ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Sem1.Financial Management My Assignments. Review Test Submission: MBOF912D-Financial Management July 21-Assignment2, Review Test Submission: MBOF912D-Financial Management-July 21- Assignment2 User Course Test Started Submitted Due Date status Attempt Score Time Elapsed Instructions hitps:lear.cce.upes.ac.inlutraicourses)_7523,_1/doutine egacyUt Rahul Srivastava Sem1 Financial Management MBOF912D-Financial Managementjuly 21-Assignment2 29/08/21 21:36 30/08/21 00:53 15/11/21 23:59 Completed Mark not available. 3 hours, 16 minutes Center for Continuing Education - UPES MBOF912D-Financial Management Assignment 2 Total Questions: 56 Total Marks: 100 Assignment Information The examination will consist of only Objective type (multiple choice) questions requiring candidates to Mouse-click their correct choice of alternatives against the related question number. The questions would carry 1 to 5 marks each depending (on the diffculty level of the question as indicated in the table below: Difficulty Level of Questions: 1 Mark - Direct, Memory based 2 Marks - Memory & Conceptual 3 Marks - Conceptual & Analytical 4 Marks - Analytical based on understanding of concepts 5 Marks - Application based on understanding of concepts + The question paper will be for 100 marks and considering marks allotted to ‘each question, the total number of questions would be around 63, + There will not be negative marking for wrong answers. + Incase candidate does not want to attempt the question he | she should not mouse-click any option. + The students are allowed to save the responses and come back later to resume, complete and "Save and Submit" the assignment. However, if the Due Date has expired, then the assignment will not be accessible and will be marked as zero. In such cases, the student can re-attempt the assignment allocated after enrolling in the subsequent Semester. _2Fwebapps-2Fgradebook-2F do~2Fstusent-2FuiewGrades%3Fcourse.. 1/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 + _Once submitted, that answer sheet cannot be retreieved for any editing. The student has to initiate a new attempt (if allowed), if he has submitted the assignment by mistake. + The students are normally allowed 3 chances to attempt and submit the assignment. The number of attempts availed is displayed under the "Test Information’, + The Highest Grade of the 3 attempts shall be considered for grading. + The assignments are auto evaluated, and hence no chance of re- evaluation/re-totalling is allowed to the student, Results. All Answers, Submitted Answers, Incorrectly Answered Questions Displayed Question 1 2out of 2 points Cost of Equity Share Capital is more than cost of debt because Selected Answer; Equity shares have higher risk than debt, Answers: Face value of debentures is more than face value of shares, Equity shares have higher risk than debt Equity shares are easily saleable Alllof the three above Question 2 O out of 2 points Most firms have a negative cash cycle. Selected Answer: True Answers: True False Question 3 2 out of 2 points IFA= Annual Requirement, © = Order Cost and € = Carrying Cost per unit per annum, then EOQ Selected Answer: v2AO/C Answers: (2A0/C) 2 2A+OC 2a0c v2A0/C Question 4 2out of 2 points Payment to creditors is a manifestation of cash held for: Selected Answer: Transactionery Motive hitps:lear.cce.upes.ac inlutraicourses)_7523_1(clloutlne legacyUrl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcourse.... 2/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Answers: Transactionery Motive Precautionary Motive Speculative Motive Allof the above Question 5 2 out of 2 points Dividend payout ratio refers to that portion of total earnings which is distributed among shareholders. Selected Answer; True Answers: True False Question 6 2out of 2 points ‘At9 percent compounded annually, it will take it to double $750 in 9 years. Selected Answer: False Answers: True False Question 7 2 out of 2 points Credit evaluation of a customer is a cost process hence it need not be undertaken by a selling firm. Selected Answer: False Answers: True False Question 8 0 out of 2 points The cost of capital depends primarily on the source of funds, not the use. Selected Answer: True Answers: True False Question 9 Oout of 2 points Which of the following argues that the value of levered firm is higher than that of the unlevered firm? Selected Answer: MM Model with taxes Answers Net income Approach hitps:Mlear.cce.upes.ac inlutraicourses)_7523_1(clloutlne legacyUsl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FuiewGrades%3Fcourse.... 