Accounting for Managers

251. The Future Value (FV) of $1000 in 5 years at 5% interest rate will be:

1. $1,000.00
2. $1,276.28
3. $999.99
4. $1,500.52

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252. Which of the following is an advantage of a corporation that is NOT an advantage as in a partnership?

1. Limited liability
2. Capital shortage
3. Single taxation
4. All of the above

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253. You wish to earn a return of 13% on each of two stocks, X and Y. Stock X is expected to pay a dividend of Rs. 3 in the upcoming year while Stock Y is expected to pay a dividend of Rs. 4 in the upcoming year. The expected growth rate of dividends for both stocks is 7%. The intrinsic value of stock X:

1. Will be greater than the intrinsic value of stock Y
2. Will be the same as the intrinsic value of stock Y
3. Will be less than the intrinsic value of stock Y
4. Cannot be calculated without knowing the market rate of return

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254. Financial leverage means

1. Use of more debt capital to increase profit
2. High degree of solvency
3. Low bank finance
4. None of the above

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255. A capital budgeting technique that is NOT considered as discounted cash flow method is:

1. Payback period
2. Internal rate of return
3. Net present value
4. Profitability index

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256. The coupon is the

1. Amount of discount received when a Bond is purchased
2. Amount paid to a Bond dealer when a Bond is purchased
3. Difference between the Bid and Ask Price
4. Stated Interest Payment on a Bond

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257. You wish to earn a return of 10% on each of two stocks, C and D. Each of the stocks is expected to pay a dividend of Rs2 in the upcoming year. The expected growth rate of dividends is 9% for stock C and nine percent for stock D. The intrinsic value of stock C ______________.

1. Will be the same as the intrinsic value of stock D
2. Will be less than the intrinsic value of stock D
3. Cannot be calculated without knowing the rate of return on the market portfolio
4. None of the above is a correct statement

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258. Which of following is (are) Direct Claim Security?

1. Bonds
2. Option
3. Shares
4. a and c

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259. The ______________ is defined as the present value of all cash proceeds to the investor in the stock.

1. Dividend payout ratio
2. Intrinsic value
3. Market capitalization rate
4. Plowback ratio

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260. Break even analysis is also called

1. Contribution Margin
2. Unit sales
3. Cost-Volume-Profit analysis
4. None of the above

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