Rs.26, 496. The total amount to be paid during the lease...

1. A leasing agreement is four 5 years. A sum of Rs.10, 000 must be paid at the beginning of

the first year, to be followed by four equal payments of Rs.𝑥 at the beginning of years two, there,

four and five. At a discount rate of 8 percent, the present value of the four equal payments is

Rs.26, 496. The total amount to be paid during the lease period is;

a) Rs.32, 000

b) Rs.40, 000

c) Rs.42, 000

d) Rs.44, 000

2. A building society adds interest monthly to investor‟s accounts even though interest rates are

expressed in annual terms. The current rate of interest is 6 percent per annum. An investor

deposits Rs.1, 000 on 1 January. How much interest will have been earned by 30 June?

a) Rs.30, 00

b) Rs.30, 38

c) Rs.60, 00

d) Rs.61, 68

3. What is present value of Rs. 10000 to be received after one year, if the preventing interest

rate is 9%p.a?

a) 9262

b) 9174

b) 9091

d) 8932

4. Which of the following formula is to be used for working out the present value of an amount

to be received in future (if CI = future cash flow and flow and „r‟=prevailing interest rate):

a) (l + r) / l x C l

b) I / (l + r) x C l

c) I / (l + r) +C l

d) I / (l + r) - C l

5. A company charges depreciation at the rate of 25 percent per annum on the reducing

balance method on an asset that cost Rs.20, 000. At the end of year three the written down

value will be;

a) Rs.5, 000.00

b) Rs.8, 437.50

c) Rs.11, 560.50

c) Rs.12, 500.00

6. A firm has arranged a 10-year lease, at an annual rent of Rs.8, 000. The first rental payment

has to be paid immediately, and the others are to be paid at the end of each year. What is the

present value of lease at 12 percent;

a) Rs.50, 624

b) Rs.53, 200

c) Rs.45, 200

d) Rs.65, 288

7. If a single sum of Rs.12, 000 is invested at 8 percent per annum with interest compounded

quarterly, the amount to which the principal will have grown by the end of year three is

approximately;

a) Rs.15, 117

b) Rs.14, 880

c) Rs.15, 219

d) Rs.15, 880

8. Which of the following is the formulate for calculation of net present value:

a) Present value of future cash outflow cash less present inflow

b) Present value of present cash inflow cash less present outflow

c) Present value of future cash inflow cash less present outflow

d) None of the above

9. A { ( 1 +r )/1 } gives:

a) Compounded value of the present outflow

b) Future value of the perpetuity

c) Future value of the annuity

d) Present value of a future annuity

10. It is estimated that a particular cost will declineby 5 percent per annum on a compound

basis. If the cost now is Rs.10, 000, by the end of year 4 the cost will be approximately;

a) Rs.7, 500

b) Rs.8, 000

c) Rs.8, 145

d) Rs.8, 500

11. A person is to receive a 10-years annuity of Rs.5, 000 per year, received at the end of each

year. At what interest rate does this have a present value of Rs.33, 550?

a) 2 percent

b) 4 percent

c) 8 percent

d) 16 percent

12. X decided to deposit Rs. 5000 per annum (at end of the year) for 10 years. How much

amount he will get if the interest rate is 5% p.a.

a) Rs. 62890

b) Rs. 62980

b) Rs. 68920

d) Rs. 69820

13. Z is expecting that he shall be getting Rs. 20000 just before the end of 1st and 2nd year each

which he proposes to invest. If he decides to invest this amount immediately on receipt, how

much he shall get at the end of 2 years, if the prevailing interest rate is assumed at 10%:

a) Rs. 40000

b) Rs. 41000

c) Rs. 42000

d) Rs. 44000

14. An individual placed a sum of money in the banks and left it there for 12 years at 5 percent

per annum. The sum us now worth Rs.1, 705.56. Using PV tables, the original principal was

found to the nearest whole Rs. to be;

a) Rs.948

b) Rs.949

c) Rs.950

d) Rs.951

15. X wants to have Rs. 20000 after a year. How much he should deposit in a bank to get this

amount if the prevailing rate of interest is 9% p.a.

a) 17896

b) 18104

c) 18224

d) 18348

16. Y purchased a property for Rs. 8 lac. He has been assured to get Rs. 10 lac, after one year.

What is the net present value of the based on this assured return:

a) Rs. 117400

b) Rs. 18104

c) Rs. 119200

d) Rs. 120100

17. An investor is to receive an annuity of Rs.1, 360 for 6 years commencing at the end of year

one. It has a present value of Rs.6, 101. What is the rate of interest?

a) 6 percent

b) 9 percent

c) 12 percent

d) 15 percent

18. A bond increases in value from Rs.400 to Rs.500 over a 6-year period. Find the percentage

increase per annum;

a) 25 percent

b) 4.17 percent

c) 3.79 percent

d) 3.81 percent

19. Z can purchase a house for down payment of Rs. 40 lac or by paying Rs. 9 lac a year, for

next 5 years. The opportunity cost is 12%. The present value amount he is to pay in installment

shall be:

a) Rs. 3545298

b) Rs. 3465398

c) Rs. 3324598

d) Rs. 3244298

20. Q received a sum of Rs. 20 lac on sale of a property which he has invested in a term deposit

with a bank at 10% interest for 10 year, with the provision that he shall get a fixed amount every

year for 10 years. How much amount he shall receive:

a) Rs. 325491

a) Rs. 325941

c) Rs. 324480

d) Rs. 323490

21. Which of the following statements is TRUE of a sinking fund?

a) A sinking fund is an investment of a constant annual amount

b) A sinking fund is an investment of a declining annual amount

c) A repayment mortgage is a type of sinking fund

d) A sinking fund is a type of annuity

22. Of what is sinking fund an example of?

a) Perpetuity

b) Annuity

c) Gratuity

d) None of these

23. Q needs Rs, 10 lac to meet the expenses on the study of his son at the end of 20 years from

now. If the interest rates are assumed at 12%, how much amount he should deposit annually.

a) 56969

b) 55980

c) 56589

d) 56985

24. X‟s daughter is expected to join a professional college in 3 years from now and he would

need a sum of Rs. 3 lac at that time as admission fee. X wants to deposit the amount now and

prevailing interest rates are 5%. How much amount he should deposit.

a) Rs. 258150

b) Rs. 259151

c) Rs. 259511

d) Rs. 259115

25. Which of the following is true of the internal rate of return IRR?

a) The IRR is the current cost of borrowing

b) The IRR is the discount rate

c) The IRR is the discount rate for which net present value is zero

d) All other things being equal, a project with a low IRR will always be preferable to one with a

high IRR

KEY

1.c 2.b 3.b 4.b 5.b 6.a 7.c 8.c 9.c 10.c 11.c 12.a 13.c

14.c 15.d 16.a 17.b 18.c 19.d 20.a 21.a 22.b 23.d 24.b 25.c

1. What does the central tendency theorem state?

a) As the sample size increases the sampling distribution of the mean will approach normally

irrespective of the shape of the populations distribution

b) The mean of the sampling distribution of the mean will equal the population mean even if the

population is not normal

c) Uses of sample statistics to make inferences of the population parameters without knowledge

of the frequency distribution

d) All of the above

2. X‟s son is expected to join a professional college in 3 years from now and he would need a

sum of Rs.3 lac at that time as admission fee. X wants to save the amount in annual installment

and prevailing interest rates are 5%. How much amount he should deposit per annum.

a) Rs. 95163

b) Rs. 95631

c) Rs. 95361

d) Rs. 96531

3. The discount factor is represented by R and the future cash flow at C. The present value for

this can be calculated as:

a) R x C

b) R / C

c) C / R

d) C +R

4. What variation does moving average method eliminate?

a) Seasonal

b) Cyclical

c) Irregular

d) Secular trend

5. What Stream of cash flows continues indefinitely?

a) Perpetuity

b) Annuity

c) Futurity

d) None of these

6. On an investment „I‟, after one year profit earned is represented by „P‟. The return on

investment can be calculated as:

a) P / I %

b) I / P %

c) P + I

d) P – I

7. I / (I / r) represents which of the following :

a) Rate of interest

b) Discount factor

c) Return on investment

d) Future value of the outflow

8. What is the difference between real and nominal cash flows due to?

a) Compounding

b) Discounting

c) Annuity

d) Inflation

9. On what is the magnitude of discount rate dependent upon?

a) Inflation

b) Preference or consumption

c) Risk

d) All of these

10. Work out the discount factor for Re.1 to be received at the end of one year prevalent 8%

discount. { use formula 1 / ( l / r)}

a) 0.935

b) 0.926

c) 0.917

d) 0.909

11. Work out the discount factor for Re.1 to be received at the end of two year prevalent 8%


a) 0.890

b) 0.873

c) 0.857

d) 0.842

12. While positive cash flows are good for an enterprise what do negative cash flows indicate?

a) Losses

b) Cash crunch

c) Investments

d) All of these

13. What does not present value give?

a) Future values of present cash flows

b) Present value of present cash flows

c) Present value of future cash flows

d) Future values of future cash flows

14. Work out the discount factor for Re.1 to be received at the end of one year prevalent 8%


a) 0.890

b) 0.873

c) 0.857

d) 0.842

15. Rate of return on an investment is represented by “r” and the future cash flow is

represented by C. The present value can be calculated as:

a) ( l+r) / C

b) C + (l+r)

c) C / (r)

d) C / (l+r)

16. What is the rule of 72?

a) 12 times table

b) Rule for calculating future cash flows

c) Rule for compounding present cash flows

d) Rule for knowing how quickly money doubles

17. What does net present value not give?

a) Future values of present cash flows

b) Present value of present cash flow

c) Net present value of future cash flows

d) All of above

18. Discount factor for Re. 1 to be received at the end of 3rd year is to be worked out. Which

of the following formula can be used:

a) l / ( l /r)

b) l / (l /r)2

c) ) l / (l /r)3

d) l / (l /r)4

19. Net present value of investment can be worked out as C0 stands for payment cash outflow

and C1 future cash flow):

a) C0 + (Cl / l + r)

b) C0 - (Cl / l + r)

c) C0 x (Cl / l + r)

d) Cl + (C0 / l + r)

20. If the present value of a cash flow generated by an initial investment of Rs.1, 00,000 is

Rs.1, 20,000, what is the NPV of the project?

a) Rs.120,000

b) Rs.20,000

c) Rs.100,000

d) None of these

21. Present Value of defined as;

a) Future cash flows discounted to the present at an appropriate discount rate

b) Inverse of future cash flows

c) Present cash flow compounded into the future


22. Present value of future cash flow – required investment =

a) Return on investment

b) Net profit

c) Net present value

d) future value of investment

23. A higher discount rate will lead to :

a) Higher present value of the future cash flow

b) Lower present value of the future cash flow

c) No change in present value of the future cash flow


24. An annuity is defined as;

a) Equal cash flows at equal intervals of time forever

b) Equal cash flows at equal intervals of time for a specific period

c) Unequal cash flows at equal intervals of time forever


25. If the present value of the cash flow X is Rs.200, and the present value cash of the flow Y is

Rs.150, than the present value of the combined cash flow is;

a) 200

b) 150

c) 50

d) 350

KEY

1.d 2.a 3.a 4.a 5.a 6.a 7.b 8.d 9.d 10.b 11.c 12.d 13.c

14.c 15.d 16.b 17.d 18.c 19.a 20.b 21.a 22.c 23.b 24.d 25.d

1. Based on the net present value rule, if a decision on investment in a capital project has to be

taken , which of the following would be correct:

a) If net present value of the investment is positive, proposal should be rejected.

b) If net present value of the investment is positive, proposal should be accepted

c) If net present value of the investment is negative, proposal should be accepted.


