Financial Management-Capital Budgeting Decisions- Risk Analysis [NTA-NET (UGC-NET) Management (& Allied Subjects) (17)]: Questions 1 - 3 of 42

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Question 1

Appeared in Year: 2014

Question MCQ▾

The capital budgeting appraisal criterion that is most appropriate in the situation of capital rationing will be (June paper II)

Choices

Choice (4)Response

a.

Payback period

b.

Net present value

c.

Profitability index

d.

Internal Rate of Return

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Question 2

Appeared in Year: 2014

Question MCQ▾

Indicate the statement which is not correct:

i. Credit risk is loss on account of default of repayment of loan.

ii. Liquidity risk is the risk on account of the mismatches of cash inflow and outflow in a firm.

iii. Basic risk is the risk in a firm owing to the differences in the index to which financial assets and liabilities are tied up.

iv. Forward rate agreement is a contract where a borrower/lender locks the interest rate and protects itself from the loss on account of change in the future interest rate. (June Paper II)

Choices

Choice (4)Response

a.

i and ii

b.

ii & iii

c.

iii & iv

d.

None of the above

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Question 3

Appeared in Year: 2015

Question MCQ▾

Statement-I: In general, the NPV and IRR methods lead to the same acceptance or rejection decision, when a single project is involved.

Statement-II: The inconsistency in ranking of competing projects as per the NPV and IRR methods lies in the implicit assumptions with regard of different rates of returns on re-investment of intermediate cash flows. (December)

Choices

Choice (4)Response

a.

Statement-I is incorrect, statement-II is correct

b.

The statements I and statement II are correct

c.

The statements I and statement II are incorrect

d.

Statement-I is correct, statement II is incorrect

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