MBAX 6070 Managerial Finance Midterms (Qns & Ans) 2026

MBAX 6070 Managerial Finance Midterms (Qns & Ans) 2026
1. Which of the following best describes the concept of "net
present value" (NPV)?
 - A) The total revenue generated by a project
 - B) The difference between the present value of cash inflows
and outflows
 - C) The interest rate at which a project's NPV is zero
 - D) The total cost of a project
 - ANS: B) The difference between the present value of cash
inflows and outflows
©2026/2027
 - Rationale: NPV measures the difference between the
present value of cash inflows and outflows, helping to assess the
profitability of a project.
2. What is the primary purpose of the capital asset pricing model
(CAPM)?
 - A) To determine the optimal capital structure
 - B) To calculate the expected return on an investment based on
its risk
 - C) To forecast future market trends
 - D) To evaluate the effectiveness of marketing strategies
 - ANS: B) To calculate the expected return on an investment
based on its risk
 - Rationale: CAPM is used to determine the expected return
on an investment by considering its risk relative to the market.
3. Which of the following is a key characteristic of preferred
stock?
 - A) Voting rights
 - B) Fixed dividend payments
 - C) High growth potential
 - D) Variable interest rates
 - ANS: B) Fixed dividend payments

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