Quiznetik

Economics for Engineers | Set 1

1. Inflation is the state in which ..............................

Correct : A. The value of money decreases

2. How inflation affects the price of the commodities?

Correct : B. Price of the commodities increases

3. When there is high inflation in the economy, how will it affect the supply of money in the economy?

Correct : C. Supply of money increases

4. Which of the following class will not be negatively affected by the higher inflation?

Correct : D. Business class

5. What is a stagflation?

Correct : B. A situation in which the economy have inflation and recession altogether

6. Which of the following concept is just opposite to deflation?

Correct : D. Disinflation

7. Which of the following measure is adopted to reduce inflation?

Correct : C. Increase in government expenditure

8. The cost reduction technique in comparison to the worth of a product is known as

Correct : B. Value engineering

9. Value analysis examines the

Correct : D. All of the above

10. Value analysis is normally applied to

Correct : B. Old products

11. Value can be defined as the combination of _______ which ensures the ultimate economy and satisfaction of the customer.

Correct : A. Efficiency, quality, service and price

12. Value is the cost directly proportionate to

Correct : B. Function

13. The price paid by the buyer is

Correct : B. Use value

14. The cost incurred by the manufacturer beyond use value is called

Correct : B. Esteem value

15. Value analysis is a ____ process

Correct : A. Remedial

16. Value analysis should be applied when the following symptom(s) is (are) present

Correct : D. All of the above

17. Who is named as Father of Value Analysis?

Correct : A. Lawrence D. Miles

18. Important reason(s) for arising unnecessary costs are

Correct : D. All of the above

19. The costs those which neither contributes to function nor the appearance of the product is called

Correct : B. Unnecessary cost

20. As per Accounting Standard-3, Cash Flow is classified into

Correct : D. Operating activities, financing activities and investing activities

21. Cash Flow Statement is also known as

Correct : C. Both a and b

22. The objectives of Cash Flow Statement are

Correct : D. Comparison of operating Performance

23. In cash flow statement, the item of interest is shown in A) Operating Activities B) Financing Activities C) Investing Activities

Correct : C. Both B and C

24. Cash Flow Statement is based upon

Correct : A. Cash basis of accounting

25. Which of the following statements are false? A) Cash Flow Statement is helpful in the formation of policies. B) Cash Flow Statement is useful for external analysis C) Cash Flow Statement is helpful in estimating future cash flow

Correct : D. None of the above

26. Which of the following statements are true?

Correct : D. Cash flow statement is not a replacement of funds flow statement.

27. Cash flow statement is based upon _________ while Funds Flow Statement recognizes _______.

Correct : A. Cash basis of accounting, accrual basis of accounting

28. Statement of changes in working capital is prepared separately in

Correct : B. Funds Flow Statement

29. Cash Flow Statement studies causes of change in working capital.

Correct : B. False

30. _________ reconciles the opening cash balance with the closing cash balance of a given period on the basis of net decrease or increase in cash during that period.

Correct : A. Cash Flow Statement

31. Which of the following statements are true? A) Cash flow statement is more useful for short term cash planning. B) Funds Flow statement is more useful in planning medium term and long term financing. C) Cash Flow statement discloses the position of liquidity in a better way

Correct : D. A, B and C

32. _____ has/have accepted cash flow statement is more useful than funds flow statement, particularly from view of analysis of liquidity of a firm.

Correct : D. All of the above

33. Time value of money indicates that

Correct : A. A unit of money obtained today is worth more than a unit of money obtained in future

34. Time value of money supports the comparison of cash flows recorded at different time period by

Correct : C. Using either a or b

35. If the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be:

Correct : D. 10.38% per annum

36. Relationship between annual nominal rate of interest and annual effective rate of interest, if frequency of compounding is greater than one:

Correct : A. Effective rate > Nominal rate

37. Mr. X takes a loan of Rs 50,000 from HDFC Bank. The rate of interest is 10% per annum. The first installment will be paid at the end of year 5. Determine the amount of equal annual installments if Mr. X wishes to repay the amount in five installments.

Correct : C. Rs 19310

38. If nominal rate of return is 10% per annum and annual effective rate of interest is 10.25% per annum, determine the frequency of compounding:

Correct : B. 2

39. Present value tables for annuity cannot be straight away applied to varied stream of cash flows.

Correct : A. True

40. Heterogeneous cash flows can be made comparable by

Correct : C. Either a or b

41. The term marginal cost can be used as a substitute of variable cost while measuring Contribution.

Correct : A. True

42. Determine total as well as per unit contribution if Sales is Rs 40,000, Sales in units is 4,000 and variable cost is Rs 30,000.

Correct : A. Rs 10,000 and Rs 2.5

43. Determine Contribution if Sales is Rs 1,50,000 and P/V ratio is 40%.

Correct : A. Rs 60,000

44. Determine Contribution if Fixed cost is Rs 40,000 and profit is Rs 30,000.

Correct : B. Rs 70,000

45. Determine Contribution if Fixed cost is Rs 50,000 and loss is Rs 20,000.

Correct : C. Rs 30,000

46. Contribution and profit both are same concepts.

Correct : B. False

47. Which of the following statements are true?

Correct : C. Contribution above breakeven point becomes profit.

