MGT201 Final Term Past Papers 2010 by Kashif

Q1. Who determines the market price of a share of common stock? (1 marks)

1. Individuals buying and selling the stock
2. The board of directors of the firm
3. The stock exchange on which the stock is listed
4. The president of the company

Q2. Which of the following would cause the gross profit margin to remain unchanged, but the net profit margin declined over the same period? (1 marks)

1. Cost Cost of goods sold increased relative to sales
2. Sales increased relative to expenses
3. Govt. increased the tax rate
4. Di DiDividends were decreased

Q3. ABC’s and XYZ’s debt-to-total assets ratio is 0.4. What is its debt-to-equity ratio? (1 marks)

1. 0 .2
2. 0 .77
3. 0.667
4. 0.333

Q4. Which of the following make the calculation of NPV difficult? (1 marks)

1. Estimated cash flows
2. Discount rate
3. Anticipated life of the business
4. All of the given options

Q5. Who is responsible for the decisions relating capital budgeting and capital rationing? (1 marks)

1. Chief executive officer
2. Junior management
3. Division heads
4. All of the given option

Q6. Mortgage bonds are secured by real property whose value is generally _______ than that of the value of the bonds issue?. (1 marks)

1. Higher
2. Lower
3. Equal
4. Higher or lower

Q7. The value of direct claim security is derived from which of the following? (1 marks)

1. Fundamental analysis
2. Underlying real asset
3. Supply and demand of securities in the market
4. All of the given options

Q8. Which of the following would tend to reduce a firm's P/E ratio? (1 marks)

1. The firm significantly decreases financial leverage
2. The firm increases return on equity for the long term
3. The level of inflation is expected to increase to double- digit levels
4. The rate of return on Treasury bills decreases

Q9. How the beta of a stock can be calculated? (1 marks)

1. By monitoring price of the stock
2. By monitoring rate of return of the stock
3. By comparing the changes in the stock market price to the changes in the stock market index
4. All of the given options

Q10. Where the stock points will lie, if a stock is a part of totally diversified portfolio? (1 marks)

1. It will lie below the regression line
2. It will line above the regression line
3. It will line exactly on the regression line
4. It will be tangent to the regression line

Q11. Why debt is a less costly source of fund? (1 marks)

1. Because additional interest creates a new form of tax shield
2. Because additional money creates a new form of tax shield
3. Because banks extend loan at lower interest rates
4. None of the given options

Q12. When a firm can acquire another firm? (1 marks)

1. Only by purchasing the assets of the target firm
2. Only by purchasing the common stock of the target firm
3. By either purchasing the assets or the common equity of the target firm
4. None of the given options