MCQOPTIONS
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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Chance of happening any unfavourable event in near future is classified as |
| A. | chance |
| B. | event happening |
| C. | probability |
| D. | risk |
| Answer» E. | |
| 2. |
Standard deviation is 18% and expected return is 15.5% then coefficient of variation would be |
| A. | 0.86% |
| B. | 1.16% |
| C. | 2.50% |
| D. | -2.50% |
| Answer» C. 2.50% | |
| 3. |
Weighted average of probabilities is classified as |
| A. | average rate of return |
| B. | expected rate of return |
| C. | past rate of return |
| D. | weighted rate of return |
| Answer» C. past rate of return | |
| 4. |
According to market risk premium, an amount of risk premium depends upon investor |
| A. | risk taking |
| B. | risk aversion |
| C. | market aversion |
| D. | portfolio aversion |
| Answer» C. market aversion | |
| 5. |
Of all stocks in a portfolio, required rate of return is classified as |
| A. | return portfolio |
| B. | in volatile portfolio |
| C. | volatile portfolio |
| D. | market portfolio |
| Answer» E. | |
| 6. |
Term structure premium, an inflation of bond and bond default premium are included in |
| A. | risk factors |
| B. | premium factors |
| C. | bond buying factors |
| D. | multi model |
| Answer» B. premium factors | |
| 7. |
Projects which are mutually exclusive but different on scale of production or time of completion then the |
| A. | external return method |
| B. | net present value of method |
| C. | net future value method |
| D. | internal return method |
| Answer» C. net future value method | |
| 8. |
Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is |
| A. | positive |
| B. | negative |
| C. | zero |
| D. | one |
| Answer» B. negative | |
| 9. |
In mutually exclusive projects, project which is selected for comparison with others must have |
| A. | higher net present value |
| B. | lower net present value |
| C. | zero net present value |
| D. | all of above |
| Answer» B. lower net present value | |
| 10. |
In cash flow analysis, two projects are compared by using common life is classified as |
| A. | transaction approach |
| B. | replacement chain approach |
| C. | common life approach |
| D. | Both B and C |
| Answer» E. | |
| 11. |
Cost of common stock is 15% and bond yield is 10.5% then bond risk premium will be |
| A. | 1.43% |
| B. | 8.50% |
| C. | 25.50% |
| D. | 4.50% |
| Answer» E. | |
| 12. |
A formula of after-tax component cost of debt is |
| A. | interest rate-tax savings |
| B. | marginal tax-required return |
| C. | interest rate + tax savings |
| D. | borrowing cost + embedded cost |
| Answer» B. marginal tax-required return | |
| 13. |
An internal rate of return in capital budgeting can be modified to make it representative of |
| A. | relative outflow |
| B. | relative inflow |
| C. | relative cost |
| D. | relative profitability |
| Answer» E. | |
| 14. |
Present value of future cash flows is Rs 2000 and an initial cost is Rs 1100 then profitability index will be |
| A. | 55.00% |
| B. | 1.82 |
| C. | 0.55 |
| D. | 1.82% |
| Answer» C. 0.55 | |
| 15. |
In capital budgeting, term of bond which has great sensitivity to interest rates is |
| A. | long-term bonds |
| B. | short-term bonds |
| C. | internal term bonds |
| D. | external term bonds |
| Answer» B. short-term bonds | |
| 16. |
Beta which is estimated as regression slope coefficient is classified as |
| A. | historical beta |
| B. | market beta |
| C. | coefficient beta |
| D. | risky beta |
| Answer» B. market beta | |
| 17. |
Life that maximizes net present value of an asset is classified as |
| A. | minimum life |
| B. | present value life |
| C. | economic life |
| D. | transaction life |
| Answer» D. transaction life | |
| 18. |
If net present value is positive then profitability index will be |
| A. | greater than two |
| B. | equal to |
| C. | less than one |
| D. | greater than one |
| Answer» E. | |
| 19. |
If future return on common stock is 19% and rate on T-bonds is 11% then current market risk premium will be |
| A. | Rs 30.00 |
| B. | 30.00% |
| C. | 8.00% |
| D. | Rs 8.00 |
| Answer» D. Rs 8.00 | |
| 20. |
An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expects use for calculating |
| A. | dividend growth model |
| B. | actual growth model |
| C. | constant growth model |
| D. | variable growth model |
| Answer» D. variable growth model | |
| 21. |
An expected dividend yield is subtracted from an expected rate of return which is used to calculate |
| A. | specialized growth rate |
| B. | capital gains yield |
| C. | casual growth yield |
| D. | past growth rate |
| Answer» C. casual growth yield | |
| 22. |
In expected rate of return for constant growth, dividends are expected to grow but with the |
| A. | constant rate |
| B. | variable rate |
| C. | yielding rate |
| D. | returning yield |
| Answer» B. variable rate | |
| 23. |
Pre-emptive right of common stockholders are necessarily included in company |
| A. | laws |
| B. | purchase chart |
| C. | corporate charter |
| D. | selling charter |
| Answer» D. selling charter | |
| 24. |
Information which is reflected in current market prices with help of past price movements is classified as |
| A. | market efficiency |
| B. | semi strong efficiency |
| C. | weak form efficiency |
| D. | strong form efficiency |
| Answer» D. strong form efficiency | |
| 25. |
Value of stock as concluded with help of analysis by particular investor is classified as |
| A. | particular value |
| B. | intrinsic value |
| C. | fundamental value |
| D. | Both B and C |
| Answer» E. | |
| 26. |