2. Based on the rate of return rule, if a decision on investment in a capital project has to be

taken, which of the following would be correct:

a) If rate of return is higher than the opportunity cost of the capital, the proposal should be

rejected.

b) If rate of return is lower than the opportunity cost of the capital , the proposal should be

accepted

c) If rate of return is higher than the opportunity cost of the capital, the proposal should be

accepted.


3 What is the present value annuity due factor of Rs.1 at a discount rate of 15% for 15 years?

a) 5.8474

b) 8.514

c) 8.13

d) 7.002

4. Yield to maturity is that rate which makes the Present Value of the bond payments equal to its

buying price. Which of the following is it?

a) Coupon rate

b) Discount rate

c) Compound rate

d) Rate of return

5. A process by which the present cash flows are converted into their future value , is called:

a) Compounding

b) Discounting

c) Converting

d) Finding present value

6. To find out the future value of a cash flow at period 0 (represented by C0), which of the

following formula shall be used:

a) C0 / ( l + r) t

b) C0 ( l + r) t

c) C0 + ( l + r) t

d) C0 – ( l + r ) t

7. What does the rate of return equal to if interest rates do not charge during the pendency of

the bond?

a) Yield to maturity

b) Coupon rate

c) Compounded rate

d) Current yield

8. Why is a discount rate used to calculate net present value?

a) Money has value

b) Money has enhancing value

c) Money has diminishing value

d) Money has constant value

9. Rule of 72 relates to which of the following aspects:

a) To make an estimate about present value of future cash flow

b) To make an estimate about future value of future cash flow

c) To make an estimate about compounding effect of an investment


10. X wants to invest in time deposit with a bank and interested to double his investment in 6

years. What should be appx. Interest rate at which he should invest (follow the Rule of 72)

a) 6 years

b) 9 years

c) 10 years

d) 12 years

11. An amount of Rs.1,15,000 is expected to be received one year from today at an interest rate

discount rate) of 10% per year. What is its present value?

a) Rs.121,000

b) Rs.100.500

c) Rs.110,000

d) Rs.104.545

12. What is the two-year discount factor at a discount rate of 10% per year?

a) 0.826

b) 1,000

c) 0.909

d) 0.814

13. {( l + given annual interest rate)n}

/ N } -l gives: (N = no. of compounding periods and n =

No. of periods over which the cash flows are received or paid)

a) Rate or return

b) Rate or interest

c) effective interest rate

d) Yield to maturity

14. An investment at 10% is compounded annually, what shall be the effect interest rate of this:

a) 10%

b) 10.25%

c) 10.47%

d) 10.5156%

15. The following statements regarding the NPV rule and the rate of return rule are true with one

exception. Which one is it?

a) Accept a project if its NPV > 0

b) Reject a project if its NPV < 0

c) Accept a project if its rate of return > 0

d) Accept a project if its rate of return > opportunity cost of capital

16. What is the concept of compound interest?

a) Earning interest on the principal

b) Earning interest on previously earned interest

c) Investing for a number of years


17. An investment at 10% is compounded semi-annually, what shall be the effect interest rate of

this:

a) 10%

b) 10.25%

c) 10.47%

d) 10.5156%

18. An investment at 10% is compounded monthly, what shall be the effect interest rate for this:

a) 10%

b) 10.25%

c) 10.47%

d) 10.5156%

19. If the present value of Rs.444 to be paid at the end of one year is Rs.400, what is the one

year discount factor?

a) 0.909

b) 1.11

c) 0.11

d) None of these

20. If you invest Rs.100,000 today at 12% interest rate for one year, what is the amount you will

have at the end of the year?

a) Rs.90,909

b) Rs.112,000

c) Rs.100,000

d) None of these

21. An investment at 10% is compounded daily, what shall be the effect interest rate for this:

a) 10%

b) 10.25%

c) 10.47%

d) 10.5156%

22. An investment at 10% is compounded continuously, what shall be the effect interest rate for

this:

a) 10%

b) 10.25%

c) 10.5156%

d) 10.5171%

23. An investment at 1.2% nominal rate compounded monthly is equal to an annual rate of;

a) 12.68%

b) 12.36%

c) 12%

d) None of these

24. A 5-year Govt. bond with a compound rate of 8% has a face value of 1000. What is the

annual interest payment?

a) 80

b) 40

c) 100

d) None of these

25. Present value of an end of the period annuity can be calculated as:

a) A { l – (l / l + r) n

/ r }

b) A / { l – (l / l +r) n

/ r}

b) A + { l – (l / l +r) n

/ r}

c) A - { l – (l / l +r) n

/ r}

KEY

1.b 2.c 3.d 4.b 5.a 6.b 7.a 8.c 9.c 10.d 11.d 12.a 13.c

14.a 15.c 16.b 17.b 18.c 19.a 20.b 21.d 22.d 23.a 24.a 25.a

1. At 12% discount rate, the present value of an end of the period annuity of Rs. 9000 each

year for next

5 years, shall be appx:

a) Rs. 32501

b) Rs. 32489

c) Rs. 32462

d) Rs. 32443

2. If the interest rate is 15%, what is the 2 year discount factor?

a) 0.7561

b) 0.8697

c) 1.3225

d) 0.658

3. If the one year discount factor is 0.8333, what is the discount rate interest rate) per year?

a) 10%

b) 20%

c) 30%

d) None of these

4. Future value of an end of the period annuity can be calculated as:

a) A { l + r )n – l /r}

b) A / {( l +r ) n – l / r }

c) A + {( l +r )n – l /r }

d) A – {( l + r) n – l / r }

5. Annuity given the future value can be calculated by using, the formula:

a) FV { r / ( l + r) n +

1}

b) FV { r / ( l + r) n /

1}

c) FV { r / ( l + r) n

}

d) FV { r / ( l + r) n - 1}

6. What is the opportunity cost of capital for a risky project?

a) The expected rate of return on a government security having the same maturity as the project

b) The expected rate of return on a well diversified portfolio of common stocks

c) The expected rate of return on a portfolio of securities of similar risks as the project

d) All of above

7. If the maturity of a bond is long into the future the interest rate is higher. Why?

a) Longer term maturity is more sensitive to price fluctuation than shorter term

b) The attractiveness of longer term is related to interest only

c) Longer term bonds are generally issued by institutions of lesser rating

d) Longer term maturity is less sensitive to fluctuation than shorter term

8. X wants to get Rs. 1 lac after 10 years with prevailing rate of interest assumed at 12%. How

much money he should deposit every year appx.

(use the formula for annuity given the future value)

a) Rs. 5590

b) Rs. 5698

c) Rs. 5798

d) Rs. 5756

9. A + A { l – ( l / l + r) n – l

/ r} =

a) Present value of the period annuities at the end of the each period

b) Present value of the period annuities at the beginning of the each period

c) Future value of the period annuities at the beginning of the each period

d) Future value of the period annuities at the end of the each period

10. What is a zero coupon bond?

a) There is gain only in price

b) Gain in coupon

c) No gain at all

d) None of above

11. If prices double, what happens to real value of rupee?

a) Remains same

b) Doubles

c) Halves

d) Changes in unlike proportions

12. A constant cash flow occurring at regular intervals of time is called:

a) Annuity

b) Future value of investment

c) Perpetuity

d) Present value of investment

13. A fund that is created by a firm by contributing funds regularly, to have enough funds to

meet a large financial liability in future, is called:

a) Annuity

b) Perpetuity

c) Reserve fund

d) Sinking fund

14. What is repayment of entire loan principal at the end of the loan period called?

a) Balloon payment

b) Compounded payment

c) Annuity

d) Term payment

15. What is interest on a bond known as?

a) Return

b) Yield

c) Coupon

d) Maturity value

16. Overstating the return on premium bonds and understating the return on discount bonds is

generally true when we use one of the following as an indicator. Which one is it?

a) Yield to maturity

b) Current yield

c) Rate of return

d) Discount rate

17. A constant cash flow paid or received at regular time intervals forever, is called:

a) Annuity

b) Perpetuity

c) Reserve fund

d) Sinking fund

18. A bond that has no maturity and on which fixed coupon (interest ) is paid is called:

a) Annuity

b) Perpetuity

c) Console bond

d) Zero coupon bond

19. The essence of systematic sampling is that;

a) Each element of the population has an equal chance of being chosen

b) Members of various strata are selected by the interviewers up to predetermined limits

c) Every nth member of the population is selected

d) Every element of one definable subsection of the population is selected

20. What is meant by „primary data‟?

a) The first data to be obtained on the subject

b) The most important information on the subject

c) Data obtained from official sources

d) Data obtained by conducting a survey on the subject

21. A console bond of Rs. 10000 is issued at 6% coupon. Current interest rates are 9%. Find

out the current value of the console bond (use the formula A/r where A is the annual amount of

coupon)

a) 7660

b) 6760

c) 6670

d) 6706

22. The cash flow that grows at a constant rate for a specified period of time, is called:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

23. What, if any, is the difference between data and information?

a) They are the same

b) Data can only be figures, whereas information can be facts or figures

c) Information results from sorting and analyzing data

d) Data results from obtaining many individual pieces of information

24. All but one of the following are advantage of using face-to-face interviews. Which is the odd

one out?

a) The respondent gets time to think about the answer

b) They have a high response rate

c) The questionnaire is filled in correctly

d) The questions can be explained

25. A constant cash flow paid or received at regular interval forever, is called:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

KEY

1.d 2.b 3.b 4.a 5.d 6.c 7.a 8.b 9.b 10.a 11.c 12.a 13.d

14.a 15.c 16.b 17.b 18.c 19.c 20.d 21.c 22.d 23.c 24.a 25.c

1. When regular cash flow for a fixed period is to be received or paid in the beginning of a

period, it is known as:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

2. All but one of the following is advantages of using postal questionnaires. Which is the odd

one out?

a) They are cheap

b) They have high response rates

c) They are easy

d) They can guarantee confidentiality

3. How does an enumerator differ from an interviewer?

a) They do not meet the respondent

b) They do not deliver the questionnaire

c) They do not fill in the questionnaire

d) They do not take away the completed questionnaire

4. When regular cash flow for a fixed period is to be received or paid in the end of a period, it is

known as:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

5. A constant cash flow which is expected to grow at regular rate for ever, is called:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

6. Which of the following is a leading question‟?

a) The first question on the questionnaire

b) The most important question on the questionnaire

c) A question such as „Why do you prefer margarine to butter‟?

d) A question such as „Which do you prefer, margarine or butter‟?

7. What is a sampling frame?

a) A list of the population from which a sample is taken

b) The rules governing the taking of a sample

c) The form on which questionnaire results are initially summarized

d) The board provided to support a questionnaire when it is being completed

8. Present value of a perpetuity can be calculated as:

a) A / r

b) A x r

c) A + r

d) A – r

9. A lifetime pension is an example of which of the following:

a) Ordinary annuity

b) Annuity due

c) Perpetuity

d) Growing annuity

10. A sample is taken by dividing the population into different age bands and then sampling

randomly from the bands, in proportion to their size. What is such a sample called?

a) Simple random

b) Stratified random‟

c) Quota

d) Cluster

11. In a survey on the opinions of employees in a large company headquarters, one of the

following is a cluster sample. Which is it?

a) Staff is randomly selected from each department in proportion to departmental size

b) Staff is selected from the list of employees, taking every nth name

c) A sample, which is a representative as possible of the composition of the staff in terms of

gender, age and department, is taken by stopping appropriate staff in the corridors and canteen

d) One department is selected and all the staff in that department is surveyed

12. Present value of a growing perpetuity can be calculated as:

a) C l x (r-g)

b) C l / (r-g)

c) C l / (r+g)

d) C l x (r+g)

A company decides to invest Rs. 100 lac in a project. It has 3 projects with it, following end of

the year cash inflows. The capital cost is 8%.

