Question 1

Under Net present value criterion, a project is approved if

Accepted Answer

A) Its net present value is positive 
B) The funds are unlimited 
C) Both (
A)  and (B 
D) None of the above 
A) Its net present value is positive 
B) The funds are unlimited 
C) Both (
A)  and (B 
D) None of the above C

Question 2

If any policy change benefits any one section of the society (gainers) to such an extent that it is better off even after the payment of compensation to the other sections of the society (losers) out of the benefits received, then that change leads to

Accepted Answer

A) decrease in social welfare 
B) Neither decrease nor increase in social welfare 
C) increase in social welfare 
D) None of the above 
A) decrease in social welfare 
B) Neither decrease nor increase in social welfare 
C) increase in social welfare 
D) None of the above C

Question 3

If the internal rate of return (IRR) is negative, then the investor

Accepted Answer

A) Loses money 
B) Gains money 
C) Neither gains nor loses money 
D) None of the above 
A) Loses money 
B) Gains money 
C) Neither gains nor loses money 
D) None of the above A

Question 4

Air pollution can be termed as a

Accepted Answer

A) Social benefit 
B) Social cost 
C) Social security measure 
D) All of the above 
A) Social benefit 
B) Social cost 
C) Social security measure 
D) All of the above

Question 5

The reason that finding the present value of a future sum of money requires us to discount it, is that:

Accepted Answer

A) Waiting involves risk 
B) We don't know when we shall receive it 
C) Inflation will reduce its purchasing power 
D) Waiting deprives us of its use 
A) Waiting involves risk 
B) We don't know when we shall receive it 
C) Inflation will reduce its purchasing power 
D) Waiting deprives us of its use

Question 6

The period of time required to recover initial cost of investment is called

Accepted Answer

A) Payback period 
B) Annual average rate of return 
C) Internal rate of return 
D) Net present value 
A) Payback period 
B) Annual average rate of return 
C) Internal rate of return 
D) Net present value

Question 7

The internal Rate of Return (IRR) criterion for project acceptance, under theoretically infinite funds is: accept all projects which have

Accepted Answer

A) IRR equal to the cost of capital 
B) IRR greater than the cost of capital 
C) IRR less than the cost of capital 
D) None of the above 
A) IRR equal to the cost of capital 
B) IRR greater than the cost of capital 
C) IRR less than the cost of capital 
D) None of the above

Question 8

The number of years required to recover initial cost of investment is called

Accepted Answer

A) Recover period 
B) Take-back period 
C) Payback period 
D) Annual average rate of return 
A) Recover period 
B) Take-back period 
C) Payback period 
D) Annual average rate of return

Question 9

Who among the following economist accepted growth of GNP as a criterion of Social Welfare

Accepted Answer

A) Nicholas Kaldor 
B) Adam Smith 
C) Jeremy Bentham 
D) Ohlin 
A) Nicholas Kaldor 
B) Adam Smith 
C) Jeremy Bentham 
D) Ohlin

Question 10

The project is accepted of

Accepted Answer

A) the profitability index is equal to one 
B) The funds are unlimited 
C) the profitability index is greater than one 
D) Both (
B)  and (C 
A) the profitability index is equal to one 
B) The funds are unlimited 
C) the profitability index is greater than one 
D) Both (
B)  and (C

Question 11

Internal rate of return is also identified as the

Accepted Answer

A) Price and location criteria 
B) Physical and location criteria 
C) Price and physical criteria 
D) None of the above 
A) Price and location criteria 
B) Physical and location criteria 
C) Price and physical criteria 
D) None of the above

Question 12

If the net present value is greater than zero, then the project is

Accepted Answer

A) Accepted 
B) Rejected 
C) Neither accepted nor rejected 
D) Postponed 
A) Accepted 
B) Rejected 
C) Neither accepted nor rejected 
D) Postponed

Question 13

Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used

Accepted Answer

A) Net present value 
B) Internal Rate of Return 
C) Profitability Index 
D) All of the above 
A) Net present value 
B) Internal Rate of Return 
C) Profitability Index 
D) All of the above

Question 14

If interest rates rise, the present value of any future earnings is bound to:

Accepted Answer

A) Suffer from inflation 
B) Increase in risk 
C) Rise 
D) Fall 
A) Suffer from inflation 
B) Increase in risk 
C) Rise 
D) Fall

