Complete Solved MGT502- Organizational Behaviour Final Term Paper spring 2010

FINALTERM  EXAMINATION

Spring 2010

MGT502- Organizational Behaviour (Session - 4)

Time: 90 min

Marks: 69

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Question No: 1    ( Marks: 1 )    - Please choose one

 Ali usually goes for shopping, calls friends to come over, or arranges a party. He looks for meaning outside of himself. We can say that he is:

       ► Introvert

       ► Extrovert

       ► Emotional

       ► Open to experience

   

Question No: 2    ( Marks: 1 )    - Please choose one

 McClelland’s theory of needs concentrates on which three needs?

       ► Power, acceptance and confirmation

       ► Affiliation, control and realization

       ► Achievement, realization and acceptance

       ► Achievement, power and affiliation

   

Question No: 3    ( Marks: 1 )    - Please choose one

 According to McClelland, individuals who have a desire to excel and to succeed are high in ______________need.

       ► Power 

       ► Achievement

       ► Motivation

       ► Affiliation

   

Question No: 4    ( Marks: 1 )    - Please choose one

 Which of the following is the most likely explanation for the higher absentee rate of women in the workplace?

       ► Women tend to have more illnesses that keep them from work than do men

       ► Traditionally, women have had the responsibility of caring for home and family

       ► Women tend to be less satisfied with their jobs than men

       ► Women tend to work in jobs that have less flexible schedules than men do

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Question No: 5    ( Marks: 1 )    - Please choose one

 Which of the following is one advantage of variable pay plans to management?

       ► They turn fixed labor costs into variable labor costs

       ► They turn low producers into high producers

       ► They turn slow employees into fast employees

       ► They turn high fixed costs into low fixed costs

   

Question No: 6    ( Marks: 1 )    - Please choose one

 Which of the following is an example of a piece-rate plan?

       ► Stock options

       ► Rs20 for each unit produced

       ► Productivity bonus

       ► Commission

   

Question No: 7    ( Marks: 1 )    - Please choose one

 Which of the following statement best defines leadership?

       ► Implementing the strategy provided by management

       ► Least concerned in bringing organizational change

       ► Coordinating and handling day-to-day problems

       ► The ability to influence a group in goal achievement

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Question No: 8    ( Marks: 1 )    - Please choose one

 Which of the following are members of an organization with authority to influence other members to achieve organizational goals?

       ► Formal leaders

       ► Informal leaders

       ► Managers

       ► Followers

   

Question No: 9    ( Marks: 1 )    - Please choose one

 The most fragile relationships are contained in which of the following types of trust?

       ► Reward

       ► Deterrence

       ► Knowledge

       ► Identification

   

Question No: 10    ( Marks: 1 )    - Please choose one

 Which of the following is least likely to create dependency?

       ► Scarcity of resources

       ► Non substitutability

       ► Power legitimacy

       ► Supply and demand

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Question No: 11    ( Marks: 1 )    - Please choose one

 The interactionist view of conflict proposes that functional conflict is:

       ► Necessary for effective group performance

       ► An indication of the group maturity level

       ► Always focused around relationships

       ► Make group members static and apathetic

   

Question No: 12    ( Marks: 1 )    - Please choose one

 In assessing intentions, cooperativeness is the degree to which:

BY : ADEEL ABBAS, Bhakkar.

►One party attempts to satisfy the other’s concerns

►One party attempts to resolve conflict

►Both parties work toward a common goal

►One party can empathize with the other

   

Question No: 13    ( Marks: 1 )    - Please choose one

 The focus of relationships in distributive bargaining is:

►Accommodation

►The long term

►The short term

►Lose-lose

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Question No: 14    ( Marks: 1 )    - Please choose one

 Which of the following is NOT a common success criteria for any organizational structures?

