Financial Management - MGT201 Spring 2005 Final Term Paper.pdf

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Financial Management - MGT201 Spring 2010 Final Term Paper Session 2.doc

Financial Management - MGT201 Spring 2010 Final Term Paper Session 3.doc

Where there is single period capital rationing, what is 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

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

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

_______ means expanding the number of investments which cover different kinds of stocks.

Select correct option:

Diversification

Standard deviation

Variance

Covariance

**Diversification** means expanding the number of investments which cover different kinds of stocks.

Select correct option:

Diversification

Standard deviation

Variance

Covariance ]]>

How dividend yield on a stock is similar to the current yield on a bond?

Select correct option:

Both represent how much each security’s price will increase in a year

Both represent the security’s annual income divided by its price

Both are an accurate representation of the total annual return an investor can expect to earn by owning the security

Both are quarterly yields that must be annualized

**Both represent the security’s annual income divided by its price**

Select correct option:

Both represent how much each security’s price will increase in a year

Both represent the security’s annual income divided by its price

Both are an accurate representation of the total annual return an investor can expect to earn by owning the security

Both are quarterly yields that must be annualized ]]>

Which of the following statements regarding covariance is correct?

Select correct option:

Covariance always lies in the range -1 to +1

Covariance, because it involves a squared value, must always be a positive number (or zero)

Low covariances among returns for different securities leads to high portfolio risk

Covariances can take on positive, negative, or zero values

**Covariances can take on positive, negative, or zero values**

Select correct option:

Covariance always lies in the range -1 to +1

Covariance, because it involves a squared value, must always be a positive number (or zero)

Low covariances among returns for different securities leads to high portfolio risk

Covariances can take on positive, negative, or zero values ]]>

Which of the following is similar between Return on investment and Payback period techniques of Capital budgeting?

Select correct option:

Involvement of interest rate while making calculations

Do not account for time value of money

Tricky and complicated methods

All of the given options

**Do not account for time value of money**

Select correct option:

Involvement of interest rate while making calculations

Do not account for time value of money

Tricky and complicated methods

All of the given options ]]>

What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue?

Select correct option:

Indenture

Debenture

Bond

Bond trustee

**Indenture**

Select correct option:

Indenture

Debenture

Bond

Bond trustee ]]>

Which of the following costs would be considered a fixed cost?

**Depreciation** costs would be considered a fixed cost

Select correct option:

Raw materials

Depreciation

Bad-debt losses

Production labor ]]>

Which of the following is NOT the type of Hybrid organizations?

Sole Proprietorship is not a type of Hybrid organizations

]]>Select correct option:

S-Type Corporation

Limited Liability

Partnership

Sole Proprietorship

Professional Corporation ]]>

Which of the following would express the negative net worth of a firm?

Experiencing accounting insolvency

]]>Select correct option:

Experiencing a business failure

In legal bankruptcy

Experiencing technical insolvency

Experiencing accounting insolvency

What would you expect to happen to the price of a share of stock on the day it goes ex- dividend?

The price should decrease by the amount of the dividend

]]>Select correct option:

The price should increase by the amount of the dividend

The price should decrease by the amount of the dividend

The price should decrease by one-half the amount of the dividend

The price should remain constant

The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as

Expected return.

Expected return

]]>Select correct option:

Probability distribution

Expected return

Standard deviation

Coefficient of variation

Which of the following is related to the use Lower financial leverage?

Common equity financing

]]>