Mid Term Papers MGT201. (Group is not responsible for any solved content)

Size: px

Start display at page:

Download "Mid Term Papers MGT201. (Group is not responsible for any solved content)"

Aubrie Douglas
6 years ago
Views:

1 MGT201 (Group is not responsible for any solved content) Subscribe to VU SMS Alert Service To Join Simply send following detail to Full Name Master Program (MBA, MIT or MCS) Semester Cell Number For Any Query or Help at Join us at

2 Question No: 1 ( Marks: 1 ) - Please choose one An initial investment of Rs. 200,000 is required to start the business; Rs. 9,000 per month is expected to be earned for the first year and Rs. 20,000 would be earned every month in the second year. How many months will it take to recover your initial investment? 14 months 16 months 18 months 20 months Question No: 2 ( Marks: 1 ) - Please choose one Don t put all eggs in one basket explains concept of finance. Time value of money Risk and Return Discounting and NPV Portfolio Diversification Question No: 3 ( Marks: 1 ) - Please choose one is equal to risk per unit return. Standard Deviation Variance Coefficient of Variation None of the given options bilal.zaheem@gmail.com Page 2

3 Question No: 4 ( Marks: 1 ) - Please choose one A bond that pays no annual interest but is sold at a discount below the par value is called: An original maturity bond A floating rate bond A fixed maturity date bond A zero coupon bond Question No: 5 ( Marks: 1 ) - Please choose one Since preferred stock dividends are fixed, valuing preferred stock is roughly equivalent to valuing: A zero growth common stock A positive growth common stock A short-term bond An option Question No: 6 ( Marks: 1 ) - Please choose one An unincorporated business owned by one individual is called Partnership Company Sole proprietorship None of given options Question No: 7 ( Marks: 1 ) - Please choose one is a ratio of the present value of future cash flows to the initial investment. Return on Investment NPV bilal.zaheem@gmail.com Page 3

4 Payback Period Profitability Index Question No: 8 ( Marks: 1 ) - Please choose one is the actual price at which share is bought or sold. Fair price Par value Market price Written down value Question No: 9 ( Marks: 1 ) - Please choose one ratio gives an indication how equity investors regard the company s value. Price / Earning Market / Book Earning / Share Price / Cash flow Question No: 10 ( Marks: 1 ) - Please choose one In the formula r CE = (D1V1/Po) + g, what does (D1V1/Po) represent? The expected dividend yield from a common stock The expected price appreciation yield from a common stock The dividend yield from a preferred stock The interest payment from a bond bilal.zaheem@gmail.com Page 4

5 Question No: 11 ( Marks: 1 ) - Please choose one For a given nominal interest rate, the more numerous the compounding periods, the less the effective annual interest rate. Question No: 12 ( Marks: 1 ) - Please choose one The current ratio is never larger than the quick ratio. if firm has more inventory it will be having large current ratio Question No: 13 ( Marks: 1 ) - Please choose one When interest rates go up, the market price of a bond goes up. Question No: 14 ( Marks: 1 ) - Please choose one Maximizing the price of a share of the firm's common stock is the equivalent of maximizing the wealth of the firm's present owners bilal.zaheem@gmail.com Page 5

6 Question No: 15 ( Marks: 1 ) - Please choose one You can reduce systematic risk by adding more common stocks to your portfolio. Question No: 16 ( Marks: 3 ) Assume that one year from now; you will deposit Rs. 1,000 into a saving account that pays 8%interest. If the bank compounds interest semi-annually, how much will you have in your account four years from now? FV = PV(1+i/m)^mn FV = 1000 (1.04)^6 ( m*n = 2*3 as we are depositing after one year so total years will be 3) FV = 1265 Question No: 17 ( Marks: 3 ) How much should you pay for the preferred stock of the PST Corporation, if it has $ 50 par value, pays $20 a share in annual dividends, and your required rate of return is 15%. =20/.15 = Question No: 18 ( Marks: 3 ) What is a portfolio? Why an investor should invest his/her funds in a portfolio rather than in thestocks of a single corporation. Question No: 19 ( Marks: 3 ) What do you mean by yield to maturity (YTM) of a bond? Explain briefly. Question No: 20 ( Marks: 3 ) Explain briefly the Constant Growth Dividends Model of common stocks valuation. bilal.zaheem@gmail.com Page 6

7 Question No: 21 ( Marks: 10 ) Snyder Computer Chips Inc. is experiencing a period of rapid growth. Earnings and dividends areexpected to grow at a rate of 15% during the next 2 years, at 13% in the third year, and at aconstant rate of 6% thereafter. Snyder s last dividend was Rs. 1.15, and the required rate of return on the stock is 12%. Required: I. Calculate the expected dividends of the firm in the first three years. II. Calculate the fair value per share of these stocks at the end of third year. bilal.zaheem@gmail.com Page 7

Mid Term Papers. Spring 2009 (Session 02) MGT201. (Group is not responsible for any solved content)

Mid Term Papers. Spring 2009 (Session 02) MGT201. (Group is not responsible for any solved content) Spring 2009 (Session 02) MGT201 (Group is not responsible for any solved content) Subscribe to VU SMS Alert Service To Join Simply send following detail to bilal.zaheem@gmail.com Full Name Master Program