Financial Management Online Test

_____ is the variability of possible outcomes from a given investment.
Beta
Return
Risk
Variance
Because investors dislike uncertainty, they will require _____ rates of return from risky investments.
Higher
Lower
The same
None of the above
The benefits attributed to an investment project are:
Tax shield benefits of depreciation
After tax operating benefits
Rate of return less than the cost of capital
Both 1 and 2 are correct
When a firm places a budgetary constraint on the projects it invests in, this is called:
Capital rationing
Working capital management
Cash budgeting
None of the above
According to reinvestment rate assumption, which method of capital budgeting assumes cash flows are reinvested at the project’s rate of return?
Payback period
Net present value
Internal rate of return
None of the above
If two projects are independent, that means that_______
Selection of one precludes selection of the other
You should analyze the projects independently
Both 1 and 2
None of the above
Which of the following capital budgeting methods measures how long it takes to recover the initial investment in a project?
Payback period
Net present value
Internal rate of return
None of the above
Which of the following capital budgeting methods is most theoretically correct?
Payback period
Net present value
Internal rate of return
None of the above
Which of the following capital budgeting methods states the return of a project as a percentage?
Payback period
Net present value
Internal rate of return
None of the above
Since capital budgeting uses cash flows instead of accounting flows, the financial manager must add back ______ to the analysis.
The cost of fixed assets
The cost of accounts payable
Investments
Depreciation
_____ Focuses on long-term decision-making regarding the acquisition of projects.
Working capital management
Capital budgeting
Cash budget
None of the above
Firms that have high price/earning ratios are generally:
Riskier than firms with low price/earning ratios
Les risky than firms with low price/earning ratios
Equally risk as firms with all firms
None of the above
A low price/earning ratio usually means that a firm:
Is a growth stock
Has positive expectations for the future
Is a mature firm
Is doomed in the market place
A high price/earnings ratio usually indicates that a firm is a:
Value stock
Growth stock
Convertible security
Constant security
Common stock that has no growth in dividend is valued as if it were:
Preferred stock
A bond
An option
None of the above
One characteristic of preferred stock is that:
It has maturity date
It is a hybrid security with characteristics of both common stock and debt
It pays a fixed dividend payment
All of the above
As time to maturity draws near, a bond’s value approaches:
Zero
Par
The coupon payment
None of the above
An annuity is
More than one payment
A series of unequal but consecutive payments
A series of equal and consecutive payment
A series of equal and non- consecutive payments
If you have Rs. 1000 and you plan to save it for 4 years with an interest rate of 10%, what is the future value of your saving?
Rs.1464.00
Rs.1000.00
Rs.1331.00
Cannot be determined
Time value of money is an important finance concept because:
It takes risk into account
It takes time into account
It takes compound interest into account
All of the above
The present value of a rupee to be received in the future is:
More than a rupee
Equal to a rupee
Less than a rupee
None of the above
The future value of a rupee that you invest today is:
More than a rupee
Equal to a rupee
Less than a rupee
None of the above
The future value of an annuity is:
Less than each annuity payment
Equal to each annuity payment
More than each annuity payment
None of the above
The concept of present value and future value are:
Directly related to each other
Not related to each other
Proportionately related to each other
Inversely related to each other
If you win the lottery and you choose to have your proceeds distributed to you over a twenty- year period, which calculation would you use to calculate the worth of those proceeds to you today?
Future value of a lump sum
Future value of an annuity
Present value of a lump sum
Present value of an annuity
Description:

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Discussion

pooja

nice and helpful test to do a quick revision of basics

1624 days 39 minutes ago

anurag sharma

Lucid and Informative.

1705 days 19 hours 49 minutes ago

Kalyan Sarkar
Psychological interventions in Mathematics Study
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