McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Uncategorized topics .
Chapters
| 51. |
The Break-even Point of a company is that level of sales income which will equal the sum of its fixed cost. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 52. |
Which of the following are characteristics of B.E.P? |
| A. | There is no loss and no profit to the firm. |
| B. | Total revenue is equal to total cost. |
| C. | Contribution is equal to fixed cost. |
| D. | All of the above. |
| Answer» D. All of the above. | |
| 53. |
Which of the following are assumptions for break-even analysis? |
| A. | Elements of cost cannot be divided in different groups. |
| B. | Fixed cost remains certain from zero production to full capacity. |
| C. | Behavior of different costs is linear |
| D. | Selling per price unit remains constant. |
| Answer» B. Fixed cost remains certain from zero production to full capacity. | |
| 54. |
While measuring break-even analysis, it is considered that during a specific period there will be no change in general price level, i.e., labor, cost of material and other overheads. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 55. |
Which of the following are limitations of break-even analysis? |
| A. | Static concept |
| B. | Capital employed is taken into account. |
| C. | Limitation of non-linear behavior of costs |
| D. | Limitation of presence of perfect competition |
| Answer» A. Static concept | |
| 56. |
Break-even analysis is used in “Make or Buy” decision. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 57. |
Using equation method, Break-even point is calculated as |
| A. | Sales = Variable expenses + Fixed expenses + Profit |
| B. | Sales = Variable expenses + Fixed expenses - Profit |
| C. | Sales = Variable expenses - Fixed expenses + Profit |
| D. | None of the above |
| Answer» A. Sales = Variable expenses + Fixed expenses + Profit | |
| 58. |
Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point? |
| A. | 500 units |
| B. | 1,000 units |
| C. | 1,250 units |
| D. | None of the above |
| Answer» C. 1,250 units | |
| 59. |
Contribution is also known as |
| A. | Contribution margin |
| B. | Net Margin |
| C. | Both a and b |
| D. | None of the above |
| Answer» A. Contribution margin | |
| 60. |
Given selling price is Rs 20 per unit, variable cost is Rs 16 per unit contribution is |
| A. | Rs 1.25 per unit |
| B. | Rs 4 per unit |
| C. | Rs 0.8 per unit |
| D. | None of the above |
| Answer» B. Rs 4 per unit | |
| 61. |
Risk of two securities with different expected return can be compared with: |
| A. | Coefficient of variation |
| B. | Standard deviation of securities |
| C. | Variance of Securities |
| D. | None of the above |
| Answer» A. Coefficient of variation | |
| 62. |
A portfolio having two risky securities can be turned risk less if |
| A. | The securities are completely positively correlated |
| B. | If the correlation ranges between zero and one |
| C. | The securities are completely negatively correlated |
| D. | None of the above. |
| Answer» C. The securities are completely negatively correlated | |
| 63. |
Efficient frontier comprises of |
| A. | Portfolios that have negatively correlated securities |
| B. | Portfolios that have positively correlated securities |
| C. | Inefficient portfolios |
| D. | Efficient portfolios |
| Answer» D. Efficient portfolios | |
| 64. |
Efficient portfolios can be defined as those portfolios which for a given level of risk provides |
| A. | Maximum return |
| B. | Average return |
| C. | Minimum return |
| D. | None of the above |
| Answer» A. Maximum return | |
| 65. |
Capital market line is: |
| A. | Capital allocation line of a market portfolio |
| B. | Capital allocation line of a risk free asset |
| C. | Both a and b |
| D. | None of the above |
| Answer» C. Both a and b | |
| 66. |
CAPM accounts for: |
| A. | Unsystematic risk |
| B. | Systematic risk |
| C. | Both a and b |
| D. | None of the above |
| Answer» B. Systematic risk | |
| 67. |
The point of tangency between risk return indifferences curves and efficient frontier highlights: |
| A. | Optimal portfolio |
| B. | Efficient portfolio |
| C. | Sub-optimal portfolio |