►Decentralized reporting

►High residual mass

►Permanent monitoring

►Rapid response

   

Question No: 15    ( Marks: 1 )    - Please choose one

 The flatten organizations are considered to be:

►Small and narrow spans of control

►Large and wide spans of control

►Tight control and strict discipline

►More focused expertise on a given area

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Question No: 16    ( Marks: 1 )   BY : ADEEL ABBAS, Bhakkar. - Please choose one

 You have eliminated horizontal, vertical, and external barriers within your organization. You are operating as a/an:

       ► Boundaryless organization

       ► Organizational pyramid

       ► Matrix organization

       ► Virtual organization

   

Question No: 17    ( Marks: 1 )    - Please choose one

 Which of the given options is the expansion of job content to include a wider variety of the tasks and to increase the workers'  responsibility for checking quality and direction for the method?

       ► Job enlargement

       ► Job rotation

       ► Job enrichment

       ► Job reengineering

   

Question No: 18    ( Marks: 1 )    - Please choose one

 Which of the following factors influence the OB in global organizations?

       ► Customers and work force

       ► Language and communication styles

       ► Differences in pay scales

       ► All of the  factors influence.

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Question No: 19    ( Marks: 1 )    - Please choose one

 A manger is helping his subordinates to explore, and possibly resolve, personal problems. What is he doing?

       ► Counseling

       ► Training

       ► Negotiating

       ► Coaching

   

Question No: 20    ( Marks: 1 )    - Please choose one

 All of the following include behavioral symptoms of stress EXCEPT:

       ► Asthma

       ► Bad moods

       ► Being irritable

       ► Defensiveness

   

Question No: 21    ( Marks: 1 )    - Please choose one

 Learning how to be a better listener and how to be a more effective team player is example of which  training?

       ► Financial

       ► Technical

       ► Problem solving

       ► Interpersonal

   

Question No: 22    ( Marks: 1 )    - Please choose one

 Which of the following statement is true regarding a dominant culture?

       ► The sum of an organization’s subcultures

       ► Defined by the leader of an organization

       ► Synonymous with an organization’s culture

       ► Likely to be a weak culture of an organization

   

Question No: 23    ( Marks: 1 )    - Please choose one

 A strong culture can act as a substitute for which of the following?

       ► Institutionalization

       ► Formalization

       ► Socialization

       ► Organizational rules

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Question No: 24    ( Marks: 1 )    - Please choose one

 All of the following are examples of material symbols EXCEPT:

BY : ADEEL ABBAS, Bhakkar.

       ► Use of the company jet

       ► New employee orientations

       ► Luxury cars for executives

       ► Private parking spots

   

Question No: 25    ( Marks: 1 )    - Please choose one

 Looking for better way to stay is called:

       ► Reactive change

       ► Anticipatory change

       ► Radical Change

       ► Incremental Change

   

Question No: 26    ( Marks: 1 )    - Please choose one

 Which of the following is/are considered necessary for the development of Objectives?

       ► Measurable

       ► Realistic

       ► Time-based

       ► All of the given options

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Question No: 27    ( Marks: 1 )    - Please choose one

 Productivity, job satisfaction and turnover are _______.

       ► Moderating variables

       ► Dependent variables

       ► Independent variables

       ► Continuous variables

   

Question No: 28    ( Marks: 1 )    - Please choose one

 The relatively stable set of psychological attributes that distinguishes one person from another is called _______.

       ► Attitude

       ► Personality

       ► Perception

       ► Mind-set

   

Question No: 29    ( Marks: 1 )    - Please choose one

 Which of the following is true for the people who adopt a thinking style based on logics and rationality?

       ► They process information serially

       ► They perceive things as a whole

       ► They perceive things on the basis of past experiences

       ► Their decisions depend upon situation

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Question No: 30    ( Marks: 1 )    - Please choose one

 Teams are very useful in which of the following situations?

       ► The work to be performed is very basic

       ► The tasks are interrelated

       ► No one wants to be accountable

       ► The group is homogeneous

   

Question No: 31    ( Marks: 1 )    - Please choose one

 Which of the following shows all people, positions, reporting relationships, and lines of formal communication in the organization?

