FIN622 QUIZ

Quiz Start Time: 11:05 AM Time Left 67
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Question # 1 of 15 ( Start time: 11:05:16 AM ) Total Marks: 1
Which one of the following statements describe "Shareholders’ wealth" in a firm?
Select correct option:

The number of people employed in the firm
The book value of the firm's assets less the book value of its liabilities
The market price per share of the firm's common stock
The amount of salary paid to its employees







Quiz Start Time: 11:05 AM Time Left 88
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Question # 2 of 15 ( Start time: 11:05:53 AM ) Total Marks: 1
A company has fixed costs of $50,000 and variable costs per unit of output of $8. If its sole product sells for $18, what is the break-even quantity of output?
Select correct option:

2,500
5,000
1,500
7,500








Quiz Start Time: 11:05 AM Time Left 89
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Question # 3 of 15 ( Start time: 11:06:01 AM ) Total Marks: 1
Suppose you have a 2-stocks portfolio, which consists of Stock A and Stock B. If stock A has a beta value of 1.8 and stock B has a beta value of 0.68, and your investment in stock A and stocks B is equal, then the beta of this 2-stock portfolio would be equal to:
Select correct option:

1.20
1.24
1.30
1.45







Quiz Start Time: 11:05 AM Time Left 87
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Question # 4 of 15 ( Start time: 11:06:45 AM ) Total Marks: 1
Suppose you wish to set aside Rs.2,000 at the beginning of each of the next 10 years (the first Rs.2,000 deposit would be made now) in an account paying 12 percent compounded annually. Approximately how much will you accumulate at the end of 10 years?
Select correct option:

Rs.22,863
Rs.35,097
Rs.39,310
Rs.25,151






Quiz Start Time: 11:05 AM Time Left 89
sec(s)


Question # 5 of 15 ( Start time: 11:06:55 AM ) Total Marks: 1
If a creditor wanted to know if a potential customer paid its bills on time, the creditor could look at the potential customer's:
Select correct option:

Current ratio.
Acid ratio.
Average age of accounts payable.
Average age of accounts receivable







Quiz Start Time: 11:05 AM Time Left 89
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Question # 6 of 15 ( Start time: 11:07:26 AM ) Total Marks: 1
Which of the following statement best describe the term Market Correction?
Select correct option:

Market Correction refers to the situation where equilibrium of supply & demand of shares occurs in the market
Market correction occurs when shares’ intrinsic values becomes equal to face values
Market Correction occurs when there is a boom in the economy
Market Correction occurs when inflation rate is above the market interest rate








Quiz Start Time: 11:05 AM Time Left 85
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Question # 7 of 15 ( Start time: 11:07:40 AM ) Total Marks: 1
Which of the following changes will occur if a bond's yield-to-maturity increases, keeping other things equal ?
Select correct option:

Its price will rise
Its price will remain unchanged
Its price will fall.
Can not be determined







Quiz Start Time: 11:05 AM Time Left 88
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Question # 8 of 15 ( Start time: 11:07:51 AM ) Total Marks: 1
With respect to Cash flow statement, “Decrease in current liability” would be considered as a:
Select correct option:

Cash outflow
Cash inflow
Sometimes as cash inflow and sometimes as cash outflow
Cannot be determined









Quiz Start Time: 11:05 AM Time Left 89
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Question # 9 of 15 ( Start time: 11:08:03 AM ) Total Marks: 1
Which of the following best define the term 'Capital Structure'?
Select correct option:

The proportion of debt and equity capital used by a firm
The proportion of long-term liabilities used by a firm
The proportion of equity used by a firm
The proportion of short-term bank loan used by a firm








Quiz Start Time: 11:05 AM Time Left 87
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Question # 10 of 15 ( Start time: 11:08:13 AM ) Total Marks: 1
Holding everything else constant, increasing fixed costs ________ the firm's break-even point.
Select correct option:

Decreases
Increases the covariance of
Increases
Does not affect







Quiz Start Time: 11:05 AM Time Left 89
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Question # 12 of 15 ( Start time: 11:08:44 AM ) Total Marks: 1
The term structure of interest rates refers to the relationship between yield and:
Select correct option:

Rating, for securities with the same maturity.
Marketability, for securities with the same tax status.
Maturity, for the same security class.
Risk, for securities with the same maturity.








Quiz Start Time: 11:05 AM Time Left 87
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Question # 13 of 15 ( Start time: 11:09:40 AM ) Total Marks: 1
Dividend discount Model states that today’s price of a stock is equal to:
Select correct option:

The Present Value of all future dividends of the stock
The Present Value of the face value of the stock
The Present Value of the Sales price of the stock
The Present Value of the book value of the stock







Quiz Start Time: 11:05 AM Time Left 89
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Question # 14 of 15 ( Start time: 11:10:08 AM ) Total Marks: 1
Which of the following is a long-term source of financing for a firm?
Select correct option:

Corporate Bonds
Money Market instruments
Trade credit
Accounts Payables



















































Quiz Start Time: 11:20 AM Time Left 62
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Question # 1 of 15 ( Start time: 11:20:58 AM ) Total Marks: 1
Which of the following stock would provide a regular income to the investors?
Select correct option:

Growth stock
Income stock
Aggressive stock
Defensive stock





Quiz Start Time: 11:20 AM Time Left 88
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Question # 2 of 15 ( Start time: 11:21:44 AM ) Total Marks: 1
Suppose that market now requires an 8 percent return for a bond that was issued some years ago with a 10 percent coupon. This bond will currently be priced:
Select correct option:

At a premium over face value.
At par value.
At a discount from face value.
At face value.







