1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
,1. Which of the following best describes the concept of Net
Present Value (NPV)?
A) The difference between discounted cash inflows and
outflows
B) The total cash inflows expected from a project
C) The interest rate at which a project's NPV equals zero
D) The sum of all future cash flows
ANS: A
Rationale: NPV measures the profitability of an investment
by calculating the difference between the present value of cash
inflows and outflows.
2. When a firm uses debt financing, which of the following risks
is predominantly increased?
A) Market risk
B) Default risk
C) Operational risk
D) Systematic risk
, ANS: B
Rationale: Increased debt financing can lead to higher default
risk as the firm may struggle to cover interest obligations.
3. The Capital Asset Pricing Model (CAPM) is used to calculate:
A) A company's market share
B) The risk-free rate
C) An asset's expected return based on its systematic risk
D) The total value of equity
ANS: C
Rationale: CAPM quantifies the relationship between
systematic risk (beta) and expected return.
4. Which financial statement provides a snapshot of a company’s
assets, liabilities, and equity at a specific point in time?
A) Income Statement
B) Cash Flow Statement
C) Balance Sheet
D) Statement of Shareholders' Equity
, ANS: C
Rationale: The Balance Sheet presents the financial position
of a firm at a specific date.
5. An increase in which of the following will lead to a decrease
in the present value of future cash flows?
A) Cash flows
B) Discount rate
C) Time period
D) None of the above
ANS: B
Rationale: A higher discount rate reduces the present value of
cash flows, as future cash flows are worth less in today's terms.
Fill-in-the-Blank Questions
6. The ________ is a ratio that measures a firm’s ability to cover
its short-term obligations with its current assets.
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