| D. | None of the above |
| Answer» C. Sub-optimal portfolio | |
| 68. |
Return on any financial asset consists of capital yield and current yield. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» A. True | |
| 69. |
There is no difference between the capital market line and security market line as both the terms are same. |
| A. | True |
| B. | False |
| C. | none |
| D. | all |
| Answer» B. False | |
| 70. |
Risk in Capital budgeting implies that the decision-maker knows___________of the cash flows. |
| A. | Variability, |
| B. | Probability, |
| C. | Certainty, |
| D. | None of the above |
| Answer» B. Probability, | |
| 71. |
In Certainty-equivalent approach, adjusted cash flows are discounted at: |
| A. | Accounting Rate of Return, |
| B. | Internal Rate of Return, |
| C. | Hurdle Rate, |
| D. | Risk-free Rate |
| Answer» D. Risk-free Rate | |
| 72. |
Risk in Capital budgeting is same as: |
| A. | Uncertainty of Cash flows, |
| B. | Probability of Cash flows, |
| C. | Certainty of Cash flows, |
| D. | Variability of Cash flows |
| Answer» D. Variability of Cash flows | |
| 73. |
Which of the following is a risk factor in capital budgeting? |
| A. | Industry specific risk factors, |
| B. | Competition risk factors, |
| C. | Project specific risk factors, |
| D. | All of the above |
| Answer» D. All of the above | |
| 74. |
In Risk-Adjusted Discount Rate method, the normal rate of discount is: |
| A. | Increased, |
| B. | Decreased, |
| C. | Unchanged, |
| D. | None of the above |
| Answer» A. Increased, | |
| 75. |
In Risk-Adjusted Discount Rate method, which one is adjusted? |
| A. | Cash flows, |
| B. | Life of the proposal, |
| C. | Rate of discount, |
| D. | Salvage value |
| Answer» C. Rate of discount, | |
| 76. |
NPV of a proposal, as calculated by RADR real CE Approach will be: |
| A. | Same, |
| B. | Unequal, |
| C. | Both (a) and (b), |
| D. | None of (a) and (b) |
| Answer» B. Unequal, | |
| 77. |
Risk of a Capital budgeting can be incorporated |
| A. | Adjusting the Cash flows, |
| B. | Adjusting the Discount Rate, |
| C. | Adjusting the life, |
| D. | All of the above |
| Answer» D. All of the above | |
| 78. |
Which element of the basic NPV equation is adjusted by the RADR? |
| A. | Denominator, |
| B. | Numerator, |
| C. | Both, |
| D. | None |
| Answer» A. Denominator, | |
| 79. |
In CE Approach, the CE Factors for different years are: |
| A. | Generally increasing, |
| B. | Generally decreasing, |
| C. | Generally same, |
| D. | None of the above |
| Answer» B. Generally decreasing, | |
| 80. |
Which of the following is correct for RADR? |
| A. | Accept a project if NPV at RADR is negative, |
| B. | Accept a project if IRR is more than RADR |
| C. | RADR is overall cost of capital plus risk-premium , |
| D. | All of the above. |
| Answer» C. RADR is overall cost of capital plus risk-premium , | |
| 81. |
In Playback Period approach to risk the target payback period is |
| A. | Not adjusted, |
| B. | Adjusted upward, |
| C. | Adjusted downward , |
| D. | (b) or c |
| Answer» C. Adjusted downward , | |
| 82. |
In Sensitivity Analysis, the emphasis is on assessment of sensitivity of |
| A. | Net Economic Life, |
| B. | Net Present Value, |
| C. | Both (a) and (b), |
| D. | None of (a) and (b) |
| Answer» B. Net Present Value, | |
| 83. |
Most Sensitive variable as given by the Sensitivity Analysis should be: |
| A. | Ignored, |
| B. | Given Least important, |
| C. | Given the maximum importance, |
| D. | None of the above |
| Answer» C. Given the maximum importance, | |
| 84. |
Expected Value of Cashflow, EVCF, is: |
| A. | Certain to occur, |
| B. | Most likely Cashflows, |
| C. | Arithmetic Average Cashflow, |
| D. | Geometric Average Cashflow |
| Answer» B. Most likely Cashflows, | |
| 85. |
Concept of joint probability is used in case of: |
| A. | Independent Cashflows, |
| B. | Uncertain Cashflows, |
| C. | Dependent Cashflows, |
| D. | Certain Cashflows |
| Answer» C. Dependent Cashflows, | |
| 86. |
Decision-tree approach is used in: |
| A. | Proposals with longer life, |
| B. | Sequential decisions, |
| C. | Independent Cashflows, |
| D. | Accept-Reject Proposal |
