MGT201 Final Term MCQs 2026 by VUBuddy

Q1. Which of the followings is/are the example(s) of capital expenditures?

1. All of the given options
2. Investment in alteration of fixed assets
3. Replacement of existing fixed asset
4. Purchase of new fixed asset

Correct answer: All of the given options

Q2. The beta of the benchmark index or market portfolio is:

1. 0.50
2. 1.00
3. 0.00
4. -1.00

Correct answer: 1.00

Q3. The variability in portfolio returns that can be avoided through diversification is termed as:

1. Unsystematic risk
2. Coefficient of variation
3. Systematic risk
4. Standard deviation

Correct answer: Unsystematic risk

Q4. Which of the following statement is TRUE in regards to conservative approach to financing working capital?

1. Financing the long term needs of the business through short term debt
2. Financing the short term needs of the business through short term debt
3. Financing the seasonal needs of the business through equity
4. Financing the short term needs of the business through long term debt

Correct answer: Financing the short term needs of the business through long term debt

Q5. Which of the following statement is true regarding covariance?

1. The range of covariance lies between -1 to +1
2. The covariance can never be negative
3. The covariance is always positive because it is a squared value
4. The covariance can take on any negative, positive or a zero value

Correct answer: The covariance can take on any negative, positive or a zero value

Q6. Lead time is defined as:

1. Length of time it takes to order inventory
2. Length of time before stock out
3. Length of time between ordering and receiving inventory order
4. Time before production is assumed

Correct answer: Length of time between ordering and receiving inventory order

Q7. Which of the following is/are the component(s) of return?

1. Interest
2. Dividend
3. Additional amount on investment
4. All of above given options

Correct answer: All of above given options

Q8. Which of the following statement is TRUE, if contribution margin is positive?

1. Both profit and loss can occur
2. Profit will only occur if the contribution margin is less than the fixed expenses
3. Profit will occur
4. Loss will occur if the contribution margin is higher than fixed expenses

Correct answer: Both profit and loss can occur

Q9. Assume that the market risk premium is 15%, risk free rate of return is 5% and beta of an asset X is 0.2. What will be the expected return of asset X under CAPM?

1. 8%
2. 2%
3. 6%
4. 5%

Correct answer: 8%

Q10. Which of the following is correct formula for contribution margin ratio?

1. Sales / Contribution margin per unit
2. Fixed cost / Contribution margin per unit
3. Sales / Variable costs
4. Total contribution margin/ Sales

Correct answer: Total contribution margin/ Sales

Q1. Which of the following represents a change in capital structure?

1. An increase in % of common shares in the capital structure
2. An decrease in % of debt in the capital structure
3. An increase in % of preferred stock in the capital structure
4. All of the given options

Correct answer: All of the given options

Q2. Which of the following is not the prime objective of a commercial business?

1. Fulfillment of corporate social responsibilities
2. Economic uplift
3. Employment generation
4. All of the given options

Correct answer: Fulfillment of corporate social responsibilities

Q3. What will be cost of preferred shares if a company is paying Rs. 12 per share dividend and the shares are selling Rs. 95 per share in the market?

1. 7%
2. 12.63%
3. 15%
4. None of the given options

Correct answer: 12.63%

Q4. _______ represents a percentage of debt in the total capital.

1. Financial leverage
2. Capital structure
3. None of the given options
4. Operating leverage

Correct answer: Financial leverage

Q5. What will be weighted average cost of capital if a company has 50% debt with a cost of 15% and 50% equity with a cost of 18%? (Tax rate = 35%)?

1. 18%
2. None of the given options
3. 13.875%
4. 15%

Correct answer: 13.875%

Q6. Which of the following is known as theory of irrelevance?

1. Net operating income theory
2. All of the given options
3. Bird in hand theory
4. Traditional theory

Correct answer: Net operating income theory