vu fin622 Final Term - Quiz No.12
vu fin622 Corporate Finance Quiz
This quiz belongs to book/course code vu fin622 Corporate Finance of vu organization. We have 17 quizzes available related to the book/course Corporate Finance. This quiz has a total of 10 multiple choice questions (MCQs) to prepare and belongs to topic Final Term. NVAEducation wants its users to help them learn in an easy way. For that purpose, you are free to prepare online MCQs and quizzes.
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Question 1: Spread variation does NOT depend on which of the following factors?
Variance of cash flows
Transaction cost
Interest rate
Expected cash flow
Question 2: Which of the following changes will occur if a bonds yield-to-maturity increases, keeping other things equal ? Select correct option: Its price will fall.
Its price will rise
Its price will remain unchanged
Can not be determined
Its price will fall
Question 3: The employment of fixed costs associated with the actual production of goods or services is known as:
Financial leverage
Volume discounting
Operating leverage
Covariance
Question 4: Financial data for three firms is presented below. Each differs only with respect to philosophy on an aggressive vs. a conservative approach to current asset management.
The firm with the least aggressive philosophy has an asset turnover of
| FIRM A | FIRM B | FIRM C | |
| Sales | $2,000,000 | $2,000,000 | $2,000,000 |
| EBIT | $200,000 | $200,000 | $200,000 |
| Current Assets | $600,000 | $500,000 | $400,000 |
| Fixed Assets | $500,000 | $500,000 | $500,000 |
| Total Assets | $1,100,000 | $1,000,000 | $900,000 |
3.33-to-1.
2.22-to-1.
5.00-to-1.
1.82-to-1.
Question 5: All of the following factors must be considered, while making short-term investment EXCEPT:
Liquidity
Safety
Profitability
Inventory
Question 6: Which of the following factor determines the financial viability of a project?
Future Profits
Future Cash flows
Sunk Cost
None of the given option
Question 7: Which of the following best illustrates the problem imposed by capital rationing?
Accepting projects with the highest NPVs first
Accepting projects with the highest IRRs first
By passing projects that have positive NPVs
Bypassing projects that have positive IRRs
Question 8: Which of the following is a major limitation of Linear Programming Technique of capital projects selection?
Time value of money is not considered
Ignores the relative size of the Investment
Project cash flows are ignored
Project profitability is ignored
Question 9: Which of the following is an objective of an optimal capital structure?
To minimize the cost of capital
To minimize cost of equity
To minimize cost of debt
To minimize cost of sales
Question 10: For the statement of cash flows, which of the following is considered a cash flow item from investing activities?
Cash inflow from borrowing
Cash outflow to acquire fixed assets
Cash outflow to government for taxes
Cash inflow from dividend income