3/15ara0/2021 Review Question 10 st Submission: MBOF9120-Financial Management-July 21 Net Operating Income Approach MM Model with taxes Both (a) and (c) 2 out of 2 points Which of the following is not incorporated in Capital Budgeting ? Selected Answer: Answers Question 11 Rate of Cash Discount Tax-Effect Time Value of Money Required Rate of Return Rate of Cash Discount 2 out of 2 points System of procuring goods when required, is known as, Selected Answer: Answers: Question 12 Just in Time Free on Board Always Butter Control Just in Time Economic Order Quantity 2 out of 2 points The equity Shareholders get the residual profit of the firm. Selected Answer: True Answers: True False Question 13 2 out of 2 points Which of the following statements is incorrect concerning the equity component. Gof the wacc? Selected Answer: There is a tax shield such as with debt. Answers: The value of retained eamings is not included. Market values should be used in the calculations, ans hitps:ilear.cce.upes.aciniutracourses)_7523_1(clloutine legacyUsi-~2Fwebapps-2Fgradebook~2Fdo~2Fstudent-2FviewGrades%s3Fcourse,ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Preferred equity has a separate component. There is a tax shield such as with debt. Question 14 2 out of 2 points If interest expenses for a firm rise, we know that firm has taken on more Selected Answer: financial leverage Answers: financial leverage operating leverage fixed assets none of the above Question 15 Sout of 2 points Ifa company roves from a conservative working capital policy to an aggressive policy, it should expect . Selected Answer: liquidity to decrease, whereas expected profitability would increase Answers liquidity to decrease, whereas expected profitability would increase expected profitability to increase, whereas risk would decrease liquidity would increase, whereas risk would also increase risk and profitability to decrease Question 16 O out of 2 points The principal amount of a bond at issue is called coupon value. Selected Answer: True Answers: True False Question 17 4out of 4 points You deposit $17,000 each year for 10 years at 7%, Then you earn 9% after that. Ifyou leave the money invested for another 5 years how much will you have in the 15th year? hitps:Mlear.cce.upes.ac.inlutraicourses)_7523_1(dlloutine legacyUsl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcourse.... 5/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Selected Answer, 361391 Answers: $363374 361391 $365374 $364374 Question 18 4 out of 4 points ‘The trade terms 2/15, net 30 indicate that: Selected Answer: 2% discount is offered if payment is made within 15 days Answers: ‘a 2% discount is offered if payment is made within 15 days 15% discount is offered if payment is made within 30 days 2 2% discount is offered if payment is made within 30 days 2 30% discount is offered if payment is made within 15 days Question 19 4 out of 4 points Assume the total expense for your current year in college equals $20,000. Approximately how much would your parents have needed to invest 21 years ago in an account paying 8% compounded annually to cover this amount? Selected Answer: $3,973 Answers: $952 $1,600 $1,728 $3,973 Question 20 4.out of 4 points What appears to be the targeted debt ratio of a firm that issues $15 million in bonds and $35 million in equity to finance its new capital projects? Selected Answer; 0.3, Answers: 0.18 03 0.35 06 hitps:ilear.cce.upes.aciniutracourses)_7523_1(clloutine legacyUsi-~2Fwebapps-2Fgradebook~2Fdo~2Fstudent-2FviewGrades%s3Fcourse,ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Question 21 5 out ofS points What is the present value of an annuity of $100 received at the end of each year for seven years? The first payment will be received one year from today (round to nearest $10). The discount rate is 13%. Selected Answer, $440 Answers: $440 $43 $600 $1,040 Question 22 O out of 5 points BBD has estimated that a proposed project's 10-year annual net cash benefit, received each year end, will be $2,500 with an additional terminal benefit of $5,000 at the end of the tenth year. Assuming that these cash inflows satisty exactly their required rate of return of 8 percent, calculate the initial cash outlay. Selected Answer: $25,000 Answers: $16,775 $19,090 $25,000 $30,000 Question 23 5 out ofS points With continuous compounding at 10 percent for 30 years, the future value of an GG initial investment of $2,000 is closest to Selected Answer, 40171 Answers: $34,898, 40171 $1,64,500 $3,28,282 Question 24 O out of 5 points How much money must a person deposit into an account at the beginning of hitps:lear.cce.upes.ac inlutraicourses)_7523_1(dlloutne legacyUsl-~2Fwebapps~2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcourse.... 