimum variance portfolio? 
    • A. 

      ► Equal to zero

    • B. 

      ► Greater than zero

    • C. 

      ► Equal to the sum of the securities' standard deviations

    • D. 

      ► Equal to -1

  • 8. 
    Which of the following value of the shares changes with investor’s perception about the company’s future and supply and demand situation?
    • A. 

      ► Par value

    • B. 

      ► Market value

    • C. 

      ► Intrinsic value

    • D. 

      ► Face value

  • 9. 
    Which of the following statement about portfolio statistics is CORRECT? 
    • A. 

      ► A portfolio's expected return is a simple weighted average of expected returns of the individual securities comprising the portfolio.

    • B. 

      ► A portfolio's standard deviation of return is a simple weighted average of individual security return standard deviations.

    • C. 

      The square root of a portfolio's standard deviation of return equals its variance.

    • D. 

      ► The square root of a portfolio's standard deviation of return equals its coefficient of variation.

  • 10. 
    Which of the following is simply the weighted average of the possible returns, with the weights being the probabilities of occurrence?
    • A. 

      ► A probability distribution

    • B. 

      ► The expected return

    • C. 

      ► The standard deviation

    • D. 

      ► Coefficient of variation

  • 11. 
    The ratio of the standard deviation of a distribution to the mean of that distribution is referred to as __________. 
    • A. 

      ► A probability distribution

    • B. 

      ► The expected return

    • C. 

      ► The standard deviation

    • D. 

      ► Coefficient of variation