unit-5 management mock test
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Q1           Score:  2.86
 4.14%
 0.59%
 0.69%
 0.79%
Q2           Score:  2.86
 secured bond
 debenture
 obligation bond
 specific bond
Q3           Score:  2.86
 high liquidity premium
 high inflation premium
 high default premium
 high yield premium
Q4           Score:  2.86
 legal rights classification
 indenture
 ownership statement
 guarantee statement
Q5           Score:  2.86
 extremely discounted
 extremely safe
 extremely risky
 extremely inflated
Q6           Score:  2.86
 Net present value
 Internal rate of return
 Accounting/Simple rate of return
 Cash payback period
Q7           Score:  2.86
 Internal rate of return method
 Simple cash payback method
 Net present value method
 Discounted cash payback method
Q8           Score:  2.86
 real value
  future value
 present value
 salvage value
Q9           Score:  2.86
 net present value of the project
 net future value of the project
 net historical value of the project
 net salvage value of the project
Q10           Score:  2.86
 ZERO
 POSITIVE
 NEGATIVE
 -1
Q11           Score:  2.86
  negative or zero
 negative or positive
 positive or zero
 negative
Q12           Score:  2.86
 A B,C
 B C A
 C A B
 B A C
Q13           Score:  2.86
 0.25 years
 3 years
 4 years
 5 years
Q14           Score:  2.86
 reduce the present value of future cash flows.
 Increase the present value of future cash flows.
 have no effect on net present value.
 compensate for reduced risk.
Q15           Score:  2.86
 the lower the profitability index, the more desirable the project.
 the lower the sunk cost, the more desirable the project.
 the higher the sunk cost, the more desirable the project.
 the higher the profitability index, the more desirable the project.
Q16           Score:  2.86
 A C D B
 B C D A
 D C A B
 C A B D
Q17           Score:  2.86
 If the profitability index of a project is 0.75, it means:
  the project's cost is less than the present value of its cash flows
 the NPV of the project is greater than 1
 the project returns 75 cents in present value for each dollar invested in it
Q18           Score:  2.86
 cost-benefit analysis
 post-completion audit
 business scorecard report
Q19           Score:  2.86
 a dependent
  an independent project
 a mutually exclusive project
 a rational project
Q20           Score:  2.86
 an independent project
  a dependent project
 an essential project
 a contingent project
Q21           Score:  2.86
 5000
 1500
 2500
 3000
Q22           Score:  2.86
 $120,000
  $300,000
 $75,000
  $180,000
Q23           Score:  2.86
  greater than the difference obtained using total cost approach
 less than the difference obtained using total cost approach
 the same as the difference obtained using total cost approach
 indeterminable
Q24           Score:  2.86
 15 %
 16 %
 12 %
 10 %
Q25           Score:  2.86
 It avoids the problem of computing the required rate of return for each investment
 It is the only way to measure a firm's required return.
 It acknowledges that most new investment projects have about the same degree of risk
 It acknowledges that most new investment projects offer about the same expected return.
Q26           Score:  2.86
  Discount rate which the firm should apply to all of the projects it undertakes
  Rate of return a firm must earn on its existing assets to maintain the current value of its stock.
  Coupon rate the firm should expect to pay on its next bond issue
 . Maximum rate which the firm should require on any projects it undertakes
Q27           Score:  2.86
 6.14%
 6.54%
 8.60%
 9.14%
Q28           Score:  2.86
 Return the stock minus the risk-free rate.
 Difference between the return on the market and the risk-free rate.
 Beta times the market risk premium
 Beta times the risk-free rate.
Q29           Score:  2.86
 Security Market Line.
 . Capital Market Line
 . Characteristic line
 Risk line.
Q30           Score:  2.86
 Discount rate which the firm should apply to all of the projects it undertakes.
 Overall rate which the firm must earn on its existing assets to maintain the value of its stock
 Rate the firm should expect to pay on its next bond issue
 . Maximum rate which the firm should require on any projects it undertakes.
Q31           Score:  2.86
 using the firm's beta is the same measure of risk as the project.
 the firm is all-equity financed.
 the financial risk is equal to business risk.
 . Both A and B.
Q32           Score:  2.86
 accepted.
 rejected.
 . It is impossible to tell.
 It will depend on the NPV.
Q33           Score:  2.86
 direction of the market variance.
 overall cycle of the market.
 .variance of the market and asset, but not their co-movement
 covariance of the security with the market and how they are correlated.
 All of the above.
Q34           Score:  2.86
 variance; covariance
 covariance; variance
 standard deviation; variance
 . expected return; covariance
Q35           Score:  2.86
 intercept.
 beta.
 . unsystematic risk
 market variance.
 market risk premium


   



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