Financial Management MCQ on Time Value of Money
Financial Management MCQ on Time Value of Money
1. The cash flows at different time periods should be made comparable to take sound
Decisions by adjusting which of the following?
(a) Timing
(b) Timing & Risk
(c) Risk
(d) None of these
Ans-(b) Timing & Risk
2. The excess of the present value of benefits over the present value of costs of a course of
Action is called as:
(a) Payoff
(b) Benefits
(c) Wealth
(d) All of these
Ans-(c) Wealth
3. The concept that value of a rupee to be received in future is less than the value of a rupee on hand today is known as:
(a) Recovery factor concept
(b) Time value of money
(c) Compounding factor concept
(d) None of these
Ans-(b) Time value of money
4. The process of calculating future value of cash flows is known as
(a) Discounting
(b) Compounding
(c) Both of these
(d) None of these
Ans-(b) Compounding
5. The method that converts the amount of present cash into an amount of cash of equivalent value in future is:
(a) Budgeting
(b) Discounting method
(c) Both
(d) Compounding method
Ans-(d) Compounding method
6. A fixed cash flow in each year for a specified number of years is called as…….
(a) Annuity
(b) Recovery factor
(c) Discounting
(d) Compounding
Ans-(a) Annuity
7. The method of converting the amount of future cash into an amount of cash and cash equivalents value in present is known as:
(a) Compounding
(b) Annuity
(c) Discounting
(d) None of these
Ans-(c) Discounting
8. The reciprocal of the present value of annuity is known as which of the following:
(a) Compounding factor
(b) Capital recovery factor
(c) Discounted factor
(d) None of these
Ans-(b) Capital recovery factor
9. The total of stream of discounted expected cash benefits from a course of action over period of time is called as:
(a) Capital
(b) Net Present Value
(c) Gross present value
(d) None of these
Ans-(c) Gross present value
10. The difference between present value of cash inflows and present value of cash outflows
is known as:
(a)Gross present value
(b)Capital
(c)Net present value
(d)None of these
Ans-(c)Net present value
11. Present value takes………..?
(a) Compounding rate
(b) Deflation rate
(c) Inflation rate
(d) Discounting rate
Ans- (d) Discounting rate
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