| Answer» B. Sequential decisions, | |
| 87. |
In a cash flow series: |
| A. | Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period |
| B. | Either an increase or decrease in the amount of a cash flow is called the gradient |
| C. | The gradient in the cash flow may be positive or negative |
| D. | All of these |
| Answer» D. All of these | |
| 88. |
In a cash-flow diagram: |
| A. | Time 0 is considered to be the present |
| B. | Time 1 is considered to be the end of time period 1 |
| C. | A vertical arrow pointing up indicates a positive cash flow |
| D. | All of these |
| Answer» D. All of these | |
| 89. |
Which method is adopted to develop an approximate or conceptual estimate for perimeter works for buildings from the following? |
| A. | Base unit method |
| B. | Cost per function method |
| C. | Cost per square metre method |
| D. | Cost per linear metre method |
| Answer» D. Cost per linear metre method | |
| 90. |
Pick up the correct statement from the following: |
| A. | The ratio of current assets, loans and advances, and the current liquidity is called current ratio |
| B. | Larger the current ratio, larger is the margin of safety |
| C. | The operating profit is the difference between gross profit and operating expenses |
| D. | All of these |
| Answer» D. All of these | |
| 91. |
The ratio of current assets to current liabilities is known as |
| A. | Liquidity ratio |
| B. | Current ratio |
| C. | Acid-Test (or Quick) ratio |
| D. | Debts ratio |
| Answer» B. Current ratio | |
| 92. |
In the cash-flow diagram shown in the given figure |
| A. | Equal deposits of Rs 3000 per year (A) are made, starting now |
| B. | The rate of interest is 10% per year account |
| C. | The amount accumulated after the seventh deposit is to be computed |
| D. | All of these |
| Answer» D. All of these | |
| 93. |
The more critical (or severe) test of the firm's liquidity can be judged by: |
| A. | Liquidity ratio |
| B. | Current ratio |
| C. | Acid-Test (or Quick) ratio |
| D. | Debts ratio |
| Answer» C. Acid-Test (or Quick) ratio | |
| 94. |
If interest is paid more than once in a year, ‘i’ is the rate of interest per year, ‘n’ is the number of periods in years and ‘m’ is a number of periods per years, compound amount factor (CAF) is: |
| A. | (1 + i/m)n |
| B. | (1 + i/n)m |
| C. | (1 + i/n)1/m |
| D. | (1 + i/m)1/n |
| Answer» A. (1 + i/m)n | |
| 95. |
Pick up the correct reason for making conceptual (or preliminary) estimate from the following: |
| A. | To have a check on a definitive cost estimate |
| B. | To check quotations from contractors and/or sub-contractors |
| C. | To compute target estimate for the owner while drawing and specifications are in initial stage |
| D. | All of these |
| Answer» D. All of these | |
| 96. |
Pick up the correct method adopted for developing the approximate or conceptual estimates from the following: |
| A. | Base unit method |
| B. | Cost per function method |
| C. | Cost per square metre |
| D. | All of these |
| Answer» D. All of these | |
| 97. |
Ratio analysis of a construction firm is used for analysis by: |
| A. | Share holders |
| B. | Firm's management |
| C. | Banks of the firm |
| D. | Financial analysts |
| Answer» D. Financial analysts | |
| 98. |
Current assets less inventories divided by current liabilities is known as |
| A. | Liquidity ratio |
| B. | Current ratio |
| C. | Acid-Test (or Quick) ratio |
| D. | Debts ratio |
| Answer» C. Acid-Test (or Quick) ratio | |
| 99. |
Refer to the cash flow diagram of uniform gradient in a cash flow (in the given figure), the gradient is: |
| A. | Rs. 10000 per year |
| B. | Rs. 15000 per year |
| C. | Rs. 20000 per year |
| D. | Rs. 25000 per year |
| Answer» D. Rs. 25000 per year | |
| 100. |
Pick up the correct statement from the following: |
| A. | The change in the amount of money over a given time period is called 'time value' of money, a most important concept in engineering economy |
| B. | The manifestation of the time value of money is termed as interest |
| C. | Interest on borrowing = present amount owed - original loan |
| D. | All of these |
| Answer» D. All of these | |
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