# MGT201 Mid and Final Term Past Solved Paper

• 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

• 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

• _______ 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.

• _______ 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

• 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

• 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

• 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

• 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

• 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

• 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

• 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

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

Depreciation costs would be considered a fixed cost

• Which of the following costs would be considered a fixed cost?
Select correct option:
Raw materials
Depreciation
Production labor  25

2

1

4

3

12

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• ## MGT201 Quiz 4 Solution and Discussion MGT201 - Financial Management • mgt201 quiz 4 solution discussion fall 2019 • • zareen

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