Financial Management - MGT201 Spring 2005 Final Term Paper.pdf
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Financial Management - MGT201 Spring 2010 Final Term Paper Session 2.doc
Financial Management - MGT201 Spring 2010 Final Term Paper Session 3.doc

Where there is single period capital rationing, what is the most sensible way of making investment decisions?

Select correct option:
Choose all projects with a positive NPV
Group projects together to allocate the funds available and select the group of projects with the highest NPV
Choose the project with the highest NPV
Calculate IRR and select the projects with the highest IRRs

Group projects together to allocate the funds available and select the group of projects with the highest NPV

Select correct option:
Choose all projects with a positive NPV
Group projects together to allocate the funds available and select the group of projects with the highest NPV
Choose the project with the highest NPV
Calculate IRR and select the projects with the highest IRRs

_______ means expanding the number of investments which cover different kinds of stocks.
Select correct option:
Diversification
Standard deviation
Variance
Covariance

Diversification means expanding the number of investments which cover different kinds of stocks.

How dividend yield on a stock is similar to the current yield on a bond?
Select correct option:
Both represent how much each security’s price will increase in a year
Both represent the security’s annual income divided by its price
Both are an accurate representation of the total annual return an investor can expect to earn by owning the security
Both are quarterly yields that must be annualized

Both represent the security’s annual income divided by its price

Which of the following statements regarding covariance is correct?
Select correct option:
Covariance always lies in the range -1 to +1
Covariance, because it involves a squared value, must always be a positive number (or zero)
Low covariances among returns for different securities leads to high portfolio risk
Covariances can take on positive, negative, or zero values

Covariances can take on positive, negative, or zero values

Which of the following is similar between Return on investment and Payback period techniques of Capital budgeting?
Select correct option:
Involvement of interest rate while making calculations
Do not account for time value of money
Tricky and complicated methods
All of the given options

Do not account for time value of money

What is a legal agreement, also called the deed of trust, between the corporation issuing bonds and the bondholders that establish the terms of the bond issue?
Select correct option:
Indenture
Debenture
Bond
Bond trustee

Indenture

Which of the following costs would be considered a fixed cost?

Depreciation costs would be considered a fixed cost

Which of the following is NOT the type of Hybrid organizations?

Sole Proprietorship is not a type of Hybrid organizations

Which of the following would express the negative net worth of a firm?

Experiencing accounting insolvency

Select correct option:
Experiencing a business failure
In legal bankruptcy
Experiencing technical insolvency
Experiencing accounting insolvency

What would you expect to happen to the price of a share of stock on the day it goes ex- dividend?

The price should decrease by the amount of the dividend

Select correct option:
The price should increase by the amount of the dividend
The price should decrease by the amount of the dividend
The price should decrease by one-half the amount of the dividend
The price should remain constant

The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as Expected return.

Expected return

Select correct option:
Probability distribution
Expected return
Standard deviation
Coefficient of variation

Which of the following is related to the use Lower financial leverage?

Common equity financing