## MGT201 Quiz Mega File

Which group of ratios measures a firm’s ability to meet short-term obligations?
Select correct option:

Liquidity ratios
Debt ratios
Coverage ratios
Profitability ratios

You are considering two investment proposals, project A and project B. B’s expected net present value is Rs. 1,000 greater than that for A and A’s dispersion of net present value is less than that for B. On the basis of risk and return, what would be your conclusion?
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Project A dominates project B
Project B dominates project A
Neither project dominates the other in terms of risk and return
Incomplete information

The value of direct claim security is derived from which of the following?
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Fundamental analysis
Underlying real asset
Supply and demand of securities in the market
All of the given options

The risk that covers events like unexpected changes in the economy refers to:
Select correct option:

Systematic risk
Unsystematic risk
Total risk
All of the above

Choose the correct statement regarding the calculations of NPV (Net Present Value).
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Exclude sunk costs and include opportunity costs and externalities
Exclude sunk costs and externalities and include opportunity costs
Include sunk costs, opportunity costs, and externalities
Exclude sunk costs and opportunity costs and include externalities

When the bond approaches its maturity, the market value of the bond approaches to which of the following?
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Intrinsic value
Book value
Par value
Historic cost

Choose among the followings, the correct statement regarding every journal entry.
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Sum of Debits = Sum of Credits
Sum of Debits >Sum of Credits
Sum of Debits < Sum of Credits
None of the given options

A 5-year annuity due has periodic cash flows of Rs.100 each year. If the interest rate is 8 percent, the future value of this annuity is closest to which of the following equations?
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(Rs.100)(FVIFA at 8% for 5 periods)
(Rs.100)(FVIFA at 8% for 4 periods)(1.08)
(Rs.100) (FVIFA at 8% for 5 periods)(1.08)
(Rs.100)(FVIFA at 8% for 4 periods) + Rs.100

Which of the following would be considered a cash-flow item from an “operating” activity?
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Cash outflow to the government for taxes
Cash outflow to shareholders as dividends
Cash inflow to the firm from selling new common equity shares
Cash outflow to purchase bonds issued by another company

What type of long-term 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?
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Long-term debt
Preferred stock
Common stock
None of the given options

The DuPont Approach breaks down the earning power on shareholders’ book value (ROE) as follows: ROE = ________.
Select correct option:

Net profit margin × Total asset turnover × Equity multiplier
Total asset turnover × Gross profit margin × Debt ratio
Total asset turnover × Net profit margin
Total asset turnover × Gross profit margin × Equity multiplier

Which of the following will NOT equate the future value of cash inflows to the present value of cash outflows?
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Discount rate
Profitability index
Internal rate of return
Multiple Internal rate of return

Which of the following would NOT improve the current ratio?
Select correct option:

Borrow short term to finance additional fixed assets
Issue long-term debt to buy inventory

Sell common stock to reduce current liabilities
Sell fixed assets to reduce accounts payable

The RBS pays 5.60%, compounded daily (based on 360 days), on a 9-month certificate of deposit, if you deposit Rs.20, 000 you would expect to earn around________ in interest.
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Rs.840
Rs.858
Rs.1,032
Rs.1,121

Which of the following should be included while calculating the cash flows associated with a project?
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Cash flows at the time of investment
Cash flows during the life of project
Cash flows at the termination date
All of the given options

Which of the following is NOT the type of Hybrid organizations?
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S-Type Corporation
Limited Liability Partnership
Sole Proprietorship
Professional Corporation

When the bond approaches its maturity, the market value of the bond approaches to which of the following?
Select correct option:
Intrinsic value
Book value
Par value
Historic cost

Which of the following is the risk of investing funds in another country?
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________ is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification.
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Systematic risk
Standard deviation
Unsystematic risk
Coefficient of variation