MGT201 Quiz 1 Solution and Discussion
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What should be the focal point of financial management in a firm?
Select correct option:
The number and types of products or services provided by the firm
The minimization of the amount of taxes paid by the firm
The creation of value for shareholders
The dollars profits earned by the firm -
With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs. 20,000 initial investment?
Select correct option:
Rs.52,000
Rs.93,219 (Correct)
Rs.99,061
Rs.915,240 -
Who or what is a person or institution designated by a bond issuer as the official representative of the bondholders?
Select correct option:
Indenture
Debenture
Bond
Bond trustee (Correct) -
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)
None of the given options -
Which of the following refers to bringing the future cash flow to the present time?
Select correct option:
Net present value
Discounting (Correct)
Opportunity cost
Internal rate of return -
Given no change in required returns, the price of a stock whose dividend is constant will________.
Select correct option:
Decrease over time at a rate of r%
Remain unchanged (Correct)
Increase over time at a rate of r%
Decrease over time at a rate equal to the dividend growth rate -
Which of the following refers to a highly competitive market where good business ideas are taken up immediately?
Select correct option:
Capital market
Efficient market (Correct)
Money market
Real asset market -
Which of the following is the Double Entry Principle?
Select correct option:
Assets + Liabilities = Shareholders’ Equity
Assets = Liabilities + Shareholders’ Equity
Liabilities = Assets + Shareholders’ Equity (Correct)
None of the given options -
Which of the following equation is NOT correct?
Select correct option:
Gross Revenue – Admin & Operating Expenses = Operating Revenue
Other Expenses + Other Revenue = EBIT (Correct)
EBIT – Financial Charges & Interest = EBT
Net Income – Dividends = Retained Earning -
With continuous compounding at 8 percent for 20 years, what is the approximate future value of a Rs. 20,000 initial investment?
Select correct option:
Rs.52,000
Rs.93,219 (Correct)
Rs.99,061
Rs.915,240 -
To increase a given future value, the discount rate should be adjusted ________.
Select correct option:
Upward
Downward (Correct)
First upward and then downward
None of the given options -
Which of the following value of the shares changes with investor’s perception about the company’s future and supply and demand situation?
Select correct option:
Par value
Market value (Correct)
Intrinsic value
Face value -
Which of the following refers to time value of money concept?
Select correct option:
A rupee in one’s hand at present is worth less than the rupee that one is going to receive tomorrow (Correct)
A rupee in one’s hand at present is worth more than the rupee that one is going to receive tomorrow
A rupee in one’s hand at present is worth same as the rupee that one is going to receive tomorrow
All of the given options -
Which of the following is NOT true regarding an ordinary annuity?
Select correct option:
It is a series of equal cash flows
Cash flows occur for a specific time period (Correct)
Payments are made at the start of each period
It is also known as deferred annuity -
Which of the following includes the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization?
Select correct option:
Financial accounting
Financial management (Correct)
Financial engineering
Financial budgeting -
Which of the following is FALSE about Perpetuity?
Select correct option:
It is a series of cash flows
Cash flows occur for a specific time period
Its cash flows are identical (Correct)