Top 150+ Solved Cash Flow MCQ Questions Answer
Q. Return on any financial asset consists of capital yield and current yield.
a. True
b. False
c. none
d. all
Q. There is no difference between the capital market line and security market line asboth the terms are same.
a. True
b. False
c. none
d. all
Q. Risk in Capital budgeting implies that the decision-maker knows___________of thecash flows.
a. Variability,
b. Probability,
c. Certainty,
d. None of the above
Q. 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
Q. 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
Q. 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
Q. In Risk-Adjusted Discount Rate method, the normal rate of discount is:
a. Increased,
b. Decreased,
c. Unchanged,
d. None of the above
Q. 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
Q. 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)
Q. 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
Q. Which element of the basic NPV equation is adjusted by the RADR?
a. Denominator,
b. Numerator,
c. Both,
d. None
Q. In CE Approach, the CE Factors for different years are:
a. Generally increasing,
b. Generally decreasing,
c. Generally same,
d. None of the above
Q. 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.
Q. In Playback Period approach to risk the target payback period is
a. Not adjusted,
b. Adjusted upward,
c. Adjusted downward ,
d. (b) or c
Q. 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)