QUIZ 5 1) The appropriate objective of an enterprises: Maximization of owners wealth Maximization of sales Maximization of profits 2) The Job of a Finance

manager is confined to: Raising of funds Management of cash Raising of funds & their effective utilization 3) Financial decision involve: Investment, Financing & Dividend decisions Investment, Financing & Sales decisions Financing, Dividend & Cash decisions 4) Profit Maximization ignores___________ 5) The main aim of finance function is to maximize the profits.(T/F)

6) Cash management is a important task of the finance manger(T/F) 7) Compounded technique of time of money is called time value of money. (T/F)

8) Finance function is one of the most important functions of business management. 9) "Shareholder wealth" in a firm is represented by a) The number of people employed in the firm. b) book value of the firm's assets less the book value of its liabilities c) amount of salary paid to its employees. d) the market price per share of the firm's common stock. 10) The market price of a share of common stock is determined by: a) board of directors of the firm. b) the stock exchange on which the stock is listed. c) the president of the company. d) individuals buying and selling the stock.

QUIZ6 1) This type of risk is avoidable through proper diversification. a) portfolio risk b) systematic risk c) unsystematic risk d) total risk .

2) In proper capital budgeting analysis we evaluate incremental a) accounting income. b) cash flow . c) operating profit. d) earnings. 3)A capital investment is one that a) has the prospect of long-term benefits. b) has the prospect of short-term benefits.. c) is only undertaken by large corporations. d) applies only to investment in fixed assets 4) The method provides correct rankings of mutually exclusive projects, when the firm is not subject to capital rationing. a) net present value b) internal rate of return . c) payback period d) profitability index 5) The investment proposal with the greatest relative risk would have a) the highest standard deviation of net present value. b) the highest coefficient of variation of net present value. c) the highest expected value of net present value. d) the lowest opportunity loss likelihood. 6) Probability-tree analysis is best used when cash flows are expected to be a) independent over time. b) risk-free. c) related to the cash flows in previous periods. d) known with certainty 7) Capital budgeting is the process of identifying, analyzing, and selecting investment projects whose cash flows will all be received within one year. a) True b) False

8) A capital investment involves making a current cash outlay in the expectation of future benefits. a) True b) False

9) Depreciation increases taxable income. a) True b) False

10) A mutually exclusive project is one whose acceptance does not preclude the acceptance of alternative projects. a) True b) False