MGT201 Final Term MCQs by Asad Munir

MGT201 Important MCQ’s Related to Finaltem Papers.

Q1. of 15 ( Start time: 12:09:58 AM ) Total Marks: 1

An annuity due is always worth _____ a comparable annuity.

Less than More than Equal to Can not be found from the given information

Q2. of 15 ( Start time: 12:11:10 AM ) Total Marks: 1

Where the stock points will lie, if a stock is a part of totally diversified portfolio?

It will lie below the regression line It will line above the regression line It will line exactly on the regression line It will be tangent to the regression line

Q3. of 15 ( Start time: 12:11:47 AM ) Total Marks: 1

What is the easiest method to diversify away firm-specific risks?

To buy stocks with a beta of 1.0 To build a portfolio with 5-10 individual stocks To purchase the shares of a mutual fund To purchase stocks that plot above the security market line

Q4. of 15 ( Start time: 12:12:23 AM ) Total Marks: 1

Nominal Interest Rate is also known as:

Effective interest Rate Annual percentage rate Periodic interest rate Required interest rate

Q5. of 15 ( Start time: 12:13:02 AM ) Total Marks: 1

When taxes are considered, the value of a levered firm equals the value of the________.

Unlevered firm Unlevered firm plus the value of the debt Unlevered firm plus the present value of the tax shield Unlevered firm plus the value of the debt plus the value of the tax shield

Q6. of 15 ( Start time: 12:14:15 AM ) Total Marks: 1

The __________ the coefficient of variation ________ the relative risk of the investment.

Larger; Larger Larger; Smaller Smaller; Larger Smaller; Smaller

Q7. of 15 ( Start time: 12:15:05 AM ) Total Marks: 1

Which of the following is correct regarding the opportunity cost of capital for a project?

The opportunity cost of capital is the return that investors give up by investing in the project rather than in securities of equivalent risk. Financial managers use the capital asset pricing model to estimate the opportunity cost of capital The company cost of capital is the expected rate of return demanded by investors in a company

Q8. of 15 ( Start time: 12:15:46 AM ) Total Marks: 1

For which of the following costs is it generally necessary to apply a tax adjustment to a yield measure?

Cost of debt Cost of preferred stock Cost of common equity Cost of retained earnings

Q9. of 15 ( Start time: 12:16:51 AM ) Total Marks: 1

What is difference between shares and bonds?

Bonds are representing ownership whereas shares are not Shares are representing ownership whereas bonds are not Shares and bonds both represent equity Shares and bond both represent liabilities

Q10. of 15 ( Start time: 12:17:16 AM ) Total Marks: 1

Which of the followings expressed the proposition that the cost of equity is a positive linear function of capital structure?

The Capital Asset Pricing Model M&M Proposition I M&M Proposition II The Law of One Price

Q11. of 15 ( Start time: 12:17:57 AM ) Total Marks: 1

The current yield on a bond is equal to ________.

Annual interest divided by the current market price The yield to maturity Annual interest divided by the par value The internal rate of return

Q12. of 15 ( Start time: 12:18:40 AM ) Total Marks: 1

When a bond will sell at a discount?

The coupon rate is greater than the current yield and the current yield is greater than yield to maturity The coupon rate is greater than yield to maturity The coupon rate is less than the current yield and the current yield is greater than the yield to maturity The coupon rate is less than the current yield and the current yield is less than yield to maturity

Q13. of 15 ( Start time: 12:19:17 AM ) Total Marks: 1

Which of the following formulas represents a correct calculation of the degree of operating leverage?

(Q - QBE)/Q (EBIT) / (EBIT - FC) [Q(P-V) + FC] /[Q(P-V)] Q(P-V) / [Q(P-V) - FC]