Tuesday, May 18, 2010

FIN622 Current Quizzes

Quiz Start Time: 02:27 PM Time Left 85
sec(s)


Question # 1 of 15 ( Start time: 02:27:19 PM ) Total Marks: 1
Which of the following is known as market portfolio?
Select correct option:

A portfolio consists of all risk free securities available in the market
A portfolio consists of securities of the same industry
A portfolio consists of all aggressive securities available in the market
A portfolio consists of all securities available in the market





Quiz Start Time: 02:27 PM Time Left 87
sec(s)


Question # 2 of 15 ( Start time: 02:28:43 PM ) Total Marks: 1
Which of the following reflects the real cost of funds to the borrowers and the real yield to the lenders?
Select correct option:

Real interest rate
Nominal interest rate
Annual interest rate
Quarterly interest rate




Quiz Start Time: 02:27 PM Time Left 51
sec(s)


Question # 3 of 15 ( Start time: 02:30:11 PM ) Total Marks: 1
The decision rule for net present value is to:
Select correct option:

Accept all projects with cash inflows exceeding initial cost.
Reject all projects with rates of return exceeding the opportunity cost of capital.
Accept all projects with positive net present values.
Reject all projects lasting longer than 10 years.





Quiz Start Time: 02:27 PM Time Left 89
sec(s)


Question # 4 of 15 ( Start time: 02:31:26 PM ) Total Marks: 1
You have calculated that the required rate of return on a particular common stock is less than the expected rate of return. Therefore, you would conclude:
Select correct option:

That the stock is more risky than the market portfolio.
That an investor should buy the stock.
That the stock has a high dividend payout ratio.
That an investor should sell the stock.



Quiz Start Time: 02:27 PM Time Left 72
sec(s)


Question # 5 of 15 ( Start time: 02:32:58 PM ) Total Marks: 1
Which of the following statements is TRUE regarding Profitability Index?
Select correct option:

It ignores time value of money
It ignores future cash flows
It ignores the scale of investment
It ignores return on investment





Quiz Start Time: 02:27 PM Time Left 77
sec(s)


Question # 6 of 15 ( Start time: 02:34:08 PM ) Total Marks: 1
The variance of an investment's returns is a measure of the:
Select correct option:

Volatility of the rates of return.
Probability of a negative return.
Historic return over long periods.
Average value of the investment.





Quiz Start Time: 02:27 PM Time Left 88
sec(s)


Question # 7 of 15 ( Start time: 02:35:36 PM ) Total Marks: 1
If the Internal Rates of Return of two, mutually exclusive options are both greater than the cost of capital, which option should be selected under the Internal Rate of Return method?
Select correct option:

The one with the largest Internal Rate of Return.
The one with the smallest Internal Rate of Return.
The one with the highest Net Present Value at the firm’s cost of capital.
None of the given options


Quiz Start Time: 02:27 PM Time Left 88
sec(s)


Question # 8 of 15 ( Start time: 02:36:59 PM ) Total Marks: 1
Which of the following would NOT improve the current ratio?
Select correct option:

Borrow short term to finance additional fixed assets.
Issue long-term debt to buy inventory
Sell common stock to reduce current liabilities.
Sell fixed assets to reduce accounts payable.





Quiz Start Time: 02:27 PM Time Left 86
sec(s)


Question # 9 of 15 ( Start time: 02:38:30 PM ) Total Marks: 1
Which of the following is a long-term source of financing for a firm?
Select correct option:

Corporate Bonds
Money Market instruments
Trade credit
Accounts Payables





Quiz Start Time: 02:27 PM Time Left 86
sec(s)


Question # 10 of 15 ( Start time: 02:39:53 PM ) Total Marks: 1
Which of the following is a disadvantage of Capital Asset Pricing model?
Select correct option:

It consider market risk
It can be used for listed companies
It can be used for Non-listed companies
It is based on Past data





Quiz Start Time: 02:27 PM Time Left 87
sec(s)


Question # 11 of 15 ( Start time: 02:41:21 PM ) Total Marks: 1
Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1 percent?
Select correct option:

20-year, zero coupon bond.
10-year, zero coupon bond.
20-year, 10 percent coupon bond
20-year, 5 percent coupon bond.