       ► Objectives chart

       ► Organizational chart

       ► Position chart

       ► Pert chart

   

Question No: 32    ( Marks: 1 )    - Please choose one

 The internal operations of an organization provide the framework for which type(s) of departmentalization?

       ► Function and process

       ► Function and market

       ► Product and customer

       ► Geographical and customer

   

Question No: 33    ( Marks: 1 )    - Please choose one

 Which of the following departmentalization is similar to functional departmentalization except that the focus is much more on specific jobs grouped according to activity?

       ► Process departmentalization

       ► Product departmentalization

       ► Geographic departmentalization

       ► Customer departmentalization

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Question No: 34    ( Marks: 1 )    - Please choose one

 Organizational culture includes all of the following EXCEPT:

       ► A basis on individual perceptions

       ► Feelings that characterize life in the organization

       ► Gain sharing plan

       ► Reference to current situations in an organization

   

Question No: 35    ( Marks: 1 ) BY : ADEEL ABBAS, Bhakkar.   - Please choose one

 Which of the following is the organizational source of resistance to change?

       ► Fear of unknown

       ► Economic threat

       ► New social relationship

       ► Threatened power

   

Question No: 36    ( Marks: 1 )    - Please choose one

 Which of the following is the process of planned change and improvement of the organization through application of knowledge of the behavioral science?

       ► Organizational culture

       ► Organizational theory

       ► Organizational Change

       ► Organizational Development

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Question No: 37    ( Marks: 1 )    - Please choose one

 Which of the following is the process in which data is gathered, analyzed, summarized and returned to those who generated them?

       ► Process Consultation

       ► Survey feedback

       ► Inter-group development

       ► Sensitivity Training

   

Question No: 38    ( Marks: 1 )    - Please choose one

 PTCL has contracted with different recruiting agencies to provide human resource for its call centers. It is an example of which of the following?

BY : ADEEL ABBAS, Bhakkar.

       ► Off shoring

       ► Outsourcing

       ► Job migration

       ► Geocentric

   

Question No: 39    ( Marks: 1 )    - Please choose one

 Usman and Awais are procurement engineers in ABC Corporation. Both have same experience and education. The responsibilities of both are same. But Usman is earning more because of the personal relationships with their boss. Which of the following may be the reason of organizational stress for Awais?

       ► Salary

       ► Supervisor

       ► Injustice

       ► Safety

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Question No: 40    ( Marks: 1 )    - Please choose one

 Today the world is facing severe type of recession. Due to which organizations have to downsize. This downsizing is causing which of the following organizational stress for employees?

       ► Salary

       ► Supervisor

       ► Security

       ► Safety

   

Question No: 41    ( Marks: 1 )    - Please choose one

 All of the following are the key components of performance management cycle EXCEPT:

       ► Recruiting

       ► Planning

       ► Monitoring

       ► Rewarding

   

Question No: 42    ( Marks: 1 )    - Please choose one

 Job rotation, understudy assignments, apprenticeship and formal mentoring programs are examples of which of the following?

BY : ADEEL ABBAS, Bhakkar.

       ► On the job training

       ► Off the job training

       ► Simulation training

       ► Vestibule training

   

Question No: 43    ( Marks: 1 )    - Please choose one

 Emotional Intelligence is important for which of the following positions?

       ► Daily wage worker

       ► Athlete

       ► Dentist

       ► Manager

   

Question No: 44    ( Marks: 1 )    - Please choose one

 Which of the following can be considered a method of social learning?

       ► Directories

       ► Purchase invoices

       ► TV commercial

       ► Work Manual

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Question No: 45    ( Marks: 1 )    - Please choose one

 The administration of a College recommended Ayesha to be the member of college honor society for her excellent effort. Administration exhibited which of the following power over Ayesha?

