SOLVED MGT502 Quiz 1 Solution and Discussion

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MGT502 Quiz 1 Solved

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Which of the following is a strategy of risk management that is employed by investors to reduce or minimize the chances of loss? MGT201
Diversification

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The pay out ratio of XYZ Company is 25%. What is its Plow back ratio? MGT201
100%

25%
100%
75%
125%

The measure of retained earnings is known as the retention ratio. The higher the retention ratio is, the lower the payout ratio is. For example, if a company reports a net income of $100,000 and issues $25,000 in dividends, the payout ratio would be $25,000 / $100,000 = 25%.

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If ABC Company is taking legal action against a third party for breach of contract and its lawyers are confident of winning this case as well as receiving compensation, then this would be reported as __________ by ABC Company.

Current asset

Long term asset

Contingent asset

Tangible asset

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Upward sloping yield curve implies that: MGT201
Short-term debt instruments have a lower yield than long-term debt instruments

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…is a series of equal payments at the beginning of each period. MGT201
Ordinary Annuity

1. Ordinary Annuity
   An ordinary annuity, also known as deferred annuity, consists of a series of equal payments at the end of
   each period.

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Which of the following is the main objective of ‘Economics’? MGT201
Profit maximization

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Which of the following is not a Profitability ratio? MGT201
Net Profit Margin

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An ____________is a series of fixed payments, which might be over a fixed number of years, or over the lifetime of an individual, or both

An annuity is a series of fixed payments, which might be over a fixed number of years, or over
the lifetime of an individual, or both. The commonly known types of annuities we see are the monthly
rent, and monthly mortgage payments, or insurance premiums.

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Which of the following document/s is/are used to ? MGT201
Cash Budget

1. Cash Budget
2. Pro Forma Balance Sheet
3. Pro Forma Income Statement

All of given

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Suppose a company has paid Rs. 50,000 a dividend to its shareholders while net income for the year was Rs. 500,000. What is the payout-ratio of the company?