MGT201 Solved MCQ4 from 2011

MGT201 Solved MCQ4 from Quiz

Question # 1 of 10

An annuity due is always worth           a comparable annuity. Select correct option:

Less than More than Equal to

Can not be found from the given information

Question # 2 of 10 ( Start time: 04:11:40 PM )  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 # 3 of 10 ( Start time: 04:13:04 PM )  Total Marks: 1

Which of the following effects price of the bond? Select correct option:

Market interest rate Required rate of return Interest rate risk

All of the given options

Question # 4 of 10 ( Start time: 04:13:54 PM )  Total Marks: 1

Where there is single period capital rationing, what the most sensible way of making investment decisions?

Select correct option:

Choose all projects with a positive NPV

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

Choose the project with the highest NPV

Calculate IRR and select the projects with the highest IRRs

Question # 5 of 10 ( Start time: 04:15:07 PM )  Total Marks: 1

Which of the following statements is correct in distinguishing between serial bonds and sinking- fund bonds?

Select correct option:

Serial bonds mature at a variety of dates, but sinking-fund bonds mature at a single date.

Serial bonds provide for the deliberate retirement of bonds prior to maturity, but sinking-fund bonds do not provide for the deliberate retirement of bonds prior to maturity

Serial bonds do not provide for the deliberate retirement of bonds prior to maturity, but sinking- fund bonds do provide for the deliberate retirement of bonds prior to maturity.

None of the above are correct since

Question # 6 of 10 ( Start time: 04:16:37 PM )  Total Marks: 1

Which group of ratios measures a firm's ability to meet short-term obligations?

                                                                                                                                  

Select correct option:

Liquidity ratios Debt ratios Coverage ratios Profitability ratios

Debt ratios show the extent to which the firm is financed with debt.

Question # 7 of 10 ( Start time: 04:17:10 PM )  Total Marks: 1

Why companies invest in projects with negative NPV? Select correct option:

Because there is hidden value in each project Because there may be chance of rapid growth Because they have invested a lot

All of the given options

Question # 8 of 10 ( Start time: 04:18:03 PM )  Total Marks: 1

Which of the following needs to be excluded while we calculate the incremental cash flows? Select correct option:

Depreciation

Sunk cost

                                                                                                                          

Opportunity cost

Non-cash item

Question # 9 of 10 ( Start time: 04:19:01 PM )  Total Marks: 1

A project that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:

Select correct option:

Pay back period Internal rate of return Net present value Profitability index