Project - A Project - B

1st year 30 lac Rs. 5 lac

2nd year 30 lac Rs Rs. 15 lac

3rd year 30 lac Rs. 25 lac

4th year 10 lac Rs. 35 lac

5th year 10 lac Rs. 50 lac

Total 110 lac Rs. 130 lac

13. What is the present value of cash inflow of 3 rd year for project A?

a) Rs. 2654900

b) Rs. 2487200

c) Rs. 2382000

d) Rs. 2170900

14. What is the present value of cash inflow of Project–A over the entire period of 5 years:

a) 9147000

b) 9265400

c) 9298700

d) 9310800

15. What is the net present value of cash flows of project A, for the entire period:

a) Rs. 786000 negative

b) Rs. 786000 positive

c) Rs. 853000 negative

d) Rs. 853000 positive

16. What is the present value of cash flow of 5th year for project B:

a) Rs. 3750300

b) Rs. 3649000

c) Rs. 3567000

d) Rs. 3405000

17. What is the present value of cash flows of project B for the entire period:

a) 9711000

b) 9765400

c) 9798700

d) 9810800

18. What is the present value of cash flows of project B:

a) 329000 negative

b) 312000 negative

c) 289000 negative

d) 276000 positive

19. Which of these 2 projects can be given preference while making investment :

a) Project A should be preferred

b) Project B should be preferred

c) Investment cannot be made as net present value is negative

d) Negative net present value is higher in project

B than A

20. What is sampling for groups with considerable variation within but similar to each other

called?

a) Cluster

b) Stratified

c) Systematic

d) Random

21. What are sampling groups which are very similar within but dissimilar without are called?

a) Cluster

b) Stratified

c) Systematic

d) Random

22. When each item is examined in the entire population, under a survey, it is called:

a) Census

b) sample

c) Data

d) Population

23. When selected items are taken for examination in the entire population under a survey, it is

called:

a) Census

b) sample

c) Data

d) Population

24. In which of the situations would ----------------- not be the correct formula for Sampling?

a) Infinite population

b) Finite population with replacement

c) Finite population without replacement


25. What does the central tendency theorem State?

a) As the sample size increases the sampling distribution of the mean will approach normality

irrespective of the shape of the population distribution

b) The mean of the sampling distribution of the mean will equal the population mean even if the

population is not normal

c) Uses of sample statistics to make inferences of the populations parameters without

knowledge of the frequency distribution

d) All of the above

KEY

1.b 2.b 3.c 4.a 5.d 6.c 7.a 8.a 9.c 10.b 11.d 12.b 13.c

14.a 15.c 16.d 17.a 18.c 19.c 20.a 21.b 22.a 23.b 24.c 25.d

1. The Statisticians use the word „population‟ to mean:

a) Human beings only

b) People only

c) Other items to be studied only

d) All the above

2. When terms used by Statisticians such as mean, median, mode describe a sample, they are

called:

a) Parameters

b) Statistics

c) Samples

d) Population

3. What is a survey of parliamentarians, seeking their opinion on revision of perks, called?

a) Biased sampling

b) Stratified sampling

c) Random sampling

d) Systematic sampling

4. How is stratified sampling carried out?

a) Divide the population into homogenous groups and select equally but randomly

b) Assigning numbers to the population and selecting the numbers

c) Sample is made up of elements which are saying 10th from the previous selection

d) Population divides itself into groups and we select equally but randomly from each

5. The measure that describes the characteristics of a sample is called:

a) Statistics

b) Sample

c) Parameter

d) Population

6. Which of the following is correct statement:

a) Lower case Roman letters are used to denote sample statistics

b) Greek letters are used to denote population characteristics

c) Capital letters are used to denote population characteristics

d) All the above

7. Why do sampling errors occur?

a) Differences between sample and population

b) Differences among samples themselves

c) Choice f elements of sampling

d) All of the above

8. If a standard error of a statistic is less than that of another then what is the former is said to

be?

a) Efficient

b) Unbiased

c) Consistent

d) Sufficient

9. „n‟ represent –––––– and „N‟ represents –––––:

a) Population size, sample size

b) Sample size, population size

c) Parameter size , sample size

d) Statistics size, population size

10. From population, two methods of selecting samples from population are:

a) direct, indirect

b) Short, detailed

c) Random , non –random

d) Judgment based , knowledge based

11. Which variation does moving average method eliminate?

a) Seasonal

b) Cyclical

c) Irregular

d) Secular trend

12. Which of the following are „TRUE‟?

a) Primary data is that which is most important in a given situation

b) Secondary data is collected for some other purpose

c) Data becomes information after being sorted and analyzed

d) None of above

13. Which of the following is not one of the methods of random sampling:

a) Biased sampling

b) Systematic sampling

c) Stratified sampling

d) Cluster sampling

14. In which of the following sampling methods, each possible sample has the equal probability

to being and each item in the population has an equal chance of being included in the sample:

a) Simple random sampling



d) Cluster sampling

15. A mail order company is to survey customers who have placed orders at some point of the

last year, by contacting one in each hundred of them. In this context, which of the following are

„TRUE‟ and which „FALSE‟?

a) The population consists of all adults living in this country last year

b) The population consists of everyone to whom they sent catalogues last year

c) The population consists of everyone who placed an order last year

d) The population consists of everyone with contact will be made

16. Which of the following should be avoided as far as possible when constructing a

questionnaires?

a) Ambiguous questions

b) Questions requiring calculations

c) Leading questions

d) Open-ended questions

e) All of the above

17. The random samples can be generated by which of the following ways:

a) A computer program to scramble numbers

b) By a table of random numbers

c) By a table of random digits

d) Any of the above

18. When elements are selected from the population at a uniform level that is measured in time,

order or space, it is called:




d) Cluster sampling

19. An ogive is;

a) another name for a histogram

b) a chart showing any linear relationship

c) a chart showing a non-linear relationship

d) a graph of a cumulative frequency distribution

20. In a histogram, the common class width is Rs.10.00. For analysis purposes, the analyst has

set one class width at Rs.12.50 and the frequency recorded is 80 respondents. To maintain the

accuracy of the histogram, the score that must be plotted is;

a) 48

b) 64

c) 80

d) 100

21. When population is divided into relatively homogenous groups and sample is randomly

selected from each group it is called:




d) Cluster sampling

22. A probability distribution of all the possible means of the sample is a distribution of the

sample means and is called:

a) Central tendency of the means

b) Sampling distribution of the means

c) Correlation of the means

d) Regression of the means

23. In a histogram, one class is three-quarters of the width of the remaining classes. If the score

in that class is 21, the correct heights to plot on the histogram is;

a) 15.75

b) 21

c) 28

d) 42

24. A pie chart shows total sales of Rs.350, 000 and a second pie chart shows total sales of

Rs.700,000. If drawn correctly to scale, the ratio of the radius of the second pie chart to the first

pie chart, to two decimal places, should be;

a) 1.41 times

b) 2 times

c) 2.82 times

d) 3.14 times

25. A method of selecting a sample from a population in which personal knowledge is used to

identify the I terms from the population that are to be included in the sample is called:




d) Cluster sampling

Key

1.d 2.b 3.a 4.a 5.a 6.a 7.d 8.a 9.b 10.c 11.a 12.a 13.a

14.a 15.c 16.e 17.d 18.b 19.d 20.b 21.c 22.b 23.c 24.a 25.c

1. Which of the following is not recommended in tabulation?

a) Rounding

b) Amalgamating unimportant sections

c) Using percentages where necessary to make comparisons

d) Keeping maximum accuracy

2. Two straight lines have been plotted on the graph. Their simultaneous solution is given by;

a) the average of their intercepts on the respective axes

b) the point where they cross the line y=x.

c) the point where they cross each other

d) no point on the graph – algebraic means must be used

3. In statistics, the term „finite population‟ stands for:

a) a population which has a stated size

b) a population which has a limited size

c) a population which has no stated or limited size

d a and b

4. A population is finite but heterogeneous. An investigator wants to have a good sample. He

should use:




d) Cluster sampling

5. What is a scatter diagram?

a) Diagram which is scatters all elements of the variable

b) A graphic representation of the relationship of the variables

c) Helps plot observed values

d) b) and c)

6. The method which helps draws a line between the set of scattered points is;

a) Regression method

b) Correlation method

c) Least square method

d) Least fit method

7. The population is spread over a very large geographical area stretching to several States.

To have a good sample, the investigator should use:



8. Where the population from which a sample is to be taken in perfectly homogeneous, the

investigator should prefer which king of the following sample size:

a) a single item

b) Few items

c) Small no. of items

d) Large no. of items

9. “As the output increase, the productivity per worker increases.” What relationship does it lead

to?

a) Direct linear relationship

b) Curvilinear relationship

c) Inverse relationship

d) None of these

10. Unemployment numbers actually recorded in a town for the second quarter of 1997 were

2,200. The underlying trend at this point was 2,000 people and he seasonal factor is 0.97. Using

the multiplicative model for seasonal adjustments, the seasonally adjusted figure in whole

numbers. For the quarter is;

a) 1,940

b) 2,061

c) 2,134

d) 2,268

11. In order to check infiltration of terrorist in a town, the local police stops every person for

checking, which of the following is being used:




d) Cluster sampling


d) Cluster sampling

12. Which of the following is correct about standard error:

a) If it is more, it is better

b) If it is less, it is better

c) If it is neither less nor more, it is better

d) If it is static, it is better

13. If a=2. b=1, independent variable = 4 then dependent variable or an estimating line is;

a) 2

b) 4

c) 6

d) None of these

14. If the estimating equation is y = a – bx which of the following is TRUE?

a) They y intercept is b

b) Slope of line is negative

c) There is inverse relationship

d) b) and c)

e) All of these

15. An investigator has sample size „n‟ from population „N‟. The finite population correction in

this case will be:

a) (N-n) /N

b) (n-N) / N

c) (N-n) / n

d) (n-N) /n

16. In the above case, the sampling fraction would be:

a) n+ N

b) n /N

c) N + n

d) N – n

17. The method of least squares finds the best fit line that ----------- the error between observed

and estimated points on the line

a) maximizes

b) minimizes

c) reduces to zero

d) b) and c)

18. If sign of r is negative it indicates;

a) Direct relationship between x and y

b) Indirect relationship between x and y

c) Inverse relationship between x and y

d) b) or c)

19. When sample size is increased, the sampling distribution of the sample means approaches

to––, irrespective of the parental distribution.

