Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 8 - FINANCIAL MANAGEMENT & ECONOMICS FOR FINANCE - SECTION A - FINANCIAL MANAGEMENT Chapter 8: RISK ANALYSIS IN CAPITAL BUDGETING - For Practice relevant for May/November 23 Examinations


Q1. Risk arises from various sources such as:

  1. Market Risk
  2. Competition Risk
  3. International Risk
  4. All of the above

Answer: 4

Q2. Expected cash flows are calculated as:

  1. Sum of likely cash flow of the project.
  2. Sum of likely cash flow of project multiplied by probability of cash flow.
  3. Sum of likely cash flow of project divided by probability of cash flow.
  4. None of the above

Answer: 2

Q3. Variance measures:

  1. How far each number in the set is from the mean
  2. The mean of a given data set
  3. Return on Investment
  4. Level of risk borne for every percent of expected return

Answer: 1

Q4. Certainty Equivalent approach is: 

  1. Guaranteed return from an investment after adjusting for certainty equivalent coefficient.  
  2. Return that is expected over the lifetime of a project.
  3. Equivalent to Net Present Value.
  4. An important component in Decision Tree Analysis. 

Answer: 1

Q5. Risk Premium is: 

  1. Extra rate of return expected by the Investors as a reward for bearing extra risk.
  2. Equivalent to the rate of Government Securities. 
  3. Return provided to equity shareholders. 
  4. Risk free rate of return

Answer: 1

Q6. Scenario Analysis is considered under scenarios such as:

  1. Worst Case Scenario
  2. Base Case Scenario
  3. Best Case Scenario
  4. All of the above 

Answer: 4


CA Intermediate FMECO - SECTION A - MCQ for Chapter 9 -   

To get back to the Chapterwise MCQ List Page       

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