vu fin622 Final Term - Quiz No.9
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: Which of the following is a necessary condition for issuing shares through Initial Public Offerings (IPO's)?
The firm must have a stable dividend policy
The firm must have a low cost of capital
The firm must have a low level of debt
The firm must be listed on the stock exchange
Question 2: When calculating a projects annual cash flows, which of the following is not directly included?
The reduction in taxes attributable to sale of an asset for less than its book value
The tax incurred when the trade-in value of the old asset exceeds its book value
The reduction in taxes attributable to depreciation charges
Depreciation expense
Question 3: A Pure Play method of selecting a discount rate is most suitable in which of the following situations?
When the intended investment project has a Non-conventional stream of cash flows
When the intended investment project belongs to industry other than the firms operating in
When the intended investment project has a conventional stream of cash flows
When the intended investment project is a replacement project
Question 4: Which of the following statements is CORRECT regarding the fundamental analysis?
Fundamental analysts use only Economic indicators to evaluate a stock
Fundamental analysts use only financial information to evaluate a company stocks
Fundamental analysts use financial and non-financial information to evaluate a company stocks
Fundamental analysts use only non-financial information to evaluate a company stocks
Question 5: Which of the following bonds will have the greatest percentage increase in value if all interest rates decrease by 1 percent?
20-year, zero coupon bond.
10-year, zero coupon bond.
20-year, 10 percent coupon bond
20-year, 5 percent coupon bond.
Question 6: All of the following are related to an income based method of shares valuation EXCEPT?
Future cash flows
Future growth
Discount rate
Book values
Question 7: With respect to Cash flow statement, "Decrease in current liability" would be considered as a:
Cash outflow
Cash inflow
Sometimes as cash inflow and sometimes as cash outflow
Cannot be determined
Question 8: Dividend discount Model states that today's price of a stock is equal to:
The Present Value of all future dividends of the stock
The Present Value of the face value of the stock
The Present Value of the Sales price of the stock
The Present Value of the book value of the stock
Question 9: A proposed investment project requires an initial cash outflow of $82,650 and has an economic life of three years, with no salvage value. It is expected to generate before tax cash flows of $45,000 for each of the three years. The firms tax rate is 30 percent. Which of the following is closest to the projects internal rate of return?
30 percent
7 percent
40 percent
12 percent
Question 10: Which of the following changes will increase the Net Present Value (NPV ) of a project?
A decrease in the discount rate
A decrease in the size of the cash inflows
An increase in the initial cost of the project
A decrease in the number of cash inflows