a) Abnormality

b) Central position

c) Normality

d) Extreme position

20. In stratified random sampling, samples are drawn from each strata according to:

a) Ratio in the total size

b) No. in the total size

c) Allocation

d) Equal representation

21. For y = a – bx we say that relationship between y and x is;

a) Direct and linear

b) Indirect and linear

c) Indirect and curvilinear

d) Direct and curvilinear

22. In the relationship between height and educational qualification;

a) The height is independent and education is dependent variable

b) The height is dependent and education is independent variable

c) There is inverse relationship between the two

d) None of above

23. Simple random sampling without replacement is most appropriate in case of :

a) a) Simple random sampling



d) Cluster sampling

24. The analysis that describes how well the estimating equation actually describes the

relationship is called:

a) Variable

b) Regression

c) Correlation

d) Deviation

25. In a time series analysis, the trend equation for a particular product is given by Trend =

0.0004 * YEAR²) + 0.2 * YEAR²). Owing to the cyclical factor, the forecast for 1996 is estimated

at 1.87 times trend. In whole units, the forecast for 1996 is;

a) 3,877

b) 3, 878

c) 3, 900

d) 3,910

Key

1.d 2.c 3.d 4.c 5.b 6.c 7.d 8.a 9.a 10.d 11.b 12.b 13.b

14.e 15.a 16.b 17.b 18.d 19.c 20.d 21.b 22.b 23.d 24.c 25.a

1. Based on the last fifteen periods, the underlying trend of sales is; y = 345.12 – 1.35x

If the sixteenth period has a seasonal factor of -23.62, assuming an additive forecasting model,

then the forecast for that period, in whole units is;

a) 300

b) 343

c) 347

d) 390

2. The known variable under regression is called:

a) Correlation

b) Independent variable

c) Dependent variable

d) positive variable

3. The unknown variable that is estimated on the basis of information available (known

variable), is called:

a) Correlation

b) Independent variable

c) Dependent variable

d) positive variable

4. Based on twenty past quarters, the underlying trend equation for forecasting is;

y =23.87 + 2.4 x. If quarter 21 has a seasonal factor of times 1.08, using a multiplicative model,

then the forecast for the quarter, in whole units is;

a) 75

b) 80

c) 83

d) 85

5. In December, unemployment in a region is 423,700. If the seasonal factor using an additive

time series model is + 81,500, find the seasonally adjusted level f unemployment to the nearest

whole number.

a) 342,200

b) 505,200

c) 345,316

d) 519,877

6. The relationship between the change in GDP and change in expenditure is generally:

a) Direct or Positive

b) Indirect

c) Inverse

d) Negative

7. As we go higher in the air, the amount of oxygen and atmosphere changes due to ––––––

relationship:

a) Direct

b) Positive

c) Inverse

d) Any of the above

8. In a time series analysis using the multiplicative model, at a certain time actual, trend and

seasonal values are 523, 465 and 1.12. Find the residual at this point

a) 1.2597

b) 56.88

c) 1.0042

d) 51.7857

9. In a multiplicative time series analysis, the seasonal variations given by averaging the y =T

values are 1.06, 1.13, 0.92 and 0.94. They are subsequently adjusted so that their total is 4.

What is the new value of the average currently valued at 1.06?

a) 0.2975

b) 1.01

c) 1.0725

d) 1.0475

10. In a time series analysis using the additive model, at a certain time actual, trend and

seasonal values are 85, 91, -6.4. Find the residual at this point.

a) 0.6

b) 0.4

c) -0.4

d) -12.4

11. When data is plotted in a graph and later on the points on the graph are linked by drawing a

line, this is called:

a) Linear diagram

b) Curvilinear diagram

c) Scatter diagram

d) Linear equation

12. Which of the following statements is not true:

a) On a scatter diagram, when there is straight line, upward, it is called direct linear relationship.

b) On a scatter diagram, when there is straight line, downward, it is called direct linear

relationship.

c) On a scatter diagram, when there is curve, upward, it is called direct curvilinear relationship.

d) On a scatter diagram, when there is curve, downward, it is called curvilinear relationship.

13. In an additive time series analysis, the seasonal variations given by averaging the y – T.

Values are 22, 15, -8, -33. They are subsequently adjusted so that their total is 0. What is the

new value of average currently valued at -33?

a) -34

b) -37

c) -29

d) -32

14. All expect one of the following are conditions that should be met if time series forecasts are

to be reliable. Which is the odd one out?

a) Residuals should be numerically small

b) Extrapolation should be avoided

c) The trend should continue as in the past

d) The seasonal pattern should continue as in the past

15. In the additive model A = T + S + R, which of the following is INCORRECT?

a) S is estimated by averaging A – T values for the particular season

b) T may be estimated by a moving average

c) T may be estimated from an appropriate regression equation

d) R is estimated from A - T

e) The seasonally adjusted value is given by A – S

16. Equation of a straight line is given by:

a) X = b + aY

b) X = a + bY

c) Y = a + bX

d) Y = b + aX

17. Suppose a = 6 and b = 4 and we have an equation Y = a + bX. If X is 4, Y=?

a) 18

b) 22

c) 24

d) 27

18. The following statements all refer to time series analysis beginning with the estimation of the

trend using a centered moving average. Which of the following is FALSE?

a) Centring must be used when the data has a cycle with an even number of points

b) When the data has a cycle with an even number of points, centering may be omitted but

gives more accurate result

c) When the data has a four-point cycle, each centred moving average utilizes five actual values

d) None of above

19. Which of the following comments regarding the validity of forecasts FALSE?

a) Regression trends give more accurate trend forecasts than those obtained using moving

average

b) Forecasts depend on the previous trend continuing

c) Forecasts depend on the previous seasonal and cyclical patterns continuing

d) Checking the fit of the model by examining the values of residuals can help in judging the

validity of forecasts

20. Which of the following statements about seasonal adjustment is CORRECT?

a) Seasonally adjusted data has had the seasonal variations added from it

b) Seasonally adjusted data has had the seasonal variations included in it

c) Seasonal adjustment is the process by which seasonal components are adjusted so that they

add to zero

d) Seasonal adjustment is the process by which estimates of the trend can easily be obtained

21. The analysis that studies the effect of change in one variable over the other , is called:

a) Coefficient of determination

b) Regression

c) Linear relationship

d) Correlation

22. Which of the following is not a type of variation in time series?

a) Secular trend

b) Cyclical fluctuation

c) Irregular variation

d) None of these

23. If the seasonally adjusted values are increasing, which of the following would you deduce?

a) The trend is upwards

b) The trend is downwards

c) No deductions about the trend are possible from the information given

d) Seasonal variability is increasing

24. For a data of 8 half year periods the code for the 7th half is;

a) 2

b) 3

c) 6

d) 5

25. When coding for odd number of periods, the following is done;

a) Subtract each value from the smallest value

b) Subtract each value from the highest value

c) Subtract each value from the middlemost term


Key

1.a 2.b 3.c 4.b 5.a 6.a 7.c 8.c 9.d 10.b 11.c 12.b 13.d

14.b 15.d 16.c 17.b 18.b 19.a 20.d 21.b 22.d 23.a 24.d 25.c

1. A time series of annual data will contain which of the following components?

a) Secular trend


c) Seasonal variation

d) a) and c)

e) a) and b)

2. In time series, in –––––, variation comes over a long period of time.

a) Secular trend



d) Seasonal variation

3. When there is steady increase is recorded in the consumer price index, it is an example of:

a) Secular trend




4. Removing the highest and lower actual-to-moving average values when computing seasonal

index for annual data reduces;

a) Extreme cyclical variations

b) Secular trend

c) Seasonal variations

d) All of these

5. The repetitive movement around a trend line in a 4-month period is best described by;

a) Seasonal variation

b) Secular trend

c) Cyclical fluctuation

d) Irregular variation

6. Business cycle often occurs in an economy. This is an example of:

a) Secular trend




7. In time series, if there is a pattern of change observed within a year, this represents:

a) Secular trend




8. The result of discarding extreme values before averaging is called ------------

a) residual mean

b) modified mean

c) extreme mean

d) None of these

9. For a given year if an adjusted index is > 100 for some other period it is;

a) <100

b) >100

c) =100

d) None of these

10. The interval between the upper quartile and the lower quartile is known as the;

a) mean

b) inter quartile range

c) standard deviation

d) mode

11. Doctors normally get more cases of flu in the winter season. This is an example of:

a) Secular trend




12. In time series, the occurring of earth quake or floods or wars, is an example of:

a) Secular trend




13. A driver makes a number of deliveries in a week. In a week where his average journey was

267 miles, his individual journey distances, in miles, were 286, 192, x, 307, 185, y, 94. When y

=4x, the value of x is;

a) 161

b) 167

c) 267

d) 644

14. Sales for the first 5 months of the year averaged Rs.8, 200 per month. For the last 4 months

of the year sales averaged Rs.8,500 per month. If sales for the year totaled Rs.102,000, the

average for the sixth, seventh and eighth months must be;

a) Rs.8,500

b) Rs.9,000

c) Rs.9,500

d) Rs.10,200

15. A group of people have the following ages in years; 21, 32, 19, 24, 31, 27, 17, 21, 26, 42.

The median age of the group is;

a) 21 years

b) 25 years

c) 26 years

d) 31 years

16. In time series, which of the following represents long term direction?

a) Secular trend




17. Ina secular trend, when the trend can be described by a straight line, it is called ––––––

trend:

a) Direct

b) Curvilinear

c) Linear

d) Straight

18. In a negative skewed distribution;

a) the mean is larger than the median

b) the mean is smaller than the median

c) the mean is the same as the median

d) the mean lies between the median and the mode

19. The following set of data; 13, 42, x, 7, 51, 69, 28, 33, 14, 8. has a median of 29. What is the

value of x?

a) 25

b) 29

c) 30

d) 32

20. If the quartiles of a distribution are 34 and 52, what is the value of the quartile deviation?

a) 43

b) 18

c) 9

d) 4.5

21. Life cycle of a business product represents –––––relationship:

a) Direct

b) Curvilinear

c) Linear

d) Straight

22. The general equation for a parabolic curve, in time series is :

a) Y = a + bx2 + cx

b) Y = a2 + bx + cx

c) Y = a + bx2 + cx

2

d) Y = a + bx + cx2

23. Which of the following would be the best measure of spread to use for a heavily skewed

distribution, all other things being equal?

a) Mean absolute deviation

b) Standard deviation

c) Quartile deviation

d) Range

24. If the standard deviation of sample of 100 people is 49, what is the value of the variance?

a) 7 b) 0.7 c) 2.401 d) 24.01

25. All the following except one are advantage of using the standard deviation to measure

spread. Which if INCORRECT?

a) It is not distorted by skewed data

b) It is well known and widely used

c) It uses all the data

d) Its formula lends itself to mathematical manipulation.

Key

1.e 2.a 3.a 4.a 5.a 6.b 7.d 8.b 9.a 10.b 11.d 12.c 13.a

14.b 15.b 16.a 17.c 18.b 19.c 20.c 21.b 22.d 23.c 24.c 25.a

1. In time series, the ratio to moving average method is used to measure the :

a) Secular trend




2. In the time series, thorough ratio to moving average method the degree of variation is

measured by:

a) Variations away from the base

b) Variation near the base

c) Variations equal to the base


3. State whether the following statements about the arithmetic mean are FALSE?

a) It measures the variability of the data

b) It is measure of central tendency

c) It gives an average level for the data

d) It gives the value of the total shared out equality

4. The arithmetic mean is given by the formula £fx

£f For grouped data, which one or more of the

following can constitute the x in the formula?

a) Interval mid-points

b) Interval upper limits

c) Interval lower limits

d) None of these

5. State whether the following statements about the median are TRUE or FALSE?

a) It is generally the best average to use when the data is skewed

b) When the data is grouped, it can only be estimated

c) For continuous data, it has a cumulative frequency of half the total frequency

d) It gives the middle value for the data

e) All are true

6. To measure the seasonal variation, under time series –––is/are used:

a) Residual cycles

b) seasonal indices

c) irregular variations

d) Irregular variations

7. Under seasonal variation, the time series are deseasonlized by:

a) Dividing each of actual value in the series by appropriate seasonal index

b) Multiply each of actual value in the series by appropriate seasonal index

c) Adding each of actual value in the series by appropriate seasonal index

d) Subtracting each of actual value in the series by appropriate seasonal index

8. State whether the following statements about the mode are TRUE or FALSE?

a) It is the most widely used average

b) It is a measure of dispersion

c) It gives the most common value

d) None of above

9. Which of the following are measures of spread?

a) The inter quartile range

b) The range

c) The coefficient of variation

d) The standard deviation

e) All of above

10. “In country P, the coefficient of variation for the salaries of trainee accountants is 40 percent,

while in country Q it is 60 percent”. Which of the following statements can be made on the basis

of this information?

