IMT SOLVED ASSIGNMENTS AVAILABLE – FINC002 Test1
ASSIGNMENT
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Question 1:
Which of the following is ultimate objective of financial management?
a) Profit maximization
b) Shareholder’s wealth maximization
c) Leverage Minimization
d) Funding maximization
Question 2:
Sheela needs Rs 500000 at the end of 5 years. How much amount she should invest right now @ 10%. Present Value of 1 Rs at 10% for 5 years is .6209
a) 100000
b) 155225
c) 310450
d) 400000
Question 3:
The underlying assumption in IRR method is that all the intermitant cashflows are reinvested at___
a) Cut-off rate
b) required rate of return
c) cost of capital
d) IRR
Question 4:
Market interest rate is 9%. A bond with 10% coupon will sell_____ par value?
a) above
b) below
c) at
d) None of the above
Question 5:
If the annual rent expense goes up, the operating leverage will_____ and will give rise to more than proportionate change in______
a) decrease, EPS
b) decrease, EBIT
c) increase, EPS
d) increase, EBIT
Question 6:
1/10, 30 credit term means?
a) 1% discount
b) 0.1% discount
c) 1% discount for payment within 10 days
d) 0.1% discount for payment within 30 days
Question 7:
Which of the following are the two components of Holding Period Return?
a) Beginning Value & Ending value
b) Periodic Return & Ending Value
c) Periodic Return & Capital Appreciation
d) Beginning Value & Capital Appreciation
Question 8:
For calculation of present value of annuity regular, in excel, the value of type should be___?
a) 1
b) 0
c) 10
d) 0.1
Question 9:
Growth of the company can be expected to be higher when_____ is high?
a) pay-out ratio
b) distribution ratio
c) dividend rate
d) retention ratio
Question 10:
Preference share is a_____ instrument?
a) ownership
b) debt
c) hybrid
d) None of the above
Question 11:
As per Bird in hand theory, high dividend pay-out is___ to low pay-out?
a) Preferred
b) not preferred
c) irrelvant for investor
d) None of the above
Question 12:
Which of the following AAA debentures will have highest price if YTM is?
a) 0.07
b) 0.08
c) 0.075
d) 0.085
Question 13:
Dividend declared at 12% means that this %age will be applied on
a) Issue Price
b) Market Price
c) Face Value
d) Profits
Question 14:
Which of the following will result in Shareholder’s wealth maximization?
a) Optimum utilization of resources
b) maximum utilization of resources
c) Leverage Minimization
d) Funding maximization
Question 15:
If credit sales is 100000, credit period is 30 days, calculate the average receivables?
a) 8219
b) 8333
c) 3333
d) 3288
Question 16:
Method tells the period in which original investment in a project will be recovered.
a) NPV
b) IRR
c) Pay-Back Period
d) Profitability Index
Question 17:
Moon Ltd invests Rs 800000 in a paper manufacturing plant. This is expected to generate Rs 150000 every year for next seven years. Cost of capital for the project is 10%. PVAF for 7 years at 10% is 5.3349. Calculate the NPV of the project?
a) 800000
b) 800235
c) 235
d) -235
Question 18:
A company replaces an old machinery with salvage value of Rs 100000 replaced by a machinery costing Rs 500000. The relevant cash flows for evaluation of this project is_____?
a) 100000
b) 500000
c) 400000
d) 600000
Question 19:
If the cost of capital of a project goes up then NPV will
a) decrease
b) increase
c) remain same
d) fluctuate
Question 20:
As per MM proposition with taxes, value of unlevered firm is____ than levered firm?
a) lower
b) same
c) higher
d) fluctuating
Question 21:
Calculate the expected return with the help of following data: p=.3 г=30%, p=.4 г=16%, p=.3 r=8%
a) 17.8
b) 18
c) 5.8
d) 7.35
Question 22:
If the coupon rate of a debenture is increased then its YTM will
a) decrease
b) increase
c) remain same
d) fluctuate
Question 23:
The rate at which present value of cash inflows becomes equal to Present value of cash outfolws is called______?
a) Cut-off rate
b) required rate of return
c) cost of capital
d) IRR
Question 24:
As per MM proposition without taxes, value of firm is………………by changing the capita structure?
a) affected
b) not affected
c) increases
d) decreases
Question 25:
Brexit, Greece Crises, Chinese Crises, Sub-Prime Crises are the examples of which of the following?
a) Systematic Risk
b) Unsystematic Risk
c) Total Risk
d) Specific Risk
Question 26:
For dairy Ltd Beta is 0.8, Nifty Returns 15% and T-bill rate is 8% what is the cost of equity?
a) 13.56%
b) 15%
c) 5.6%
d) 7%
Question 27:
Calculate the standard deviation with the help of following data: p=.3 г-30%, p=.4 r=16%, p=.3 r=8%
a) 74.76
b) 24.92
c) 4.21
d) 8.64
Question 28:
When in the calculation of IRR, intermitant cashflows are reinvested at required rate of return, the resultant rate is known as______?
a) CIRR
b) MIRR
c) IRR
d) None of the above
Question 29:
A liberal working capital policy will lead to
a) Low debtors
b) Low inventory
c) low cost
d) high inventory
Question 30:
Which of the following instrument is riskiest?
a) Shares
b) Preference Shares
c) Debentures
d) Fixed Deposit