MGT201 Quiz 3 by VU Sparky

Q1. Which of the following is a shortcoming of using payback period to determine the acceptability of a project?

1. It ignores cash flows during payback period of a project
2. It takes into account cash flows after payback period of a project
3. It takes into account times value of money
4. It ignores time value of money

Q2. Which of the following statement is true in regards to “2/15 net 30”?

1. A 15% discount will be given if payment is made within 15 days
2. A 15% discount will be given if payment is made within 30 days
3. A 2% discount will be given if payment is made within 30 days
4. A 2% discount will be given if payment is made within 15 days

Q3. Which of the following is a type of bond?

1. Zero coupon bond
2. Maturity bond
3. All of the given options
4. Coupon bond

Q4. The variability in portfolio returns that can be avoided through diversification is termed as:

1. Systematic risk
2. Coefficient of variation
3. Unsystematic risk
4. Standard deviation

Q5. Which of the following statement is TRUE in regards to hedging approach to financing working capital?

1. Financing the short term needs of the business through short term debt
2. Financing the seasonal needs of the business through long term debt
3. Financing the long term needs of the business through short term debt
4. Financing the short term needs of the business through long term debt

Q6. Which of the following reflects the variability in portfolios return due to change in market return?

1. Unsystematic risk
2. Standard deviation
3. Coefficient of variation
4. Systematic risk

Q7. Which of the following is/are types of inventory?

1. Work in process
2. Raw material
3. Finished goods
4. All of the given options

Q8. Cost of capital includes:

1. Cost of bonds
2. All of the given options
3. Cost of preferred shares
4. Cost of common shares

Q9. Coefficient of variation is a measure of relative dispersion (risk) per unit of:

1. Expected volatility
2. All of the above given options
3. Expected return
4. Expected risk

Q10. Which of the following capital budgeting technique use “Interpolation method”?

1. Payback period
2. Internal Rate of return
3. Profitability Index
4. Profitability Index