7/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 ‘each of 5 years in order to have $5,000 at the end of the Sth year? Assume that the account pays 12% per year, and round to the nearest $10. Selected Answer: $790 Answers: $700 $1,390 $1,550 $790 Question 25 1 out of 1 points: Working Capital is defined as excess of: Selected Answer: Current assets over current liabilities Answers: Current assets over capital Current liabilities over capital Current assets over current liabilities Share capital over resources Question 26 0 out of 1 points A capital investment is one that Selected Answer: is only undertaken by large corporations Answers: has the prospect of long-term benefits has the prospect of short-term benefits is only undertaken by large corporations applies only to investment in fixed assets Question 27 O out of t points Auditors is the group who elected by stockholders to oversee management in a corporation. Selected Answer: True Answers: True False Question 28 Oout of 1 points “For corporations, maximizing the value of owner's equity can also be stated as" hitps:Mlear.cce.upes.ac inlutraicourses)_7523_1/dlloutne legacyUsl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcourse.... 8/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Selected Answer: maximizing retained earnings Answers: maximizing retained earnings maximizing earings per share maximizing net income maximizing the stock price. Question 29 1 out of 1 points Operating leverage analyses the relationship between sales level and EPS. Selected Answer: False Answers: True False Question 30 1 out of 1 points A firm becomes bankrupt when the value of its debt equals the value of its assets, Selected Answer; True Answers: True False Question 31 1 out of 1 points The concept of compound interest refers to: Selected Answer: payment of interest on previously earned interest. Answers: earning interest on the original investment payment of interest on previously earned interest. investing for a multikyear period of time determining the APR of the investment Question 32 1 out of 1 points Cre ;nalysts examine a firm's financial strength for its debt holders. Selected Answer: True Answers: True False Question 33 1 out of 1 points hitps:Mlear.cce.upes.ac inlutralcourses)_7523_1(clloutne legacyUsl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcourse.... 9/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 “in almost all present and future value computations, itis implicitly assumed that the cash flows occur at the beginning of each period.” Selected Answer; False Answers: True False Question 34 1 out of 1 points: Walters model supports the view that dividend is relevant for value of the firm, Selected Answer; True Answers: True False Question 35 1 out of 1 points: Receiving a required inventory item at the exact time needed is, Selected Answer: JIT Answers: ABC st FoB PERT Question 36 1 out of 1 points ‘The amount of current assets that varies with seasonal requirements is referred toas working capital Selected Answer: temporary Answers: permanent temporary net gross Question 37 1 out of 1 points Which of the following would be consistent with a hedging (maturity matching) approach to financing working capital? Selected Answer: Financing short-term needs with short-term funds. Answers: Financing short-term needs with short-term funds. hitps:lear.cce.upes.ac inlutralcourses)_7523_1iclloutlne legacyUsl-~2Fwebapps~2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcours.... 