MGT201 Quiz 1 Solution and Discussion
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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 -
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 -
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
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@zareen said in MGT201 Quiz 1 Solution and Discussion:
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
Capital market
Efficient market (Correct)
Money market
Real asset market -
A technique that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:
Select correct option:Pay back period (Correct)
Internal rate of return
Net present value
Profitability index -
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 (Correct)
Cash budget
Cash flow statement
None of the given options -
Which of the following statements is TRUE regarding Permanent Accounts?
Select correct option:Accounts that are found on Income Statement
Accounts that are found on Statement of Retained Earnings
Accounts that are found on Balance Sheet
All of the given options -
The statement of cash flows reports a firm’s cash flows segregated into which of the following categorical order?
Select correct option:Operating, investing, and financing
Investing, operating, and financing
Financing, operating and investing
Financing, investing, and operating -
Which of the following needs to be excluded while we calculate the incremental cash flows?
Select correct option:Depreciation
Sunk cost (Correct)
Opportunity cost
Non-cash item -
Which of the following is a capital budgeting technique that is NOT considered as discounted cash flow method?
Select correct option:Payback period (Correct)
Internal rate of return
Net present value
Profitability index -
The value of a bond is directly derived from which of the following?
Select correct option:Cash flows
Coupon receipts (Correct)
Par recovery at maturity
All of the given options -
The value of a bond is directly derived from which of the following?
Select correct option:Cash flows
Coupon receipts (Correct)
Par recovery at maturity
All of the given options -
A technique that tells us the number of years required to recover our initial cash investment based on the project’s expected cash flows is:
Select correct option:
Pay back period (Correct)
Internal rate of return
Net present value
Profitability index -
Which of the following is NOT an example of a financial intermediary?
Select correct option:
Wisconsin S&L, a savings and loan association
Strong Capital Appreciation, a mutual fund
Microsoft Corporation, a software firm (Correct)
College Credit, a credit union -
When a bond will sell at a discount?
Select correct option:
The coupon rate is greater than the current yield and the current yield is greater than yield to maturity
The coupon rate is greater than yield to maturity
The coupon rate is less than the current yield and the current yield is greater than the yield to maturity
The coupon rate is less than the current yield and the current yield is less than yield to maturity (Correct) -
When bonds are issued, under which of the following category the value of the bond appears?
Select correct option:
Equity
Fixed assets
Short term loan
Long term loan (Correct)