48. Profit-Volume ratio is also known as

Correct : D. All of the above

49. Which of the following statements are true?

Correct : C. Concept of P/V ratio is also used to determine profit at a given volume of sales

50. The P/V ratio can be improved by

Correct : C. Changing the sales mix

51. The Break-even Point of a company is that level of sales income which will equal the sum of its fixed cost.

Correct : A. True

52. Which of the following are characteristics of B.E.P?

Correct : D. All of the above.

53. Which of the following are assumptions for break-even analysis?

Correct : B. Fixed cost remains certain from zero production to full capacity.

54. While measuring break-even analysis, it is considered that during a specific period there will be no change in general price level, i.e., labor, cost of material and other overheads.

Correct : A. True

55. Which of the following are limitations of break-even analysis?

Correct : A. Static concept

56. Break-even analysis is used in “Make or Buy” decision.

Correct : A. True

57. Using equation method, Break-even point is calculated as

Correct : A. Sales = Variable expenses + Fixed expenses + Profit

58. Given selling price is Rs 10 per unit, variable cost is Rs 6 per unit and fixed cost is Rs 5,000. What is break-even point?

Correct : C. 1,250 units

59. Contribution is also known as

Correct : A. Contribution margin

60. Given selling price is Rs 20 per unit, variable cost is Rs 16 per unit contribution is

Correct : B. Rs 4 per unit

61. Risk of two securities with different expected return can be compared with:

Correct : A. Coefficient of variation

62. A portfolio having two risky securities can be turned risk less if

Correct : C. The securities are completely negatively correlated

63. Efficient frontier comprises of

Correct : D. Efficient portfolios

64. Efficient portfolios can be defined as those portfolios which for a given level of risk provides

Correct : A. Maximum return

65. Capital market line is:

Correct : C. Both a and b

66. CAPM accounts for:

Correct : B. Systematic risk

67. The point of tangency between risk return indifferences curves and efficient frontier highlights:

Correct : C. Sub-optimal portfolio

68. Return on any financial asset consists of capital yield and current yield.

Correct : A. True

69. There is no difference between the capital market line and security market line as both the terms are same.

Correct : B. False

70. Risk in Capital budgeting implies that the decision-maker knows___________of the cash flows.

Correct : B. Probability,

71. In Certainty-equivalent approach, adjusted cash flows are discounted at:

Correct : D. Risk-free Rate

72. Risk in Capital budgeting is same as:

Correct : D. Variability of Cash flows

73. Which of the following is a risk factor in capital budgeting?

Correct : D. All of the above

74. In Risk-Adjusted Discount Rate method, the normal rate of discount is:

Correct : A. Increased,

75. In Risk-Adjusted Discount Rate method, which one is adjusted?

Correct : C. Rate of discount,

76. NPV of a proposal, as calculated by RADR real CE Approach will be:

Correct : B. Unequal,

77. Risk of a Capital budgeting can be incorporated

Correct : D. All of the above

78. Which element of the basic NPV equation is adjusted by the RADR?

Correct : A. Denominator,

79. In CE Approach, the CE Factors for different years are:

Correct : B. Generally decreasing,

80. Which of the following is correct for RADR?

Correct : C. RADR is overall cost of capital plus risk-premium ,

81. In Playback Period approach to risk the target payback period is

Correct : C. Adjusted downward ,

82. In Sensitivity Analysis, the emphasis is on assessment of sensitivity of

Correct : B. Net Present Value,

83. Most Sensitive variable as given by the Sensitivity Analysis should be:

Correct : C. Given the maximum importance,

84. Expected Value of Cashflow, EVCF, is:

Correct : B. Most likely Cashflows,

85. Concept of joint probability is used in case of:

Correct : C. Dependent Cashflows,

86. Decision-tree approach is used in:

Correct : B. Sequential decisions,

87. In a cash flow series:

Correct : D. All of these

88. In a cash-flow diagram:

Correct : D. All of these

89. Which method is adopted to develop an approximate or conceptual estimate for perimeter works for buildings from the following?

Correct : D. Cost per linear metre method

90. Pick up the correct statement from the following:

Correct : D. All of these

91. The ratio of current assets to current liabilities is known as

Correct : B. Current ratio

92. In the cash-flow diagram shown in the given figure

Correct : D. All of these

93. The more critical (or severe) test of the firm's liquidity can be judged by:

Correct : C. Acid-Test (or Quick) ratio

94. If interest is paid more than once in a year, ‘i’ is the rate of interest per year, ‘n’ is the number of periods in years and ‘m’ is a number of periods per years, compound amount factor (CAF) is:

Correct : A. (1 + i/m)n

95. Pick up the correct reason for making conceptual (or preliminary) estimate from the following:

Correct : D. All of these

96. Pick up the correct method adopted for developing the approximate or conceptual estimates from the following:

Correct : D. All of these

97. Ratio analysis of a construction firm is used for analysis by:

Correct : D. Financial analysts

98. Current assets less inventories divided by current liabilities is known as

Correct : C. Acid-Test (or Quick) ratio

99. Refer to the cash flow diagram of uniform gradient in a cash flow (in the given figure), the gradient is:

Correct : D. Rs. 25000 per year

100. Pick up the correct statement from the following:

Correct : D. All of these