MGT201 Quiz 1 Solution and Discussion
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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) -
Which of the following term may be defined as incidental cash flows that arise because of the effect of new project on the running business?
Select correct option:
Sunk cost
Opportunity cost
Externalities (Correct)
Contingencies -
What is the present value of Rs. 3,500,000 to be paid at the end of 50 years if the correct risk adjusted interest rate is 18%?
Select correct option:
Rs.105,000
Rs.1,500,000
Rs.3975,000
Rs. 350,000 -
Which if the following refers to capital budgeting?
Select correct option:
Investment in long-term liabilities (Correct)
Investment in fixed assets
Investment in current assets
Investment in short-term liabilities