Quiz Start Time: 11:20 AM Time Left 89
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Question # 3 of 15 ( Start time: 11:21:55 AM ) Total Marks: 1
Which of the following is a measure of risk of an asset?
Select correct option:

Weighted average
Standard deviation
Probability distribution
Geometric mean








Quiz Start Time: 11:20 AM Time Left 89
sec(s)


Question # 4 of 15 ( Start time: 11:22:09 AM ) Total Marks: 1
Suppose you wish to set aside Rs.2,000 at the beginning of each of the next 10 years (the first Rs.2,000 deposit would be made now) in an account paying 12 percent compounded annually. Approximately how much will you accumulate at the end of 10 years?
Select correct option:

Rs.22,863
Rs.35,097
Rs.39,310
Rs.25,151








Quiz Start Time: 11:20 AM Time Left 89
sec(s)


Question # 5 of 15 ( Start time: 11:22:23 AM ) Total Marks: 1
What is the first step to determine optimal cash balance using Miller Orr Model?
Select correct option:

Calculating the upper limit of cash balance
Determining the lower limit of cash balance
Observing interest rates
Calculating cash flow variations








Quiz Start Time: 11:20 AM Time Left 88
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Question # 6 of 15 ( Start time: 11:22:41 AM ) Total Marks: 1
Virgo Airlines will pay Rs.4.00 dividend next year on its common stock, which is currently selling at Rs.100 per share. What is the market's required return on this investment if the dividend is expected to grow at 5% forever?
Select correct option:

4 percent.
5 percent.
7 percent.
9 percent.








Quiz Start Time: 11:20 AM Time Left 82
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Question # 7 of 15 ( Start time: 11:23:08 AM ) Total Marks: 1
What is the future value of Rs.1 invested for 10 years if the 12 percent annual rate of interest is compounded quarterly?
Select correct option:

Rs.2.30
Rs.3.26
Rs.3.25
Rs.2.93








Quiz Start Time: 11:20 AM Time Left 89
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Question # 8 of 15 ( Start time: 11:23:36 AM ) Total Marks: 1
Which of the following is known as market portfolio?
Select correct option:

A portfolio consists of all risk free securities available in the market
A portfolio consists of securities of the same industry
A portfolio consists of all aggressive securities available in the market
A portfolio consists of all securities available in the market








Quiz Start Time: 11:20 AM Time Left 89
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Question # 9 of 15 ( Start time: 11:24:06 AM ) Total Marks: 1
What is the risk of using a conservative approach to financing assets?
Select correct option:

Borrowing only what is necessary
Usually borrowing at a higher cost
Uncertain future interest costs
Frequent refinancing of debt oblige








Quiz Start Time: 11:20 AM Time Left 89
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Question # 10 of 15 ( Start time: 11:24:32 AM ) Total Marks: 1
What effect will a reduction in the cost of capital have on the accounting break-even level of revenues?
Select correct option:

It raises the break-even level.
It reduces the break-even level.
It has no effect on the break-even level.
This cannot be determined without knowing the length of the investment horizon.







Quiz Start Time: 11:20 AM Time Left 89
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Question # 11 of 15 ( Start time: 11:24:50 AM ) Total Marks: 1
What is the main purpose of constructing a portfolio of financial assets?
Select correct option:

To maximize risk and minimize the return
To minimize the risk and minimize the return
To maximize the return and minimize the risk
To minimize the return and minimize the risk








Quiz Start Time: 11:20 AM Time Left 89
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Question # 12 of 15 ( Start time: 11:25:13 AM ) Total Marks: 1
Holmes Aircraft recently announced an increase in its net income, yet its net cash flow declined relative to last year. Which of the following could explain this performance?
Select correct option:

The company’s taxes increased.
The company’s depreciation expense declined.
The company’s operating income declined.
All of the given statements are correct.









Quiz Start Time: 11:20 AM Time Left 88
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Question # 13 of 15 ( Start time: 11:25:48 AM ) Total Marks: 1
Which of the following will precede “FEEDBACK” in the financial planning process?
Select correct option:

Choosing strategy
Implementation of the plan
Comparing budgeted and actual results
Taking corrective measures








Quiz Start Time: 11:20 AM Time Left 86
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Question # 14 of 15 ( Start time: 11:26:12 AM ) Total Marks: 1
A firm is holding cash to take advantage of any temporary business opportunity. This is an example of the ________ motive for holding cash.
Select correct option:

Capital needs
Precautionary
Transaction
Speculative