a) In P,40 percent of trainee accountants have a below-average salary

b) In Q, the lowest salary of trainee accountants is 60 percent of the average

c) Salaries of trainee accountants are more variable in Q than in P

d) Salaries of trainee accountants are higher on average in Q than in P

11. In statistics, there are –––––– type/s of estimates:

a) One

b) Two

c) Three

d) Four

12. –––––– estimate is a single number which is use to estimate the unknown population:

a) Point estimate

b) Average estimate

c) Interval estimate

d) Final estimate

13. Which is FALSE about advantages of using the standard deviation?

a) It has an exact algebraic formula

b) It is not distorted by data being skewed

c) It is the most widely used measure of spread

d) It is affected by open-ended intervals

14. In given quarterly data the first step in computing seasonal index is calculating;

a) 4 quarters moving average

b) Discard highest and lowest values

c) 4 quarters moving total


15. For a data of 8 half year periods the code for the 7th half is;

a) 2

b) 3

c) 6

d) 5

16. The correlation between x and y is 0.85. This means that;

a) x is 85 percent of y

b) y is 85 percent of x

c) there is a strong relationship between x and y

d) there is a week relationship between x and y

17. If £x = 440, £y = 330, £x² = 17,986, £y² = 10,366, £xy = 13,467 and n = 11, then the value of

r, the coefficient of correlation, to two decimal places, is;

a) 0.98

b) 0.63

c) 0.96

d) 0.59

18. In a forecasting model based on y = a + bx, the intercept is Rs.234. If the value of y is

Rs.491 and x is 20, then the value of the slope, to two decimal places is;

a) -24.55

b) -12.85

c) 12.85

d) 24.85

19. If the correlation is 0.8, what is the coefficient of determination?

a) 0.64

b) 89

c) -0.8

d) 0.4

20. –––––––– estimate is a range of values which is used to estimated the unknown population:

a) Point estimate

b) Average estimate


d) Final estimate

21. The Principal of colleges makes an estimate that next year the no. of students that will be

enrolled to the college will be between 3000 to 3500. This is example of:

a) a) Point estimate

b) Average estimate


d) Final estimate

22. If the regression equation in Rs.‟000 linking sales y and advertising expenditure x is given by

y = 5, 000 + 10x, forecast the sales when Rs.100,000 is spent on advertising.

a) Rs.1005,000

b) Rs.501,000

c) Rs.4m

d) Rs.6m

23. If the regression equation linking costs Rs. m to number of units produced „000s is y = 4.3 +

0.5x, which of the following is CORRECT?

a) For every extra unit produced, costs rise by Rs.500,000.

b) For every extra 1, 000 units produced, costs rise by Rs.500,000

c) For every extra 1,000 units produced, costs rise by Rs.4.3m

d) For every extra unit produced, costs rise by Rs.4, 300.

24. All of the following except one will adversely affect the reliability of regression forecasts.

Which is the exception?

a) Small sample

b) Low correlation

c) Extrapolation

d) Negative correlation

25. The Principal of colleges makes an estimate that next year the no. of students that will be

enrolled to the college will be 3000. This is example of:

a) a) Point estimate

b) Average estimate


d) Final estimate

Key

1.d 2.a 3.a 4.a 5.e 6.b 7.a 8.d 9.e 10.c 11.b 12.a 13.b

14.c 15.d 16.c 17.b 18.c 19.a 20.c 21.c 22.d 23.b 24.d 25.a

1. A sample statistics which is used to estimate a population parameter is called:

a) Estimate

b) Estimator

c) Assessment

d) Probability

2. If the correlation between x and y is 0.9, which of the following is FALSE?

a) There is strong linear relationship between x and y

b) Y increases as x increases

c) Ninety percent of the changes in y can be explained by the corresponding changes in x

d) The slope of the regression line of y on x is positive

3. “Over a period of 12 months, in which monthly advertising expenditure ranges from

Rs.20,000 to Rs.50,000, the correlation between monthly advertising expenditure and monthly

sales is 0.8,”. Which of the following is TRUE on the basis of the information given?

a) Higher sales are caused by higher expenditure on advertising

b) If advertising expenditure is increased to Rs.100,000, sales will increase

c) Sixty-four percent of the changes in sales from one month to the next can be explained by

corresponding changes in advertising expenditure.

d) A correlation coefficient derived from 12 months‟ data would be more reliable than that given

above

4. The correlation coefficient for ten pairs of x- and y- values, with x ranging from Rs.500 to

Rs.700, is calculated to be 0.79, and the regression equation is y = 620 + 4.3x. Which of the

following is TRUE?

a) When x = Rs.600, the estimate of y = 3,200

b) When x = Rs.500, the estimate of y from the regression equation is likely to be reliable

c) When x = 0, the estimate of y from the regression equation is likely to be reliable

d) When x increases by Rs.1, y increases by 0.79.

5. Which of the following is a correct statement:

a) The sample mean is the estimator of the population mean

b) The sample proportion cannot be used as an estimator of population proportion

c) The sample mean cannot be estimator of the population mean

d) The sample proportion can be used as an estimator of population mean

6. An estimate is a –––––––:

a) Average value of a statistics

b) Estimated value of a statistics

c) General value of a statistics

d) Specific value of a statistics

7. If the correlation coefficient was 0.95, which of the following statements would be

INCORRECT?

a) The positive sign tells us that there is a strong relationship between temperature and sales

b) The positive sign tells us that as temperature rises, so do sales

c) The value of the correlation coefficient tell us that there is a strong linear relationship between

temperature and sales

d) The value of the correlation coefficient does not tells us that for each increase of 1 degree in

temperature, sales increase by 0.95 cartons

8. If the coefficient of determination was 85 percent, which of the following statements would be

CORRECT?

a) When temperature increase by 1ºC, sales increase by 85%

b) When temperature increase 1ºC, sales increase by 1.5%

c) On 85% of days it s possible to accurately predict sales if an accurate prediction of

temperature exists

d) 85% of the changes in sales from, one day to the next can be explained by corresponding

changes in temperature

9. Which of the following is not a criteria of a good estimator (1) unbiased (2) efficiency (3)

consistency (4) sufficiency

a) 1 and 2

b) 3 and 4

c) 3 only


10. The probability that is associated with an interval estimate is called:

a) Confidence interval

b) Probability interval

c) Confidence level

d) Probability level

11. If the correlation coefficient was 0.9, which of the following comments are INCORRCT?

a) The correlation coefficient shows that there is a strong linear relationship between output and

costs

b) The correlation coefficient shows that high output causes high costs

c) The correlation coefficient shows that costs rise as output rises

d) The high value of the correlation coefficient means that estimates made using regression are

likely to be reliable

12. In what range does correlation coefficient life?

a) 0 to + 1

b) -1 to 0

c) -1 to + 1

d) >1

13. Point estimate is often insufficient. Why?

a) Decision is inversely proportional to the number of estimates

b) Difficult to pinpoint the correct single estimate

c) Because it does not provide the extent of error

d) a) and c)

14. If it is reported that we are 90% confident that the mean of the population of incomes of

people in certain community will lie between Rs. 10000 and Rs. 24000, this range is the ––––––

a) Confidence interval

b) Probability interval

c) Confidence level

d) Probability level

15. Confidence interval is expressed in:

a) Numerical value

b) Alphanumeric explanation

c) Standard error

d) Graph

16. Out of following, which 3 measures are used in correlation analysis?

a) standard error b) covariance c) standard deviation d) coefficient of correlation

e) coefficient of determination

a) a, b, c

b) a, c, e

c) b, d, e

d) b, c, e

17. In a normal distribution 95.5% of all the sample statistics are within ------ standard errors of

the population parameter.

a) ± 5%

b) ± 2.25%

c) ± 3%

d) None of these

18. The value of r² is 0.49 then coefficient of correlation is;

a) 0.49

b) 0.7

c) 0.07

d) Cannot be determined

19. If a tighter and tighter confidence interval is set, we will get:

a) a lowest confidence level

b) A lower and lower confidence level

c) A higher confidence level

d) A higher and higher confidence level

20. Which among the following represents the present value of a bond:

a) PV (face value) + PV (coupon)

b) PV (face value) - PV (coupon)

c) PV (face value) / PV (coupon)

d) PV (face value) x PV (coupon)

21. If the dependent variable increases with the independent variable then the coefficient or

correlation is;

a) 0 to – 1

b) 0 to – 0.5

c) 0 to – 2

d) None of these

22. A sample of 100 companies has been analyzed by size and whether they pay invoices

promptly. The sample has been cross-tabulated into large= small against fast payers = slow

payers. Sixty of the companies are classified as large, of which forty are slow payers. In total,

thirty of all the companies are fast payers. The probability that a company chosen at random is

a fast-paying, small company is;

a) 0.10

b) 0.20

c) 0.30

d) 0.40

23. In a group of 100 CIMA students, thirty are male, fifty-five are studying Foundation level, and

six of the male students are not studying Foundation level. A student chosen at random is

female. What is the probability that she is not studying Foundation Level?

a) 0.80

b) 0.56

c) 0.44

d) 0.20

24. A sale representative makes calls to three separate unrelated customers. The chance of

making a sale at any one of then is 60 percent. The probability that a sale is made on the third

call only is;

a) 0.096

b) 0.216

c) 0.36

d) 0.4

25. A normal distribution has a mean of 55 and a variance of 14.44. The probability of a score of

59 or more is approximately;

a) 0.15

b) 0.35

c) 0.50

d) 0.65

Key

1.b 2.c 3.c 4.a 5.a 6.d 7.a 8.d 9.d 10.c 11.b 12.c 13.c

14.a 15.c 16.c 17.b 18.d 19.b 20.a 21.d 22.a 23.b 24.a 25.a

1. In a normally distributed population with a mean score of 850 and a standard deviation of

74.63, the lower quartile score will be approximately;

a) 700

b) 750

c) 800

d) 900

2. A bond with Rs. 1000 par value has a coupon rate of 12%. The required rate of return on the

bond is 14% and it is mature in 8 years. Find the value of the bond:

a) 907.70

b) 970.00

c) 977.00

d) 900.77

3. A bond with Rs. 100 par value has a coupon rate of 14%. The required rate of return on the

bond is 13% and it is mature in 5 years. Find the value of the bond:

a) 104.45

b) 105.34

c) 104.35

d) 103.54

4. A company has a normally distributed sales pattern for one of its products, with a mean of

Rs.110. The probability of a sale worth more than Rs.120 is 0.0119. Using normal tables, the

standard deviation, to two decimal places, associated with sales is;

a) 4.41

b) 4.42

c) 4.43

d) 4.44

5. From past records it is known that 10 percent of items from a production line are defective. If

two items are selected at random, what is the probability that only one is defective?

a) 0.09

b) 0.10

c) 0.18

d) 0.20

6. A project may result in profits of Rs.20, 000, or Rs.12, 000 in a loss of Rs.5, 000, with

probabilities 0.3, 0.5 and 0.2, respectively. What is the expected profit?

a) Rs.11,000

b) Rs.27,000

c) Rs.9,000

d) Rs.12,000

7. Project S will result in profits of Rs.2m or Rs.1.3m, with probabilities 0.3 and 0.7, respectively.

If project T results in Rs.1.5m, with probability p or alternatively Rs.2.1m, what is the value of p

for which the projects are equally attractive under the expected value criterion?

a) 0.3933

b) 0.9167

c) 0.9833

d) 0.7

8. If weights are normally distributed with mean 65kg and standard deviation 8kg, what is the

probability of a weight being less than 70kg?

a) 0.2357

b) 0.7357

c) 0.7643

d) 0.2643

9. A company is paying a dividend of Rs. 3 on a share and the rate of return is 10%. For how

much, this can be purchased:

a) Rs.20

b) Rs. 30

c) Rs. 40

d) Rs. 50

10. When there is change in the market interest rate, the price of a bond:

a) There is no effect

b) The price changes in the same direction

c) The price changes in the opposite direction

d) The price changes according to market sentiment

11. The duration of a bond is a function of the bond‟s;

a) coupon rate

b) yield to maturity

c) time to maturity

d) all of these

12. Holding other factors constant, the interest-rate risk of a coupon bond is higher when the

bond‟s;

a) term-to-maturity is lower

b) coupon rate is higher

c) yield to maturity is lower

d) current yield is higher

e) None of the above

13. The “modified duration” used by practitioners is equal to the Macaulay duration;

a) times the change in interest rate

b) time one plus the bond‟s yield to maturity)

c) divided by one minus the bond‟s yield to maturity)

d) divided by one plus the bond‟s yield to maturity)

14. Given the time to maturity, the duration of a zero-coupon bond is higher when the discount

rate is;

a) higher

b) lower

c) equal to the risk free rate

d) The bond‟s duration is independent of the discount rate.