Quiz Start Time: 02:27 PM Time Left 89
sec(s)


Question # 12 of 15 ( Start time: 02:42:27 PM ) Total Marks: 1
Which of the following stock would provide a regular income to the investors?
Select correct option:

Growth stock
Income stock
Aggressive stock
Defensive stock




Quiz Start Time: 02:27 PM Time Left 88
sec(s)


Question # 13 of 15 ( Start time: 02:43:46 PM ) Total Marks: 1
A firm can lower its breakeven level by doing which of the following actions?
Select correct option:

Lowering direct cost
Increasing variable cost
Increasing direct cost
Lowering sales price





Quiz Start Time: 02:27 PM Time Left 87
sec(s)


Question # 14 of 15 ( Start time: 02:44:55 PM ) Total Marks: 1
Which of the following is a main purpose of the Sensitivity Analysis?
Select correct option:

To find out the optimal level of capital budget.
To find out that how price changes affect break-even volume.
To find out the seasonal variation in product demand.
To find out that how variables in a project affect profitability






Quiz Start Time: 02:27 PM Time Left 88
sec(s)


Question # 15 of 15 ( Start time: 02:46:19 PM ) Total Marks: 1
The percentage change in a firm's operating profit (EBIT) resulting from a 1% change in output (sales) is known as the ________.
Select correct option:

Degree of operating leverage
Degree of profit leverage
Degree of total leverage
Degree of financial leverage







Quiz Start Time: 02:49 PM Time Left 31
sec(s)


Question # 1 of 15 ( Start time: 02:49:41 PM ) Total Marks: 1
A market portfolio has a beta equal to:
Select correct option:

0
1
2
3




Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 2 of 15 ( Start time: 02:51:07 PM ) Total Marks: 1
Which of the following focuses on long-term decision-making regarding the acquisition of projects?
Select correct option:

Working Capital Management
Capital Budgeting
Cash Budgeting
None of the given options



Quiz Start Time: 02:49 PM Time Left 84
sec(s)


Question # 3 of 15 ( Start time: 02:52:32 PM ) Total Marks: 1
You have calculated that the required rate of return on a particular common stock is less than the expected rate of return. Therefore, you would conclude:
Select correct option:

That the stock is more risky than the market portfolio.
That an investor should buy the stock.
That the stock has a high dividend payout ratio.
That an investor should sell the stock.





Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 4 of 15 ( Start time: 02:53:58 PM ) Total Marks: 1
Suppose you have a 2-stocks portfolio, which consists of Stock A and Stock B. If stock A has a beta value of 1.8 and stock B has a beta value of 0.68, and your investment in stock A and stocks B is equal, then the beta of this 2-stock portfolio would be equal to:
Select correct option:

1.20
1.24
1.30
1.45





Quiz Start Time: 02:49 PM Time Left 29
sec(s)


Question # 5 of 15 ( Start time: 02:55:29 PM ) Total Marks: 1
Which of the following investment criteria does not take the time value of money into consideration?
Select correct option:

Simple payback method
Net present value
Profitability index
Internal rate of return for borrowing projects






Quiz Start Time: 02:49 PM Time Left 81
sec(s)


Question # 6 of 15 ( Start time: 02:56:45 PM ) Total Marks: 1
You plan to deposit Rs.400 at the end of each year for 16 years in an account that pays 9 percent compounded annually. The terminal value at the end of the 16 year period is closest to:
Select correct option:

Rs.13,201
Rs.17,667
Rs.9,634
Rs.19,329.






Quiz Start Time: 02:49 PM Time Left 70
sec(s)


Question # 7 of 15 ( Start time: 02:58:08 PM ) Total Marks: 1
The variance of an investment's returns is a measure of the:
Select correct option:

Volatility of the rates of return.
Probability of a negative return.
Historic return over long periods.
Average value of the investment.






Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 8 of 15 ( Start time: 02:59:32 PM ) Total Marks: 1
Which of the following reflects the real cost of funds to the borrowers and the real yield to the lenders?
Select correct option:

Real interest rate
Nominal interest rate
Annual interest rate
Quarterly interest rate





Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 9 of 15 ( Start time: 03:00:48 PM ) Total Marks: 1
Which of the following is a main purpose of the Sensitivity Analysis?
Select correct option:

To find out the optimal level of capital budget.
To find out that how price changes affect break-even volume.
To find out the seasonal variation in product demand.
To find out that how variables in a project affect profitability






Quiz Start Time: 02:49 PM Time Left 89
sec(s)


Question # 10 of 15 ( Start time: 03:02:04 PM ) Total Marks: 1
Which one of the following statements describe "Shareholders’ wealth" in a firm?
Select correct option:

The number of people employed in the firm
The book value of the firm's assets less the book value of its liabilities
The market price per share of the firm's common stock
The amount of salary paid to its employees



Quiz Start Time: 02:49 PM Time Left 65
sec(s)


Question # 10 of 15 ( Start time: 03:02:04 PM ) Total Marks: 1
Which one of the following statements describe "Shareholders’ wealth" in a firm?
Select correct option:

The number of people employed in the firm
The book value of the firm's assets less the book value of its liabilities
The market price per share of the firm's common stock
The amount of salary paid to its employees




Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 11 of 15 ( Start time: 03:03:27 PM ) Total Marks: 1
Determine a firm's total asset turnover (TAT) if its net profit margin (NPM) is 5 percent, total assets are $8 million, and ROI is 8 percent.
Select correct option:

1.60
2.05
2.50
4.00





Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 12 of 15 ( Start time: 03:04:59 PM ) Total Marks: 1
Which of the following changes will increase the Net Present Value (NPV ) of a project?
Select correct option:

A decrease in the discount rate
A decrease in the size of the cash inflows
An increase in the initial cost of the project
A decrease in the number of cash inflows





Quiz Start Time: 02:49 PM Time Left 88
sec(s)


Question # 13 of 15 ( Start time: 03:06:30 PM ) Total Marks: 1
Which of the following factor determines the financial viability of a project?
Select correct option:

Future Profits
Future Cash flows
Sunk Cost
None of the given option






Quiz Start Time: 02:49 PM Time Left 89
sec(s)


Question # 14 of 15 ( Start time: 03:07:44 PM ) Total Marks: 1
A company has fixed costs of $50,000 and variable costs per unit of output of $8. If its sole product sells for $18, what is the break-even quantity of output?
Select correct option:

2,500
5,000
1,500
7,500



Quiz Start Time: 02:49 PM Time Left 72
sec(s)


Question # 15 of 15 ( Start time: 03:18:56 PM ) Total Marks: 1
In which of the following conditions a stock is said to be overvalued?
Select correct option:

If the stock has market value less than the expected value
If the stock has market value more than the expected value
If the stock has market value equal to the expect value
If the stock has market value less than its intrinsic value





Quiz Start Time: 03:20 PM Time Left 52
sec(s)


Question # 1 of 15 ( Start time: 03:20:13 PM ) Total Marks: 1
Which of the following methods would be most suitable for selecting capital project (s) in case of multi-period capital rationing?
Select correct option:

Simple payback period
Discounted payback period
Multiple Internal Rate of Return
Linear Programming






Quiz Start Time: 03:20 PM Time Left 88
sec(s)


Question # 2 of 15 ( Start time: 03:21:01 PM ) Total Marks: 1
Virgo Airlines will pay Rs.4.00 dividend next year on its common stock, which is currently selling at Rs.100 per share. What is the market's required return on this investment if the dividend is expected to grow at 5% forever?
Select correct option:

4 percent.
5 percent.
7 percent.
9 percent.





Quiz Start Time: 03:20 PM Time Left 87
sec(s)


Question # 3 of 15 ( Start time: 03:22:16 PM ) Total Marks: 1
You plan to deposit Rs.400 at the end of each year for 16 years in an account that pays 9 percent compounded annually. The terminal value at the end of the 16 year period is closest to:
Select correct option:

Rs.13,201
Rs.17,667
Rs.9,634
Rs.19,329.