       ► Legitimate

       ► Coercive

       ► Reward

       ► Personal

   

Question No: 46    ( Marks: 1 )    - Please choose one

 Naveed is relatively new employee and wants to make sure that he makes a good impression on his coworkers and supervisor.  He agrees with the supervisor’s opinion most of the time and is always doing nice things for him.  Naveed is attempting to use:

       ► Political behavior

       ► Conflict management

       ► Fastidious behavior

       ► Impression management

   

Question No: 47    ( Marks: 1 )    - Please choose one

 In contrasting organizational culture with job satisfaction, organizational culture is a descriptive term, while job satisfaction is a _____ term.

       ► Reactive

       ► Affective

       ► Evaluative

       ► Deductive

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Question No: 48    ( Marks: 1 )    - Please choose one

 Mr. Ali is a marketing manager of ABC Corporation. He asked MR. Usman, sales manager, to help him in a project and promised him that he will help him when he would need without bringing it into the notice of their supervisors. Both of them are involved in which of the following type of politics?

       ► Managing impression

       ► Controlling information

       ► Cultivating networks

       ► Creating obligation

   

Question No: 49    ( Marks: 3 )

 How strong organizational cultures have great influence on the behavior of its employees? BY : ADEEL ABBAS, Bhakkar.

Organizational cultures are learnt by stories, rituals, and handbook. But the intensity of the culture and the degree to follow it by employees depends upon the employee stage of satisfaction to the organization.

Normally satisfied employees try to follow and adopt organizational culture on them. But unsatisfied employees try to avoid as on where they can.

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A strong organizational culture means every employee should follow and if not, negative reinforcement, or punishment will be applied upon him. Some organizations don’t compromise on quality, customer satisfaction.

With this degree of how strong the organizational culture is  employees have to follow it, otherwise they are ready for the reaction from the organization.

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Question No: 50    ( Marks: 3 )

 How ISO has impacted organizational behavior? BY : ADEEL ABBAS, Bhakkar.

Products or services all over the world have some properties attached to them. The satisfaction they provide, against the resources paid, is called quality of the product. ISO tried to put some basic properties of the product, by which we can understand that the product, will provide the benefit at least the level of the quality prescribed.

The organizations which follow the standards provide by the ISO for their product and services are globally accepted.  So in the current situation if any organization would like to introduce their product globally they have to follow some rules and regulation prescribed by ISO.

Quality can be achieved by applying some strict rules in the transformation process of the organization. And to follow these rules is the responsibility for everyone in the organization.

Edwerd Deming introduced the TQM (Total Quality Management) concept at organizational level. This quality management are the steps by following an organization produce quality products, and keep survival in the competitive world.

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Question No: 51    ( Marks: 5 )

 Discuss some of the important steps that management takes to review the performance of employees?  BY : ADEEL ABBAS, Bhakkar.

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To measure the employee performance, mostly organizations use confidential report (CR) and appraisal form. Normally this CR or appraisal form filled by the immediate supervisor. The performance depends upon, Ability, Attitude, and personality.

Supervisor has to judge the personal traits, Learning ability, Strength, and response of the employee. And how much the employee is loyal to the organization.

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Question No: 52    ( Marks: 5 )

 Do you think structured interview reduces biases as compared to unstructured interview?  BY : ADEEL ABBAS, Bhakkar.

Structured interviews can definitely reduced biases, which is a normal human fault occurs during interviews.

An unstructured interview can not measure the candidate ability to job fit, interpersonal skills, and behavior.

Interviewer can make the following mistake.

Selective perception:   Ability he is searching in the candidate can not be find in half an hour or one hour.

Halo effect:  Interviewer can like or dislike any one thing of the candidate and the interviewee can be rejected or accepted through it.

Stereotyping:  The interviewer can have the earlier knowledge about the group the interviewee belongs to.