15. The interest rate risk of a bonds;

a) the risk related to the possibility of bankruptcy of the bond‟s issuer

b) the risk that arises from the uncertainty of the bonds‟ return caused by changes in interest

rates

c) the unsystematic risk caused by factors unique in the bond

d) a) and b) above

16. When the current market, interest rate increase more than the coupon rate of a bond, the

value of the bond:

a) Increase

b) Decrease

c) Remains constant


17. When the current market interest rate decrease more than the coupon rate of a bond, the

value of the bond:

a) Increase

b) Decrease

c) Remains constant


18. Holding other factors constant, which one of the following bonds has the smallest price

volatility?

a) 5-year, 0% coupon bond

b) 5-year, 12% coupon bond

c) 5-year, 14% coupon bond

d) 5-year, 10% coupon bond

e) Cannot tell from the information given

19. Which of the following is NOT true?

a) Holding other things constant, the duration of a bond increases with time to maturity

b) Given time to maturity, the duration of a zero-coupon decrease with yield to maturity

c) Given time to maturity and yield to maturity, the duration of a bond is higher when the coupon

rate is lower

d) Duration is a better measure of price sensitivity to

Interest rate changes than is time to maturity

e) All of the above

20. The duration of a 5-year zero coupon bond is;

a) smaller than 5

b) larger than 5

c) equal to 5

d) equal to that of a 5-year 10% coupon bond

21. The basic purpose of immunization is to;

a) eliminate default risk

b) produce a zero net interest-rate risk

c) offset price and reinvestment risk

d) a) and b)

e) b) and c)

22. The duration of a par value bond with a coupon rate of 8% and a remaining time to maturity

of 5years is;

a) 5 years

b) 5.4 years

c) 4.17 years

d) 4.31 years

23. Govt. issued a bond of Rs. 1000 with 8% coupon and 10 year maturity. The current interest

rates have increased. Which of the following is correct:

a) The price of bond will increase and coupon rate will decrease

b) The price of bond will fall and coupon rare will not change

c) The price of bond will increase and coupon rate will not change

d) The price of bond will decrease and coupon rate will decrease

24. RBI issues a 6% bond of Rs. 100 with maturity period of 3 years. The current interest rates,

offer a return of 5.6%. What is the present value of the bond:

a) 101.08

b) 100.08

c) 102.08

d) 99.08

25. A seven- year par value bond has a coupon rate of 9% and a modified duration of;

a) 7 years

b) 5.49 years

c) 5.03 years

d) 4.87 years


Key

1.c 2.a 3.d 4.b 5.c 6.a 7.c 8.b 9.b 10.c 11.d 12.c 13.d

14.d 15.b 16.b 17.a 18.c 19.b 20.c 21.e 22.d 23.b 24.a 25.

1. Par value bond XYZ has a modified duration of 6. Which one of the following statements

regarding the bond is TRUE?

a) If the market yield increases by 1% the bond‟s price will decreases by $ 60.

b) If the market yield increases by 1% the bond‟s price will increases by $ 50

c) If the market yield increases by 1% the bond‟s price will decreases by $ 50

d) If the market yield increase by 1% the bond‟s price will increase by $ 60

2. Which of the following bonds has the longest duration?

a) An 8-year maturity, 0% coupon bond

b) An 8-year maturity, 5% coupon bond

c) A 10-year maturity, 5% coupon bond

d) A 10=year maturity, 0% coupon bond


3. Which of the following statements is TRUE concerning the duration of a perpetuity?

a) The duration of 15% yield perpetuity that pays $ 100 annually is longer than that of a 15%

yield perpetuity that pays $ 200 annually

b) The duration of a 15% yield perpetuity that pays $ 100 annually is shorter than that of a 15%

yield perpetuity that pays $ 200 annually

c) the duration of a 15% yield perpetuity that pays $ 100 annually is equal to that of 15% yield

perpetuity that pays $ 200 annually

d) The duration of a perpetuity cannot be calculated.

4. The two components of interest-rate risk are;

a) price risk and default risk

b) reinvestment risk and systematic risk

c) call risk and price risk

d) price risk and reinvestments risk


offer a return of 5.6%. Interest is semi – annually. What is the present value of the bond:

a) 101.08

b) 101.09

c) 102.08

d) 99.08


offer a return of 15%. What is the present value of the bond:

a) 81.34

b) 81.03

c) 80.12

d) 79.45

7. Which of the following is correct with regard to bond price value in relation to current interest

rate:

a) When current rate of interest is higher than the coupon, bond sells at a higher price

b) When current rate of interest is lower than the coupon, bond sells at a higher price

c) When current rate of interest is lower than the coupon, bond sells at a lower price

d) When current rate of interest is higher than the coupon, there is no effect on the bond price

b)

8. A 10% bond of the face value of Rs.100 is purchased at Rs. 113.62. Hence this gives 8.8%

return. This return is called:

a) Current yield

b) Current rate of interest

c) Current coupon rate


9. The duration of a coupon bond;

a) does not change after the bond is issued

b) can accurately predict the price change of the bond for any interest rate change

c) will decrease as the yield to maturity decreases

d) All of the above are true

e) None of the above is true

10. Indexing of bond portfolios is difficult because;

a) The number of bonds included in the major indexes is so large that it would be difficult to

purchase them in the proper proportions

b) many bonds are thinly traded so it is difficult to purchase them at a fair market price

c) the composition of bond index is constantly changing

d) All of the above are true

11. Identify the bond that has the longest duration no calculations necessary);

a) 20-year maturity with an 8% coupon

b) 20-year maturity with a 12% coupon

c) 15-year maturity with a 0% coupon

d) 10-year maturity with a 15% coupon

e) 12-year maturity with a 12% coupon

12. When interest rates decline, the duration of a 10-year bond selling at a premium;

a) increases

b) decreases

c) remains the same

d) increases at first, then declines

e) decreases at first, then increases

13. An 8%, 30- year corporate bond was recently being priced to yield 10%. The Macaulay

duration for the bond is 1-20 years. Given this information, the bond‟s modified duration would

be------------

a) 8.05

b) 9.44

c) 9.27

d) 11.22

14. The concept that takes into account the current yield on a bond and subsequent change in

the bond value over its life, is called:

a) Current yield




15. The discount rate that makes the present value of the bond‟s payment s equal to its price, is

called:

a) Current yield




16. An 8%, 15-year bond has a yield to maturity of 10% and duration of 8.05 years. If the market

yield changes by 25 basis points, how much change will there be in the bond‟s price?

a) 1.85%

b) 2.01%

c) 3.27%

d) 6.44%

17. One way that banks can reduce the duration of their asset portfolio is through the use of;

a) fixed rate mortgages

b) adjustable rate mortgages

c) certificates of deposit

d) short-term borrowing


18. The duration of a bond normally increases with an increase in;

a) term to maturity

b) yield to maturity

c) coupon rate

d) All of the above


19. Which one of the following is an INCORRECT statement concerning duration?

a) The higher the yield to maturity, the greater the duration

b) The higher the coupon, the shorter the duration

c) The difference in duration is small between two bonds with different coupons each maturing

in more than 15 year

d) The duration is the same as term to maturity only in the case of zero-coupon bonds

20. Immunization is not a strictly passive strategy because;

a) It requires choosing an asset portfolio that matches an index

b) there is likely to be a gap between the values of assets and liabilities in most portfolios

c) It require frequent rebalancing as maturities and interest rates change

d) durations of assets and liabilities fall at the same rate


21. (Coupon income + price change ) / investment =

a) Bond price

b) Yield to maturity

c) Rate of return

d) Current yield

22. A 6% bond of face value of Rs.1000 is purchased at Rs. 1010.77 and sold next year for

Rs. 1020. The rate of return will be:

a) 6.86%

b) 6.51%

c) 6%

d) 5.82%

23. Contingent immunization;

a) is a mixed-active passive bond portfolio management strategy

b) is a strategy whereby the portfolio may or may not be immunized

c) is a strategy whereby if and when some trigger point value of the portfolio is reached, the

portfolio is immunized to insure minimum required return

d) a) and b)

e) a), b) and c)

24. Some of the problems with immunization are;

a) duration assumes that the yield curve is flat

b) duration assumes that if shifts in the yield curve occur, these shifts are parallel

c) immunization is valid for one interest rate change only

d) durations and horizon dates change by the same amounts with the passage of time

e) a), b) and c)

25. Cash flow matching on a multi period basis is referred to as a;

a) immunization

b) contingent immunization

c) dedication

d) duration matching

e) rebalancing

Key

1.a 2.d 3.c 4.d 5.b 6.d 7.b 8.a 9.e 10.d 11.c 12.a 13.c

14.d 15.d 16.a 17.b 18.a 19.a 20.c 21.c 22.a 23.e 24.e 25.c

1. Immunization through duration matching of assets and liabilities may be ineffective or

inappropriate because;

a) conventional duration strategies assume a flat yield curve

b) duration matching can only immunize portfolios from parallel shifts in the yield curve

c) immunization only protects the nominal value of terminal liabilities and does not allow for

inflation adjustment

d) Both a) and c) are true

e) All of the above are true

2. The curvature of the price-yield curve for a given bond is referred to as the bond‟s;

a) modified duration

b) immunizations

c) sensitivity

d) convexity

e) tangency

3. The investor gets, the difference in purchase price and the face value, as return on which of

the following types of bonds:

a) Floating rate bonds

b) Callable bonds

c) Zero Coupon bonds

d) Convertible bonds

4. On a specified date, a bonds takes the form of a share, at a pre-determined price, Such

bond is called:


b) Callable bonds



5. A substitution swap is an exchange of bonds undertaken to;

a) change the credit risk of a portfolio

b) extend the duration of a portfolio

c) reduce the duration of a portfolio

d) profit from apparent mispricing between two bonds

e) adjust for differences in the yield spread

6. A rate anticipation swap is an exchange of bonds undertaken to;

a) shift portfolio duration in response to an anticipated change in interest rates

b) shift between corporate and government bonds when the yield spread is out of line with

historical values

c) profit from apparent mispricing between two bonds

d) change the credit risk of the portfolio

e) increase return by shifting into higher yield bonds

7. An active investment strategy;

a) Implies that market prices are fairly set

b) attempts to achieve return greater than those commensurate with the risk borne

c) attempts to achieve the proper return that is commensurate with the risk borne

d) requires portfolio managers, while a passive investment strategy does not

e) occurs when bond portfolio managers are

hyperactive

8. Which of the following are TRUE about the interest rate sensitivity of bonds?

I. Bond prices and yields are inversely related

ll. Prices of long-term bonds tend to be more sensitive to interest rate changes than prices of

short-term bonds

lll. Interest rate risk is directly related to the bond‟s coupon rate

lV. The sensitivity of a bond‟s price to a change in its yield to maturity is inversely related to the

yield to maturity at which the bonds is currently selling

a) l and ll

b) l and lll

c) l, ll and lV

d) ll, lll, and lV

e) l, ll, lll, and lV

9. According to the duration concept;

a) only coupon payments matter

b) only maturity value matters

c) the coupon payments made prior to maturity make the effective maturity of the bond greater

than its actual time to maturity

d) the coupon payments made prior to maturity make the effective maturity of the bond less than

its actual time to maturity

e) discount rates don‟t matter

10. On which of the following types of bond, the rate is re-set with the passage of time,

according to a bench-mark, based on the current rate of interest:


b) Callable bonds



11. Depending upon the current interest rates, the face value of which of the following types of

bonds changes:


b) Negotiable bonds



12. The fixed income received by an investor on a bond, is called:

a) Yield

b) Current

c) Fixed rate

d) Coupon rate

13. Duration is important in bond portfolio management because;

l. it can be used in immunization strategies

ll. it provides a gauge of the effective average maturity of the portfolio

lll. It is related to the interest rate sensitivity of the portfolio

lV. it is a good predictor of interest rate changes

a) l and ll

b) l and lll

c) lll and lV

d) l, ll, and lll

e) l, ll, lll and lV

14. Two bonds are selling at par value and each has 17 years to maturity. The first bond has a

coupon rate of 13%. Which of the following is TRUE about the durations of these bonds?