In expected rate of return for constant growth, capital gains is divided by beginning price to calculate |
| A. | yield of loan return |
| B. | yield of mortgage return |
| C. | yield of capital gains |
| D. | yield of fixed cost |
| Answer» D. yield of fixed cost | |
| 27. |
Tracking stock of company is also classified as |
| A. | target stock |
| B. | dividend stock |
| C. | firm part stock |
| D. | tied stock |
| Answer» B. dividend stock | |
| 28. |
Beginning price is Rs 25 and capital gains yield is 5% then capital gain would be |
| A. | Rs 50.00 |
| B. | Rs 1.25 |
| C. | 50 times |
| D. | Rs 23.75 |
| Answer» C. 50 times | |
| 29. |
An expected dividend yield is added into expected growth rate to calculate |
| A. | dividend return |
| B. | expected rate of return |
| C. | expected capital |
| D. | invested capita |
| Answer» C. expected capital | |
| 30. |
Expected dividends in each year and price investor expecting to get at selling of stock are two components of |
| A. | dividend cash flow |
| B. | expected cash flows |
| C. | price cash flows |
| D. | investing cash |
| Answer» C. price cash flows | |
| 31. |
An original investment is Rs 30 and an expected capital gain is Rs 10 then an expected final stock price will be |
| A. | Rs 20.00 |
| B. | Rs 40.00 |
| C. | -Rs 40.00 |
| D. | -Rs 20.00 |
| Answer» C. -Rs 40.00 | |
| 32. |
Preferred stock dividends must be paid on common stock and must have |
| A. | fixed amount of dividends |
| B. | fixed amount of shares |
| C. | variable amount of dividends |
| D. | variable amount of shares |
| Answer» B. fixed amount of shares | |
| 33. |
Positive minimum risk portfolio of any security shows that market security sold |
| A. | equal to original price |
| B. | equal to sum of stocks |
| C. | less than original price |
| D. | greater than original price |
| Answer» E. | |
| 34. |
An opposite of perfect positive correlation + 1.0 is called |
| A. | negative correlation |
| B. | multiple correlation |
| C. | divisor correlation |
| D. | none of above |
| Answer» B. multiple correlation | |
| 35. |
External factors such as expiration of basic patents and industry competition effect |
| A. | patents premium |
| B. | competition premium |
| C. | company's beta |
| D. | expiry premium |
| Answer» D. expiry premium | |
| 36. |
Risk affects any firm with factors such as war, recessions, inflation and high interest rates is classified as |
| A. | diversifiable risk |
| B. | market risk |
| C. | stock risk |
| D. | portfolio risk |
| Answer» C. stock risk | |
| 37. |
An analysis of decision making of investors and managers is classified as |
| A. | risky finance |
| B. | behavioral finance |
| C. | premium finance |
| D. | buying finance |
| Answer» C. premium finance | |
| 38. |
Rational traders immediately sell stock when price is |
| A. | conditional |
| B. | inefficient portfolio |
| C. | too low |
| D. | too high |
| Answer» E. | |
| 39. |
A line which shows relationship between an expected return and risk on efficient portfolio is considered as |
| A. | efficient market line |
| B. | attributable market line |
| C. | capital market line |
| D. | security market line |
| Answer» D. security market line | |
| 40. |
According to capital asset pricing model assumptions, quantities of all assets are |
| A. | given and fixed |
| B. | not given and fixed |
| C. | not given and variable |
| D. | given and variable |
| Answer» B. not given and fixed | |
| 41. |
Stock portfolio with lowest book for market ratios is considered as |
| A. | S portfolio |
| B. | B to M portfolio |
| C. | H portfolio |
| D. | L portfolio |
| Answer» E. | |
| 42. |
Betas tend to move towards 1.0 with passage of time are classified as |
| A. | standard betas |
| B. | varied betas |
| C. | historical betas |
| D. | adjusted betas |
| Answer» E. | |
| 43. |
A theory which states that assets are traded at price equal to its intrinsic value is classified as |
| A. | efficient money hypothesis |
| B. | efficient market hypothesis |
| C. | inefficient market hypothesis |
| D. | inefficient money hypothesis |
| Answer» C. inefficient market hypothesis | |
| 44. |
All points lie on line if degree of dispersion is |
| A. | four |
| B. | one |
| C. | Two |
| D. | five |
| Answer» C. Two | |
| 45. |
In calculation of betas, an adjusted betas are highly dependent on historical |
| A. | unadjusted betas |
| B. | adjusted historical betas |
| C. | fundamental historical betas |
| D. | fundamental varied betas |
| Answer» B. adjusted historical betas | |
| 46. |
Price earning ratio and price by cash flow ratio are classified as |
| A. | marginal ratios |
| B. | equity ratios |
| C. | return ratios |
| D. | market value ratios |
| Answer» E. | |
| 47. |
Process of comparing company results with other leading firms is considered as |
| A. | comparison |
| B. | analysis |
| C. | benchmarking |
| D. | return analysis |
| Answer» D. return analysis | |
| 48. |
A company purchases goods but does not pay payments to suppliers immediately and record them as |
| A. | account payable |
| B. | account receivable |
| C. | current liabilities |
| D. | accumulated liabilities |
| Answer» B. account receivable | |
| 49. |
Stockholders that do not get benefits even if company's earnings grow are classified as |
| A. | preferred stockholders |
| B. | common stockholders |
| C. | hybrid stockholders |
| D. | debt holders |
| Answer» B. common stockholders | |
| 50. |
Process of calculating future value of money from present value is classified as |
| A. | compounding |
| B. | discounting |
| C. | money value |
| D. | stock value |
| Answer» B. discounting | |