Projection:  He expected what is he in his mind about the candidate

   

Question No: 53    ( Marks: 5 )

 Differentiate between job description and job specification.

Job description means how the task divided in jobs, this will answer, What to do, how to do. A complete set of series documented form is a job description.

While Job specification means what are the minimum qualification and experience, certification required to do this type of job.

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MGT201- Financial Management Complete Solved FINALTERM EXAMINATION Spring 2010

                                              FINALTERM EXAMINATION

                                                       Spring 2010

                                   MGT201- Financial Management (Session - 3)

                                       Time: 90 min

Marks: 69

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Question No: 1 ( Marks: 1 ) - Please choose one

Which of the following financial market is referred to the market for short-term

government and corporate debt securities?

► Money market

► Capital market

► Primary market

► Secondary market

Question No: 2 ( Marks: 1 ) - Please choose one

Which of the following would be deductible as an expense on the corporation's

income statement? http://vustudents.ning.com/

► Interest paid on outstanding bonds

► Cash dividends paid on outstanding common stock

► Cash dividends paid on outstanding preferred stock

► All of the given options

Question No: 3 ( Marks: 1 ) - Please choose one

In finance, we refer to the market where new securities are bought and sold for

the first time as the __________ market.

► Money market

► Capital market

► Primary market

► Secondary market

Question No: 4 ( Marks: 1 ) - Please choose one

Felton Farm Supplies, Inc., has an 8 percent return on total assets of Rs.300,000

and a net profit margin of 5 percent. What are its sales?

► 750,0Rs.3, 750,000

► Rs.48Rs.480, 000

► Rs.30Rs.300, 000

► Rs.1, Rs.1, 500,000

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Question No: 5 ( Marks: 1 ) - Please choose one

An investment proposal should be judged in whether or not it provides:

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► A return equal to the return require by the investor

► A return more than required by investor

► A return less than required by investor

► A return equal to or more than required by investor

Question No: 6 ( Marks: 1 ) - Please choose one

The value of a bond is directly derived from which of the following?

► Cash flows

► Coupon receipts

► Par recovery at maturity

► All of the given options

Question No: 7 ( Marks: 1 ) - Please choose one

A statistical measure of the variability of a distribution around its mean is referred

to as __________.

► A probability distribution

► The expected return

► The standard deviation

► Coefficient of variation

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Question No: 8 ( Marks: 1 ) - Please choose one

A well-diversified portfolio is defined as:

► One that is diversified over a large enough number of securities that

the nonsystematic variance is essentially zero

► One that contains securities from at least three different industry sectors

► A portfolio whose factor beta equals 1.0

► A portfolio that is equally weighted

Question No: 9 ( Marks: 1 ) - Please choose one

What will happen to the expected return on a stock with a beta of 1.5 and a

market risk premium of 9% if the Treasury bill yield increases from 3% to 5%?

► The expected return will increase by 2.0%

► The expected return will remain unchanged

► The expected return will increase by 1.0%

► The expected return will increase by 3.0%

Question No: 10 ( Marks: 1 ) - Please choose one

How can you limit company-specific risks?

► Invest in that company's bonds

► Invest in a variety of stocks



► Invest in securities that do well in a recession

► Invest in securities that do well in a boom

Question No: 11 ( Marks: 1 ) - Please choose one

Why markets and market returns fluctuate? http://vustudents.ning.com/

► Because of political factors

► Because of social factors

► Because of socio-political factors

► Because of macro systematic factors

Question No: 12 ( Marks: 1 ) - Please choose one

The use of personal borrowing to change the overall amount of financial leverage

to which the individual is exposed is called:

► Dividend recapture

► Financial leverage

► Private debt placement

► Homemade leverage

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Question No: 13 ( Marks: 1 ) - Please choose one

Which of the following best describes the statement; “The value of an asset is

preserved regardless of the nature of the claims against it”?

