MGT201 Quiz 2 Set 2

Q1. According to Capital asset pricing model, the overpriced stocks have:

1. Negative Beta
2. Negative Alpha
3. Positive Alpha
4. Zero Beta

Correct answer: Negative Alpha

Q2. What will be NPV of a project if PV of cash inflows is Rs. 550,000 and initial investment is Rs. 600,000?

1. Rs. 550,000
2. Rs. 1,150,000
3. Rs. 50,000
4. Rs. 600,000

Correct answer: Rs. 50,000

Q3. Systematic risk is also known as:

1. Diversifiable Risk
2. Undiversifiable Risk
3. Avoidable Risk
4. Controllable Risk

Correct answer: Undiversifiable Risk

Q4. Which of the followings is/are the type(s) of capital budgeting technique?

1. Net Present Value
2. Payback Period
3. Internal Rate of Return
4. All of the given options

Correct answer: All of the given options

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

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

Correct answer: 1.00

Q6. Which of the followings is true with respect to straight line method of depreciation?

1. Depreciation expense decreases every year
2. Depreciation expense increases every year
3. None of the given options
4. Depreciation expense remains constant every year

Correct answer: Depreciation expense remains constant every year

Q7. Lead time is defined as:

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

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

Q8. Which of the following is/are types of inventory?

1. Raw material
2. Work in process
3. Finished goods
4. All of the given options

Correct answer: All of the given options

Q9. Gross working capital can further be classified according to:

1. Time and rate of return
2. Time and components
3. Rate of return and financing method
4. Time and financing method

Correct answer: Time and financing method

Q10. All are the examples of non-cash items EXCEPT:

1. Bad debts
2. Depreciation
3. Amortization
4. Financial charges

Correct answer: Financial charges