a) The duration of the higher-coupon bond will be higher

b) The duration of the lower-coupon will be higher

c) The duration of the higher-coupon bond will equal the duration of the lower-coupon bond

d) There is no consistent statement that can be made about the durations of the bonds

e) The bond‟s durations cannot be determined without knowing the prices of the bonds

15. The duration is a 15-year zero-coupon bond is;

a) smaller than 15

b) larger than 15

c) equal to 15

d) equal to that a 15-year 10% coupon bond


16. The duration of a 20-year zero-coupon bond is;

a) equal smaller than 20

b) larger than 20

c) smaller than 20

d) equal to that of a 20-year 10% coupon bond


17. The duration of perpetuity with a yield of 10% is;

a) 13.50 years

b) 11 years

c) 6.66 years

d) cannot be determined


18. When a bond is held by an investor and meanwhile its price changes. This is called:

a) Interest rate risk

b) Market risk

c) Price risk

d) Trading risk

19. Current yield on an 8% Rs. 100 bond is 7.5%. The price of bond should be:

a) Rs. 104.56

b) Rs. 104.96

c) Rs. 105.86

d) Rs. 106.67

20. Three bonds are available to an investor for investment: (a) 1st is 5 years, 9% bond that

provides 10% yield to maturity. (b) 2nd one is 4 years, 8% bond, with 10% yield to maturity (c) 3rd

one is 6 years, and 10% bond, with yield to maturity of 10%. Which of these the investor can

prefer to purchase

a) (c) only

b) (a) only

c) (b) only

d) any of these

21. The duration of a perpetuity with a yield of 6% is;

a) 13.50 years

b) 12.11 years

c) 17.67 years

d) cannot be determined


22. Par value bond F has a modified duration of 9. Which one of the following statements

regarding the bond is TRUE?

a) If the market yield increases by 1% the bond‟s price will decrease by $ 90

b) If the market yield increase by 1% the bond‟s price will increase by $ 90

c) if the market yield increases by 1% price will decrease by $ 60

d) if the market yield increases by 1% price will increase by $ 60


23. Which of the following bonds has the longest duration?

a) A 12-year maturity, 0% coupon bond

b) A 12-year maturity, 8% coupon bond

c) A 4-year maturity, 8% coupon bond

d) A 4-year maturity, 0% coupon bond


24. A 10%, 30-year corporate bond was recently being priced to yield 12%. The Macaulay

duration for the bond is 11.3 years. Given this information, the bond‟s modified duration would

be;

a) 8.05

b) 10.09

c) 9.27

d) 11.22


25. A 6%, 30-years corporate bond was recently being priced to yield 8%. The Macaulay

duration for the bond is 8.4 years. Given this information, the bond‟s modified duration would be;

a) 8.05

b) 9.44

c) 9.27

d) 7.78


Key

1.e 2.d 3.c 4.d 5.d 6.a 7.b 8.c 9.d 10.a 11.b 12.d 13.d

14.b 15.c 16.a 17.b 18.c 19.d 20.d 21.c 22.a 23.a 24.b 25.d

1. An investor has invested in 8% RBI bonds with face value of Rs.100. The bond is being sold

at 7% yield to maturity. The interest received by the investor would be:

a) Rs. 70

b) Rs. 80

c) Rs. 56

d) Rs. 90

2. A 6 year bond is selling at Rs.9500 with face value of Rs.10000. The annual coupon amount

is Rs. 800. What is the coupon rate?

a) 9.5%

b) 9%

c) 8.5%

d) 8%

3. A 6 year bond is selling at Rs. 9500 with face of value of Rs. 10000. The annual coupon

amount is Rs. 800. What is the current yield?

a) 9.51%

b) 9.12%

c) 8.42%

d) 8.21%

4. A 7%. 14-years bond has a yield to maturity of 6% and duration of 7 years. If the market yield

changes by 44 basis points, how much change will there by in the bond‟s price?

a) 1.85%

b) 2.91%

c) 3.27%

d) 6.44%


5. How many of the following points satisfy the inequality 2x – 3y >-5;

1,1), -1, 1), 1, -1), -1, -1), -2, 1), 2, -1), -1, 2), and -2, -1),?

a) 6

b) 4

c) 7

d) 3

e) 5

6. The point x, 3) satisfies the inequality, -5x -2y ≤13. Find the smallest possible value of x;

a) -1.4

b) 3.8

c) 0

d) 1.4

e) -3.8

7. The following five inequalities define a feasible region. Which one of these could be removed

from the list without changing the region?

a) –x + y ≤ 10

b) y > 0

c) z > 0

d) x – 2y > - 8

e) x + y < 20

8. How many points with integer coordinates lie in the feasible region defined by;

3x + 4y ≤ 12, x ≥0 and y ≥ 1 ?

a) 6

b) 5

c) 7

d) 4

e) 8

9. A 6 year bond is selling at Rs. 9500 with face of value of Rs. 10000. The annual coupon

amount is Rs.800. What is the yield to maturity?

a) 9.51%

b) 9.12%

c) 8.42%

d) 8.21%

10. A bank issues 3 year bonds of face value of Rs. 100 each with a coupon of 8%. Bond is

being sold at yield to maturity of 9%. What is the selling price of this bond?

a) 98.12

b) 97.41

c) 97.03

d) 96.57

11. Govt. issued a 25 year bond with face value of Rs. 10000 each and coupon rate of 8%.

Shortly after issue, the market interest rates increased to 8.25%. Which of the following is not

true?

a) Price of the bond will decline

b) The current yield will increase

c) The yield to maturity will decrease

d) The coupon rate will not change

12. Find, if possible, the minimum value of the objective function 3x – 4y subject to the

constrains; -2x + y ≤ 12,x – y ≤2, x ≥ 0 and y ≥0.

a) 8

b) -8

c) 0

d) No solution

13. All formula in Excel start with;

a) %

b) +

c) =

d) –

14. You can use a function to combine text from two cells into one cell. But you can use an

operator to do the same thing. Which operator is that?

a) & ampersand)

b) – equal sign)

c) # space)

d) All of these

15. Two common wildcard characters that Excel recognizes are;

a) * and ?

b) < and>

c) ^ and /

d) + and –

16. The divide symbols is;

a) /

b) D

c) \

d) )

17. Govt. issued a 25 year bond with face value of Rs. 10000 each and coupon rate of 8%.

Shortly after issue, the market interest rates increased to 7.50%. Which of the following is not

true?

a) Price of the bond will decline

b) The current yield will increase

c) The yield to maturity will decrease

d) The coupon rate will not change

18. A bank issued 20 year bonds with 14% coupon and face value Rs. 1000. The bond is

callable at the end of 5th year at Rs. 1140. Presently, the bond is being sold for Rs. 1050. What

is the current yield:

a) 14 %

b) 13.65%

c) 13.33%

d) 12.97%

19. The word „linear‟ represents which of the following:

a) Drawing lines for solving management problem

b) Representation of relationship by straight line.

c) Solution for production problem through statistical methods

d) Representing the solution on straight lines.

20. To add two cells [–A1 and A2] together you use the following formula;

a) =A1 + A2

b) =Add A1+ A2)

c) – together A1 : A2)

d) A1 plus A2

21. To make a number in cell C1 10% smaller than the number in C3 you enter;

a) =C3* 1.10

b) + C3 * 110

c) =C3 % 10

d) –C3 * 90

22. On an excel sheet the active cell is indicated by;

a) a dark wide boarder

b) a dotted border

c) a blinking border

d) None of these

23. Using the FII shortcut key to create a chart sheet creates;

a) a default chart

b) a 2- dimensional column chart

c) a 2- dimensional bar chart

d) a 3-diemnsional line chart

24. You can print;

a) a range of cells by range name

b) an entire worksheet

c) a single worksheet

d) All of these

25. Linear programming is a –––– technique:

a) Economics

b) Mathematical

c) Algebraic

d) Any of the above

Key

1.b 2.d 3.c 4.b 5.e 6.e 7.a 8.a 9.b 10.b 11.c 12.d 13.c

14.a 15.a 16.a 17.a 18.c 19.b 20.a 21.d 22.a 23.b 24.d 25.b

1. Linear expression in linear programming is known as:

a) Linear constrains

b) Algebraic function

c) Objective function

d) Main function

2. Linear inequalities in linear programming are known as:

a) Linear function

b) Algebraic function

c) Objective function

d) Main function

3. You can create only a horizontal page break by first selecting;

a) a row below the row where you want the page break to occurs

b) a cell in row 1

c) a cell in column A

d) a) and c)

4. You can create hyperlinks from the Excel workbook to;

a) a webpage on company internet

b) a web page on the internet

c) other office 97 application documents

d) All

5. The cell reference for a range of cells that starts in cell B1 and goes over to column G and

down to row 10 is.

a) B1-G10

b) B1.G10

c) B1; G10

d) B1: G10

6. The advantage of using a spreadsheet is;

a) calculations can be done automatically

b) changing data automatically updates calculations

c) More flexibility

d) All of the above

7. The intersection of a row and column is called;

a) data

b) a field

c) a cell

d) an equation

8. The value of decision variables can be:

a) Negative or positive

b) Zero or negative

c) Positive or zero

d) a and b

9. The decision variable in LP that should not assume negative values are called ––––––

because they represent s impossible situation.

a) Negative restrictions

b) Positive restrictions

c) Non-negative restrictions

d) Non- negative and positive restrictions

10. The relationships to be expressed either as equations or inequalities should be:

a) Positive

b) Straight

c) Cervical

d) Linear

11. There are three types of data found in a spread sheet;

a) data, words, numbers

b) equations, data, numbers

c) words, numbers, labels

d) numbers formulas, labels

12. To select a column the easiest method is to ---

a) double click any cell in the column

b) drag from the top cell in the column to the last cell in the column

c) click the column heading

d) click the column label

13. If you press ----------- the cell accepts your typing as its contents;

a) enter

b) ctrl + enter

c) tab

d) insert

14. Which of the following special function keys allow the content in cell?

a) esc

b) shift

c) return

d) tab

15. Which is not an advantage of using computerized spreadsheets?

a) flexibility of moving entries

b) speed of calculations

c) ability of generate tables

d) cost of initial setup

16. The non-zero variables in a basic feasible solution are called:

a) Surplus variables

b) Slack variables

c) Artificial variables

d) Basic variables

17. Positive variables that are added to the left hand side to the constrains to convert them to

equalities are called:


b) Slack variables


d) Basic variables

18. Positive variables that are subtracted to the left hand side to the constrains to convert them

to equalities are called:


b) Slack variables


d) Basic variables

19. To select several cells or ranges that are not touching each other, you would --------- while

selecting;

a) hold down the Ctrl key

b) hold down the Shift key

c) hold down the Alt key

d) hold down Ctrl – Shift key

20. What is the Auto Summarize feature used for in Word 2000?

a) It creates a 250 words, 500 words or 1000 words summary of the document

b) It adds Automatic headworrs, bold and italic characters as well as automatic formatting of the

document to give the look of a well summarized document

c) It summarizes the statistics of the document into a report such as total words, total

characters, total pages, total paragraphs, file size etc

d) It identifies the key points in a document for your to share with others or quickly scan.