► Law of diminishing marginal returns

► Law of conservation of value

► Law of return on equity

► Law of return on assets

Question No: 14 ( Marks: 1 ) - Please choose one

The amount of current assets that varies with seasonal requirements is referred

to as __________ working capital.

► Permanent

► Net

► Temporary

► Gross

Question No: 15 ( Marks: 1 ) - Please choose one

Which of the following is an example of a natural hedge?

► The prices and costs are both determined in the global market place.

► The prices are determined in the global market place and costs are

determined in the domestic market place.

► The costs are determined in the global market place and prices are

determined in the domestic market place.

► None of the given options is correct



Question No: 16 ( Marks: 1 ) - Please choose one

How should a successful acquisition be evaluated in the long-run?

► The acquisition is successful if the acquirer is able to increase its earnings

per share (EPS), relative to what it would have been without the acquisition.

► The acquisition is successful if the acquirer is able to reduce its debt-tototal

asset ratio, and hence risk, relative to what it would have been without the

acquisition.

► The acquisition is successful if the acquirer is able to diversify its asset

base and reduce its overall risk.

► The acquisition is successful if the market price of the acquirer's

stock increases over what it would have been without the acquisition.

Question No: 17 ( Marks: 1 ) - Please choose one

Which of the following term is used when the firm can independently control

considerable assets with a very limited amount of equity?

► Joint venture

► Leveraged buyout (LBO)

► Spin-off

► Consolidation

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Question No: 18 ( Marks: 1 ) - Please choose one

Which of the following would NOT be included in inventory carrying cost?

► Insurance expense for the inventory

► Opportunity cost of capital for inventory investment

► Cost of inventory

► Cost of shelf space

Question No: 19 ( Marks: 1 ) - Please choose one

What would you expect to happen to the price of a share of stock on the day it

goes ex-dividend?

► The price should increase by the amount of the dividend

► The price should decrease by the amount of the dividend

► The price should decrease by one-half the amount of the dividend

► The price should remain constant

Question No: 20 ( Marks: 1 ) - Please choose one

Which of the following is the suggestion of Trade-off theory of capital structure?

► Firms should add leverage whenever interest rates are low

► Firms with higher operating risk should use less debt

► Firms should use 50% debt and 50% equity

► Firms should use debt to overcome high par values of stock

Question No: 21 ( Marks: 1 ) - Please choose one

What is the basic purpose of financial management?

► Finding the best opportunities for the use of finance

► Maintaining the books of accounts of the organization

► Helping managers in managing the employees

► Assessing the nature of employees and motivating them

Question No: 22 ( Marks: 1 ) - Please choose one

“Value line” is an agency in America which performs which of the following

functions? http://vustudents.ning.com/

► Calculates the NPVs

► Calculates the Correlation coefficients

► Calculates the Annuities

► Calculates the stock Betas

Question No: 23 ( Marks: 1 ) - Please choose one

In NPV (Net Present Value) calculations, which of the following is used?

► Excepted rate of return

► Required rate of return

► Both expected rate of return and Required rate of return

► None of the given options

Question No: 24 ( Marks: 1 ) - Please choose one

In a market where the SML (Security Market Line) has steep slope, most of the

investors are:

► Risk lover

► Risk averse

► Gamblers

► None of the given options

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Question No: 25 ( Marks: 1 ) - Please choose one

If an asset B has steeper SML (security market line) than another asset A, which

of the following statements is TRUE?

► Asset A is more risky than asset B

► Asset B is more risky than asset A

► Asset B is as risky as Asset A

► None of the given options

Question No: 26 ( Marks: 1 ) - Please choose one

Which of the following shows ALL possible risk–return combinations of all stocks

in a portfolio, whether these are efficient or not?

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► Security market line

► Capital market line

► Parachute graph

► All of the given options            

Question No: 27 ( Marks: 1 ) - Please choose one

According to Traditionalist Theory, when a 100% Equity Firm takes on more and

more debt, which of the following phenomenon is observed?