10/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Financing short-term needs with long-term debt. Financing seasonal needs with long-term funds. Financing some long-term needs with short-term funds. Question 38 1 out of 1 points focuses on long-term decision-making regarding the acquisition — Gof projects. Selected Answer: Capital Budgeting Answers: Working Capital Management Capital Budgeting Cash Budgeting none of the above Question 39 1 out of 1 points “Firms raise the funding they need through debt, equity and profits.” Selected Answer: True Answers: True False Question 40 1 out of 1 points The largest provider of short-term credit for a business is: Selected Answer: suppliers to the firm Answers: banking organizations suppliers to the firm commercial paper Eurodollars Question 41 1 out of 1 points “In India, commercial papers can be issued for any amount and for any duration.” Selected Answer: False Answers: True False hitps:lear.cce.upes.ac iniutraicourses)_7523_1(clloutlne legacyUrl-~2Fwebapps~2Fgradebook-2F do~2Fstusent-2FuiewGrades%3Fcours.... 11/15axcoroe21 Reviow Test Submision: MBOF912D-Financal Management July 21. Question 42 1 out of 1 points Which of the following exchange capital for ownership in a business? Selected Answer: Angel investors Answers: Auditors Agency investors Angel investors None of these exchange capital for ownership in a business Question 43 1 out oft points Cash is the most important but least earning current asset. Selected Answer: True Answers: True False Question 44 1 out of 1 points Retained earnings are an easily available source of funds at no explicit cost. Selected Answer: True Answers: True False Question 45 1 out of 1 points “For a levered firm, the cost of equity, RE, is equal to the required return on the firm’s assets, RA Selected Answer: False Answers: True False Question 46 1 out of 1 points Short-term financing for a business firm includes: Selected Answer: accounts payable Answers: bonds accounts payable stockholders equity mortgages hitps:Mlear.cce.upes.ac inlutraicourses)_7523_1(dlloutne legacyUrl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcours.... 12/15ara0/2021 Review Test Submission: MBOF9120-Financial Management-July 21 Question 47 Sout of 1 points “For small companies, long-term debt is the principal source of external Ed financing." Selected Answer: False Answers: True False Question 48 1 out oft points The premium to compensate an investor for the eroding effect of rising prices is — Gealled the risk premium. Selected Answer: False Answers: True False Question 49 1 out of 1 points The discount factor measures the present value of 1 received in year t. Selected Answer: True Answers: True False Question 50 1 out of 1 points MM model asserts that value of the firm is not affected whether the firm pays dividend or not. Selected Answer: True Answers: True False Question 51 1 out of 1 points: Compounding is the process of accumulating interest in an investment over time to earn more interest. Selected Answer: True Answers: True False Question 52 1 out of 1 points Permanent Working Capital is also known as hitps:lear.cce.upes.ac inlutralcourses)_7523,_1(dl/outine legacyUt _2Fwebapps-2Fgradebook-2F do~2Fstusent-2FuiewGrades%3Fcours.... 13/15srs0r2021 Review Test Submission: MBOF9120-Financial Management July 21. gy Selected Answers None ofthe above Answers: Gross working capital Net working capital Total current assets None of the above Question 53 1 out of 1 points Proposed assets can be evaluated using the company cost of capital providing that the: Selected Answer: new assets have the same risk as existing assets Answers: firm does not pay taxes, firm is all equity financed cost of debt is less than the cost of equity new assets have the same risk as existing assets. Question 54 1 out of 1 points An increase in the firm's receivable turnover ratio means that: Selected Answer: itis collecting credit sales more quickly than before Answers itis collecting credit sales more quickly than before cash sales have decreased ithas initiated more liberal credit terms inventories have increased Question 55 1 out of 1 points Capital market securities fall into two categories: bonds and stocks. Selected Answer: True Answers: True False Question 56 Sout of 1 points Cash dividend and bonus share issue affect the firm in the same way. Selected Answer: True Answers: True hitps:lear.cce.upes.ac inlutraicourses)_7523_1/clloutlne legacyUsl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcours.... 14/15ara0/2021 Review Te st Submission: MBOF9120-Financial Management-July 21 False Monday, 30 August 2021 00:53:39 o'clock IST 0K hitps:lear.cce.upes.ac.inlutraicourses)_7523_1/dlloutne legacyUrl-~2Fwebapps-2Fgradebook-2F do~2Fstusent-2FviewGrades%3Fcours.... 15/15