Question 15

A project is accepted when

Accepted Answer

A) Net present value is greater than zero 
B) Profitability index will be greater than unity 
C) Internal Rate of Return will be greater than cost of capital 
D) Any of the above 
A) Net present value is greater than zero 
B) Profitability index will be greater than unity 
C) Internal Rate of Return will be greater than cost of capital 
D) Any of the above

Question 16

The values of the future net incomes discounted by the cost of capital are called

Accepted Answer

A) future income 
B) Internal rate of return 
C) Net present values 
D) Discounted capital cost 
A) future income 
B) Internal rate of return 
C) Net present values 
D) Discounted capital cost

Question 17

If inflation occurs, investment will be

Accepted Answer

A) More profitable 
B) Less profitable 
C) More difficult 
D) None of the above 
A) More profitable 
B) Less profitable 
C) More difficult 
D) None of the above

Question 18

If the net present value (NPV) is more than one, then the project may be

Accepted Answer

A) Accepted 
B) Rejected 
C) Accepted or rejected 
D) All of the above 
A) Accepted 
B) Rejected 
C) Accepted or rejected 
D) All of the above

Question 19

___________ on capital is called 'Cost of capital'.

Accepted Answer

A) Lower expected return 
B) Normally expected return 
C) Higher expected return 
D) None of the above 
A) Lower expected return 
B) Normally expected return 
C) Higher expected return 
D) None of the above

Question 20

In an investment project, the lower the rate of interest

Accepted Answer

A) No significant change in the value of the project 
B) The lower the present value of the project 
C) The higher the present value of the project 
D) None of the above 
A) No significant change in the value of the project 
B) The lower the present value of the project 
C) The higher the present value of the project 
D) None of the above

Under Net present value criterion, a project is approved if

If any policy change benefits any one section of the society (gainers) to such an extent that it is better off even after the payment of compensation to the other sections of the society (losers) out of the benefits received, then that change leads to

If the internal rate of return (IRR) is negative, then the investor

Air pollution can be termed as a

The reason that finding the present value of a future sum of money requires us to discount it, is that:

The period of time required to recover initial cost of investment is called

The internal Rate of Return (IRR) criterion for project acceptance, under theoretically infinite funds is: accept all projects which have

The number of years required to recover initial cost of investment is called

Who among the following economist accepted growth of GNP as a criterion of Social Welfare

The project is accepted of

Internal rate of return is also identified as the

If the net present value is greater than zero, then the project is

Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used

If interest rates rise, the present value of any future earnings is bound to:

A project is accepted when

The values of the future net incomes discounted by the cost of capital are called

If inflation occurs, investment will be

If the net present value (NPV) is more than one, then the project may be

___________ on capital is called 'Cost of capital'.

In an investment project, the lower the rate of interest

Economic Concepts and Theories

Understanding Rent, Capital, and Profits in Economics

Factor and Product Markets, Equilibrium, and Production Factors

Market Equilibrium and Welfare Economics

Welfare Economics and Efficiency Allocation

Project Evaluation and International Trade Theories

International Trade Theory and Practice

Filters

Exam 6: Key Concepts in Investment and Economic Analysis

Under Net present value criterion, a project is approved if

If any policy change benefits any one section of the society (gainers) to such an extent that it is better off even after the payment of compensation to the other sections of the society (losers) out of the benefits received, then that change leads to

If the internal rate of return (IRR) is negative, then the investor

Air pollution can be termed as a

The reason that finding the present value of a future sum of money requires us to discount it, is that:

The period of time required to recover initial cost of investment is called

The internal Rate of Return (IRR) criterion for project acceptance, under theoretically infinite funds is: accept all projects which have

The number of years required to recover initial cost of investment is called

Who among the following economist accepted growth of GNP as a criterion of Social Welfare

The project is accepted of

Internal rate of return is also identified as the

If the net present value is greater than zero, then the project is

Where capital availability is unlimited and the projects are not mutually exclusive, for the same cost of capital, following criterion is used

If interest rates rise, the present value of any future earnings is bound to:

A project is accepted when

The values of the future net incomes discounted by the cost of capital are called

If inflation occurs, investment will be

If the net present value (NPV) is more than one, then the project may be

___________ on capital is called 'Cost of capital'.

In an investment project, the lower the rate of interest

Economic Concepts and Theories

Understanding Rent, Capital, and Profits in Economics

Factor and Product Markets, Equilibrium, and Production Factors

Market Equilibrium and Welfare Economics

Welfare Economics and Efficiency Allocation

Project Evaluation and International Trade Theories

International Trade Theory and Practice

Filters