► Share Price first falls, then reaches minimum and finally rises

► Share Price first rises, then reaches minimum and finally falls

► Share Price first rises, then reaches maximum and finally falls

► None of the given options

Question No: 28 ( Marks: 1 ) - Please choose one

Which of the following formula represents the yield to maturity?

► Interest yield + Market price

► Capital gain yield + Book value

► Interest yield + Capital gain yield

► Market price + Capital gain yield

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Question No: 29 ( Marks: 1 ) - Please choose one

In the WACC equation (rDxD + rExE + rPxP), xP represents which of the following?

► Weight or Fraction of Total Capital value raised from common stock

► Weight or Fraction of Total Capital value raised from bonds

► Weight or Fraction of Total Capital value raised from preferred stock

► Weight or Fraction of Total Capital value raised from retained earnings

Question No: 30 ( Marks: 1 ) - Please choose one

The date on which the firm’s directors issue a statement about the

announcement of dividend is known as:

► Declaration Date

► Holder-of-record Date

► Ex-Dividend Date

► Payment Date

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Question No: 31 ( Marks: 1 ) - Please choose one

You own 150 shares of ABC Company and it offers you the stock splits 2-for-1.

How many additional shares will you receive after stock splits?

► 100

► 150

► 200



.

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► 300

Question No: 32 ( Marks: 1 ) - Please choose one

The decisions regarding working capital management of a firm are mainly

concerned with which of the following?

► Current assets & long-term liabilities of balance sheet

► Current assets & current liabilities of balance sheet

► Fixed assets & current liabilities of balance sheet

► Fixed assets & long-term liabilities of balance sheet

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Question No: 33 ( Marks: 1 ) - Please choose one

ABC Company wants to use hedging approach to financing assets. How can the

firm use this approach?

► Finance temporary current assets with long-term liabilities

► Finance short-term assets with equity

► Finance permanent working capital with long-term liabilities

► Finance all assets financed with a mixture of 50% equity and 50% longterm

debt

Question No: 34 ( Marks: 1 ) - Please choose one

Which of the following is true regarding financial leverage?

► Whenever a firm's equity increases faster than its debt, financial leverage

increases

► Investors can undo the effects of the firm's capital structure by

using home-made leverage

► Increasing financial leverage will always increase the EPS for

stockholders

► The level of financial leverage that produces the minimum firm value is

the most beneficial to stockholders

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Question No: 35 ( Marks: 1 ) - Please choose one

Suppose that there is no personal or corporate income tax and that the firm's

WACC is not affected by its capital structure, then which of the following

statements is true?

► A firm's cost of equity depends on the firm's business and financial

risks

► The value of the firm is dependent on its capital structure

► The cost of equity increases as the firm's leverage decreases

► The greater the financial leverage, the more valuable is the firm

Question No: 36 ( Marks: 1 ) - Please choose one

Which of the following is NOT a source of spontaneous financing?

► Trade credits



► Short term loans

► Accrued taxes

► Wages payable

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Question No: 37 ( Marks: 1 ) - Please choose one

Which of the following statements depicts the trade-off theory in a better way?

► It states a tradeoff between the costs and benefits of debt financing

► It states the tradeoff between the debt financing and equity financing

► There is tradeoff between assets and liabilities of the firm

► There is tradeoff between revenues and expenses of the firm

Question No: 38 ( Marks: 1 ) - Please choose one

Value of the firm can be calculated with the help of which of the following

formulas?

► Price of a share x No. of shares outstanding

► Price of a share x debt / equity

► Price of a share / No. of shares outstanding

► Price of a share x earnings after tax / equity

Question No: 39 ( Marks: 1 ) - Please choose one

Company A has to purchase another company. How do Company A pay for

buying the other company?

► In Cash

► In Shares

► Bank Borrowing

► All of the given options

Question No: 40 ( Marks: 1 ) - Please choose one

Which of the following mathematical expressions depicts divestiture?

