MGT201 Final Term Quiz 3 July 2023 by Miss Mehwish

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Q1. Keeping in mind the concept of market portfolio, which of the following statement is false? Options:

1. The market portfolio lies on the capital market line
2. The market portfolio contains both systematic and unsystematic risk
3. The market portfolio includes all risky assets in the world
4. The market portfolio lies on the security market line

Correct option: b) The market portfolio contains both systematic and unsystematic risk

Q2. Which of the following statements is true regarding covariance?

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

Correct option: c) The covariance can take on any negative, positive, or zero value

Q3. While calculating cash flow from financing activities, we subtract:

1. All of the given options are correct
2. Payment of long-term debt
3. Payment of dividends
4. Purchase of treasury stock

Correct option: a) All of the given options are correct

Q4. Which of the following reflects the variability in a portfolio's return due to changes in market return? Options:

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

Correct option: b) Systematic risk

Q5. The beta of the benchmark index or market portfolio is:

1. -1.00
2. 0.50
3. 1.00
4. -1,000

Correct option: c) 1.00

Q6. While calculating cash flow from operating activities, we subtract: Options:

1. Increase in current liabilities
2. Non-cash expenses
3. Decrease in current assets
4. Increase in current assets

Correct options: b) Non-cash expenses and a) Increase in current liabilities

Q7. Buying or selling of bonds and shares of other companies is recorded in cash flows from: Options:

1. Contingent activities
2. Financing activities
3. Operating activities
4. Investing activities

Correct option: d) Investing activities

Q8. Cash flow from operating activities includes:

1. Net profit or loss derived from the profit and loss account
2. Changes in current liabilities
3. All of the given options are correct
4. Changes in current assets