MGT201 Quiz 1 Solution and Discussion
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What is the additional amount a borrower must pay to lender to compensate for assuming the risk associated with non-payment?
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The formula to calculate future value of an amount using continuous compounding is:
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@zareen said in MGT201 Quiz 1 Solution and Discussion:
The formula to calculate future value of an amount using continuous compounding is:
Future Value (FV) = PV x [1 + (i / n)](n x t) Calculating the limit of this formula as n approaches infinity (per the definition of continuous compounding) results in the formula for continuously compounded interest: FV = PV x e (i x t), where e is the mathematical constant approximated as 2.7183.
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Which of the following statements is true for “Portfolio Diversification”?
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The ____________ presents a company’s financial position at the specified date.
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@zareen said in MGT201 Quiz 1 Solution and Discussion:
The ____________ presents a company’s financial position at the specified date.
balance sheet
The balance sheet presents a company’s financial position at the end of a specified date. Some describe the balance sheet as a “snapshot” of the company’s financial position at a point (a moment or an instant) in time. -
Long term debt and corporate stocks is the financial instrument of which of the following market?
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@zareen said in MGT201 Quiz 1 Solution and Discussion:
Long term debt and corporate stocks is the financial instrument of which of the following market?
Markets. News. Company News · Markets News · Trading News · Political News · Trends … These assets can be cash, a contractual right to deliver or receive cash … OTC is a market or process whereby securities–that are not listed on … Short-term debt-based financial instruments last for one year or less.
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“Which of the following is FALSE about Perpetuity?” MGT201
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When the bond approaches its maturity, the market value of the bond approaches to which of the following?
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@zareen said in MGT201 Quiz 1 Solution and Discussion:
When the bond approaches its maturity, the market value of the bond approaches to which of the following?
Intrinsic value
Book value
Par value (Correct)
Historic cost -
Which of the following refers to the risk associated with interest rate uncertainty?
Select correct option: -
@zareen said in MGT201 Quiz 1 Solution and Discussion:
Which of the following refers to the risk associated with interest rate uncertainty?
Select correct option:Default risk premium (Correct)
Sovereign Risk Premium
Market risk premium
Maturity risk premium -
When the zero coupon bond approaches to its maturity, the market value of the bond approaches to which of the following?
Select correct option: -
@zareen said in MGT201 Quiz 1 Solution and Discussion:
When the zero coupon bond approaches to its maturity, the market value of the bond approaches to which of the following?
Select correct option:Intrinsic value
Book value (Correct)
Par value
Historic cost -
What is difference between shares and bonds?
Select correct option:
Bonds are representing ownership whereas shares are not
Shares are representing ownership whereas bonds are not (Correct)
Shares and bonds both represent equity
Shares and bond both represent liabilities