► 5-1=4

► 5-1=6

► 5+1=6

► None of the given options

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Question No: 41 ( Marks: 1 ) - Please choose one

What happens to the total risk when leverage increases with high rate?

► Total risk increases with slow rate than the leverage

► Total risk increases with decreasing rate

► Total risk remains the same

► Total risk increases faster than the leverage

Question No: 42 ( Marks: 1 ) - Please choose one

From which of the followings, the stability of the firm can be judged?

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► Financial leverage

► Weighted-average cost of capital

► Capital structure

► Business risk

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Question No: 43 ( Marks: 1 ) - Please choose one

You have 25 Indian Rupees and you want to exchange these Indian Rupees with

Pakistan Rupees. You go to a money changer and he tells you the selling rate of

1 Indian Rupee is 1.8041 PKR. The rate 1.8041 PKR is referred as:

► Bid rate

► Forward rate

► Future rate

► Ask rate

Question No: 44 ( Marks: 1 ) - Please choose one

The value at which buyers and sellers are willing to buy and sell any asset is

known as:

► Liquidation value

► Book value

► Intrinsic value

► Market value

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Question No: 45 ( Marks: 1 ) - Please choose one

“Do not compare apples with oranges” is the concept in:

► Discounting and Net present value

► Risk & return

► Insurance management

► Time value of money

Question No: 46 ( Marks: 1 ) - Please choose one

Which of the following statement best describes capital budgeting?

► It’s a tool which is used to evaluate the projects and fixed assets of the

company

► A technique used to assess the working capital requirement

► It will help the management to decide whether the new venture should be

taken up or not.

► All of the given options are correct

Question No: 47 ( Marks: 1 ) - Please choose one

In Pakistan which of the following is assigned to bond rating and risk?

► IMF

► Moody’s

► Standard & poor

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► PACRA

Question No: 48 ( Marks: 1 ) - Please choose one

In Gordon’s formula (rCE = DIV1 / Po + g), rCE is considered as __________ and

“g” is considered as __________.

► Dividend yield, operating expenses

► Dividend yield, operating income

► Dividend yield, capital loss

► Dividend yield, capital gain

Question No: 49 ( Marks: 3 )

Where do firms invest excess funds until they are needed to pay bills?

Question No: 50 ( Marks: 3 )

What problems a firm can face if it faces a shortfall or surplus of

inventories.

Question No: 51 ( Marks: 5 )

Compare aggressive working capital financing with conservative working

capital financing.

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Question No: 52 ( Marks: 5 )

Ahmad Corporation, a small business man, provided the following information

about the production level:

Fixed operating cost = Rs. 2,500, Sale price per unit is Rs.10 and its operating

variable cost per unit is Rs. 5.

 You are required to calculate the breakeven quantity from the above

information.

Answer:

Sales=10/unit

VC=5/unit

CM=5/unit

FC=2,500, 250/unit

Profit=200/unit

Fixed cost/ CM unit= 25, 00/5

Breakeven quantity=500

 If variable cost has changed and it is increased up to Rs. 6 then what

will be the effect of this change on Break even quantity.





Answer:

Contribution Margin=10-6=4

New Breakeven quantity=25, 00/4=625

Breakeven quantity is increased by 125 units.

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Question No: 53 ( Marks: 5 ) http://vustudents.ning.com/

ABC Corporation expects to have the following data during the coming

year.

Assets Rs. 200,000 Interest rate 8%

Debt/Assets, book value 65% Tax rate 40%

EBIT Rs. 25,000

Required:

What is the firm's expected ROE?

Answer:

ROE=NI/Equity

NI=EBIT-Tax=25,000-10,000=15,000

Assets=(200,000*65%)=130,000

130,000*8%=10,400

Profit after interest=25,000-10,400=14,600

14,600*40%=5840

Net profit after tax=8,760

ROE=(8,760/70,000)*100=12.51%

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