21. A certain spreadsheet shows in page Break Preview that cells in Rows 1-25 have white

background. The cells in row 26 that contain data have a dark grey background, when you click

the Print button --------

a) nothing will print because some cells with data have been omitted

b) only the cells with gray background will print

c) the whole sheet will print

d) only the cells with white background will print

22. A constant is another name for this type of data;

a) number

b) equation

c) formula

d) description

23. The view that puts line around each page that would be printed is the ----------

a) Print Preview

b) Normal View

c) Page Break Preview

d) Split View

24. The original linear programming problem is called:

a) Original problem

b) Primary problem

c) Dual problem

d) Primal problem

25. The problem that is related to original linear programming problem is called:

a) Original problem

b) Primary problem

c) Dual problem

d) Primal problem

Key

1.c 2.a 3.d 4.d 5.d 6.d 7.c 8.c 9.c 10.d 11.d 12.c 13.a

14.c 15.d 16.a 17.b 18.a 19.a 20.a 21.d 22.a 23.c 24.d 25.c

1. A linear programming problem shows degeneracy:

a) When a basic variable acquires a zero value

b) In the final solution either the no. of basic variables is not equal to the no. of constraints

c) The no. of zero variable does not equal the no. of decision variables


2. Auto Calculate will quickly add selected cells if you ------------

a) right click on the status bar and select Sum

b) click the Auto Calculate button on the tool bar

c) Use the key combination Ctrl + $

d) Double click the selection

3. The cell labeled 23.54 the cell labelled F5 refers to;

a) row F column 5

b) column F row 5

c) function available in cells

d) function key F4

4. When you are typing an equation into a cell the first thing that must be entered is;

a) the first cell referenced

b) parenthesis

c) quotation marks

d) an equal sign

5. Using the Auto Sum button will replace in the selected cell -------

a) the sum of values in the cell‟s column

b) nothing until you select a range of cells

c) the sum of the cell‟s row unless you change the range

d) a formula which will add values in the range Excel guesses you want to add

6. Book 1 is an example of how ---------- are numbered and named during each work session;

a) Active cell

b) Formula bar

c) Menu bar

d) Name box

7. For formulation of a linear programming problem, which of the following is an important step:

a) Determination of unknown variables

b) Identification of constraints and expressing them in linear equations

c) Identification of objectives and represent them as a linear function of decision variables

d) All the above

8. Which of the following combinations are the methods employed in linear programming

problems:

a) Geometrical, graphical methods

b) Simplex method, graphical methods

c) Geometrical, simplex method

d) b and c both

9. Geometrical method can be used effectively when the no. of variable is:

a) minimum 2

b) Maximum 2

c) Maximum 5

d) No restrictions on minimum and maximum

10. Which of the following displays the contents of the active cell?

a) Active cell

b) Formula bar

c) Menu bar

d) Name box

11. Graphics objects on a chart are used to;

a) add emphasis to chart data

b) add interest to a chart

c) help explain the chart data

d) a), b) and c)

12. What does SUMIF function do?

a) Adds up cell values based on a condition

b) Adds all the numbers in a range of cells

c) Return‟s a subtotal in a list or database

d) All of above

13. You can insert labels for;

a) all the data markers on a chart

b) a data series

c) a selected data marker

d) All

14. Tab scrolling buttons;

a) Allow you to view a different worksheet

b) Allow you to view additional worksheet row down

c) Allow you to view additional worksheet column to the right

d) Allow you to view additional sheet tabs

15. Which of the following is most effective methods under LPP:

a) Graphical

b) Geometrical

c) Simplex

d) All the above

16. An arithmetical step by step procedure is called:

a) linear programming

b) algorithm

c) Iterative procedure


17. Simplex method is basically and essentially ––––procedure that evaluated corner point s in

search of the optimal solution:

a) Iterative

b) Continuous

c) Regular

d) Minimum

18. All macro keyboard shortcuts include the ------- keys;

a) Alt

b) Ctrl

c) F I I

d) Shift

19. To open the Format Cells dialog box, press;

a) Alt + 1

b) Ctrl + 1

c) Ctrl + Shift + 1

d) F1

20. You can add a hyperlink to you worksheet by pressing;

a) Alt + K

b) Ctrl + H

c) Ctrl + K

d) Ctrl + Shift + K

21. To move to the previous worksheet, press;

a) Alt + Pg Up

b) Ctrl + Pg Up

c) Ctrl + Pg Dn

d) Shift + Tab

22. Simulation is not desirable when:

a) Experiment on the real system would disrupt ongoing activity

b) Experiment on the real system would be too costly to undertake

c) Experiment on the real system do not permit control over key variable


23. In Simplex method, the value of objection function is increased at each step of iteration till:

a) Further possibility of increase has ended

b) Maximum benefit has been obtained

c) No further improvement is possible


24. When Simplex method is used for problems such as maximization of production, profit or

contribution, such problem is called:

a) Simplex problem

b) Minimization problem

c) Maximization problem

d) a or c

25. When Simplex method is used for problems such as Minimization of production, profit or

contribution, such problem is called:

a) Simplex problem

b) Minimization problem

c) Maximization problem

d) a or c

Key

1.d 2.b 3.b 4.d 5.d 6.d 7.d 8.d 9.d 10.b 11.d 12.a 13.d

14.d 15.c 16.b 17.a 18.b 19.d 20.c 21.b 22.d 23.c 24.c 25.b

1. What tool is used to split the window into different parts of the same worksheet?

a) The title bar

b) The scroll bar

c) The tool bar

d) The split box

2. What is the combination of keys required to come back to the top of the worksheet?

a) Page Up Pg Up)

b) Alt and Page Up

c) Ctrl and Home

d) Ctrl and left arrow

3. What key is used to select multiple ranges of cells?

a) Shift

b) Ctrl

c) Alt

d) Alt Car or Alt Gr

4. What key should be used to change the content of a cell?

a) F1

b) F2

c) F3

d) F4

5. What function offers you the possibility to view different results depending on the entered

conditions?

a) = If ( )

b) = Sum ( )

c) = Sum If ( )

d) = True False ( )

6. In which of the following areas, the application of LP techniques can be done:

a) Portfolio selection

b) Staffing problem

c) Profit planning

d) All the above

7. In which of the following areas, the application of LP techniques can not be done:

a) Trimming of loss

b) Agriculture and contract awarding

c) Financial mix strategy


8. An approach under which several mathematical techniques are used to allocate limited

resources among competing demands in an optimal way, is called:

a) Simulation

b) Estimation

c) Linear programming

d) Regression

9. What function is used to make sure that all conditions are true before showing a TRUE

answer?

a) =AND ( )

b) = OR ( )

c) = Vlookup ( )

d) = If ( )

10. Which of these statements on Vlookup ( ) is FALSE?

a) The V lookup function can be used to compare a value that‟s between two value or for an

exact value

b) When this function is used to find a value between, you must always place the smallest

possible value first in the first column

c) The values of the first column must be in descending order

d) With this function, the comparison table is always read vertically.

11. Linear programming has:

a) many useful applications to financial decisions

b) Few applications to financial decisions

c) Negligible applications to financial decisions

d) No applications to financial decisions

12. For a linear programming problem, which of the following is an essential condition (1) all

equations should be linear (2) the constraints are known (3) all the variable should have non-

negative values.

a) 1 to 3 all

b) 1 and 2 only

c) 2 and 3 only

d) 1 and 3 only

13 The Simplex method is used in which of the following:

a) Simulation

b) Estimation

c) Linear programming

d) Regression

14. What tool helps you to optimize the results of a model?

a) Scenario manager

b) Solver

c) Target value


15. Which is true about Pivot tables?

a) They are interactive table that allow the user to group and summarizes large amounts of data

in a concise, tabular format for easier reporting and analysis

b) They can sort, count, and total the data, and are available in a variety of spreadsheet

programs

c) Reason they‟re called “pivot tables” is because you can drag and drop fields to “rotate” a

summary field and create cross tabs;

d) All of above

16. Which of the following statement is not correct in the context of simulation?

a) It is the method of studying the effect of changes in real system through models

b) It is imitation of some real thing or process

c) We try to imitate a system or environment in order to predict actual behavior in simulation

d) None of these

17. The objective of simulation is :

a) To find out cause of past occurrence

b) To forecast future effects of assumed circumstances

c) Both the above


18. Simulation is appropriate to situations where in view of the size or complexity of the problem

the use of other techniques:

a) Is easy

b) Is difficult

c) Is difficult or impossible


19. Which one are the advantages of using Pivot Tables?

a) It allows you to rearrange, hide and display different category fields within the Pivot Table to

provide alternate views of the data

b) It generates and extracts meaningful information from a large table of information within a

matter of minutes

c) Pivot table is to a way to extract data from a long list of information, and present it in a

readable form

d) All of above

20. The simulation method finds application in which of the following (a) air traffic control

queuing (b) assembly line scheduling (c) inventory recorder design (d) stock market.

a) a to d all

b) a to c only

c) a and b only

d) a and b only

21. Which of the following is the appropriate sequence for simulation:

a) Start, construct the simulation model, run the simulation, define problem

b) Start, define problem ,construct the simulation model, run the simulation

c) Start, define problem , construct the simulation model, run the simulation

d) Start, construct the simulation model, define problem, run the simulation

22. In which of the following , the simulation is preferable:

a) When a mathematical model is very complex

b) When a mathematical model is not available to handle

c) When a mathematical model is not robust enough to provide information on all factors of

interest

d) All the above

23. Which of them is TRUE about Macros in excel?

a) Macros are symbols, name, or keys that represent a list of commands, actions, or keystrokes

b) We can enter a single character or word to perform a whole series f actions

c) To perform a task repeatedly in Excel, you can automate the task with a macro

d) All of above

24. Which of them is NOT TRUE about Macros?

a) When you record a macro, Excel stores information about each step you take as you perform

a series of commands. You then run the macro to repeat, or “play back”, the commands

b) You can run a macro by choosing it from a list in the Macro dialog box. To make a macro run

whenever you click a particular button or press a particular key combinations, you can assign

the macro to a tool bar button

c) After you record a macro, you can view the macro code with the Visual Basic Editor to correct

errors or change what the macro does

d) Excel provides safeguards that help protect against viruses that can be transmitted by macro.

If you share macros with others, you can certify them with a digital signature

e) All are true

KEY

1.d 2.c 3.b 4.b 5.a 6.d 7.d 8.c 9.a 10.c 11.a 12.a 13.c

14.b 15.d 16.d 17.c 18.c 19.d 20.a 21.b 22.d 23.d 24.e

Rs.26, 496. The total amount to be paid during the lease...

Documents

Transcript of Rs.26, 496. The total amount to be paid during the lease...