Quiz Start Time: 03:20 PM Time Left 85
sec(s)


Question # 4 of 15 ( Start time: 03:22:25 PM ) Total Marks: 1
Suppose a stock is selling today for Rs.35 per share. At the end of the year, it pays a dividend of Rs.2.00 per share and sells for Rs.39.00. What is the dividend yield on the stock?
Select correct option:

2%
3%
4%
5%





Quiz Start Time: 03:20 PM Time Left 89
sec(s)


Question # 5 of 15 ( Start time: 03:23:47 PM ) Total Marks: 1
In the formula rE = (D1/P0) + g, what does the symbol "g" represent?
Select correct option:

The expected price appreciation yield from a common stock.
The expected dividend yield from a common stock.
The dividend yield from a preferred stock.
The interest payment from a bond.



Quiz Start Time: 03:20 PM Time Left 86
sec(s)


Question # 6 of 15 ( Start time: 03:25:08 PM ) Total Marks: 1
If you invest Rs.400 today in a savings account paying 8 percent interest per year, how much will you have in the account at the end of three years if the interest is compounded annually?
Select correct option:

Rs.325
Rs.1,299
Rs.504
Rs.609





Quiz Start Time: 03:20 PM Time Left 87
sec(s)


Question # 7 of 15 ( Start time: 03:26:27 PM ) Total Marks: 1
Which of the following would lower a firm's operating break-even point?
Select correct option:

An increase in the cost of goods sold
An increase in selling price
An increase in wages paid to employees
An increase in total sales






Quiz Start Time: 03:20 PM Time Left 87
sec(s)


Question # 8 of 15 ( Start time: 03:27:46 PM ) Total Marks: 1
Which of the following is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume?
Select correct option:

Technical analysis
Fundamental analysis
Common size analysis
Ration analysis





Quiz Start Time: 03:20 PM Time Left 88
sec(s)


Question # 9 of 15 ( Start time: 03:29:07 PM ) Total Marks: 1
A firm can lower its breakeven level by doing which of the following actions?
Select correct option:

Lowering direct cost
Increasing variable cost
Increasing direct cost
Lowering sales price





Quiz Start Time: 03:20 PM Time Left 88
sec(s)


Question # 10 of 15 ( Start time: 03:29:55 PM ) Total Marks: 1
Which of the following would NOT improve the current ratio?
Select correct option:

Borrow short term to finance additional fixed assets.
Issue long-term debt to buy inventory
Sell common stock to reduce current liabilities.
Sell fixed assets to reduce accounts payable.






Quiz Start Time: 03:20 PM Time Left 89
sec(s)


Question # 11 of 15 ( Start time: 03:30:32 PM ) Total Marks: 1
A company has fixed costs of $50,000 and variable costs per unit of output of $8. If its sole product sells for $18, what is the break-even quantity of output?
Select correct option:

2,500
5,000
1,500
7,500






Quiz Start Time: 03:20 PM Time Left 88
sec(s)


Question # 12 of 15 ( Start time: 03:30:43 PM ) Total Marks: 1
If sensitivity analysis concludes that the largest impact on profits would come from changes in the sales level, then which of the following recommendations should be considered?
Select correct option:

Fixed costs should be traded for variable costs
Variable costs should be traded for fixed costs.
The project should not be undertaken.
Additional marketing analysis may be beneficial before proceeding.





Quiz Start Time: 03:20 PM Time Left 88
sec(s)


Question # 13 of 15 ( Start time: 03:32:12 PM ) Total Marks: 1
What's the value to you of a $1,000 face-value bond with an 8% coupon rate when your required rate of return is 15 percent?
Select correct option:

More than its face value
Less than its face value.
$1,000.
Can not be determined




Quiz Start Time: 03:20 PM Time Left 89
sec(s)


Question # 14 of 15 ( Start time: 03:33:25 PM ) Total Marks: 1
A company has a dividend yield of 8%. If its dividend is expected to grow at a constant rate of 5%, what must be the expected rate of return on the company’s stock?
Select correct option:

14%
13%
12%
10%

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