MGT201 Quiz 1 Solution and Discussion


@zareen said in MGT201 Quiz 1 Solution and Discussion:
Which of the following document/s is/are used to prepare a financial plan?
A financial plan documents an individual’s longterm financial goals and … The following steps in creating a financial plan may, of course, … You can’t create a financial plan without knowing where your money is … Don’t overlook cash withdrawals that may be used on sundries from shampoo to sodas.

Which of the following document/s is/are used to prepare a financial plan?

MGT201 vuzs.info Question # 15 of 15 ( Start time: 11:11:06 PM ) Total M  1
Effective interest rate is different from nominal rate of interest because:
Select correct option:Nominal interest rate ignores compounding
Nominal interest rate includes frequency of compounding (Correct)
Periodic interest rate ignores the effect of inflation
All of the given options

______ are also known as Spontaneous Financing.
Select correct option:Current liabilities
Current assets (Correct)
Fixed assets
Longterm liabilities

What is the present value of Rs.1,000 to be paid at the end of 5 years if the correct risk adjusted interest rate is 8%?
Select correct option:Rs.714
Rs.1,462
Rs.322.69
Rs.401.98

What is the additional amount a borrower must pay to lender to compensate for assuming the risk associated with nonpayment?
Select correct option:Default risk premium
Sovereign Risk Premium (Correct)
Market risk premium
Maturity risk premium

What is the most important criteria in capital budgeting?
Select correct option:Return on investment
Profitability index (Correct)
Net present value
Pay back period

What type of longterm financing most likely has the following features: 1) it has an infinite life, 2) it pays dividends, and 3) its cash flows are expected to be a constant annuity stream?
Select correct option:Longterm debt
Preferred stock
Common stock
None of the given options

Which of the following is/are the characteristic(s) of Perpetuity?
Select correct option:It is an annuity
It has no definite end (Correct)
It is a constant stream of identical cash flows
All of the given options

Which of the following allows to graphically depicting the timing of the cash flows as well as their nature as either inflows or outflows?
Select correct option:Cash flow diagram
Cash budget
Cash flow statement
None of the given options (Correct)

Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:
Select correct option:Magnitude of expected cash flows
Timing of expected cash flows
Both timing and magnitude of cash flows
None of the given options

Discounted cash flow methods provide a more objective basis for evaluating and selecting an investment project. These methods take into account:
Select correct option:Magnitude of expected cash flows
Timing of expected cash flows
Both timing and magnitude of cash flows
None of the given options

_______ is equal to (common shareholders’ equity/common shares outstanding).
Select correct option:Book value per share
Liquidation value per share (Correct)
Market value per share
None of the above

The logic behind _______ is that instead of looking at net cash flows you look at cash inflows and outflows separately for each point in time.
Select correct option:IRR
MIRR (Correct)
PV
NPV

What is the present value of Rs.8,000 to be paid at the end of three years if interest rate is 11%?
Select correct option:Rs.6,015
Rs.4,872
Rs.6,725
Rs.1,842
6:59 PM