MCQ on Methods of Valuation: Check the below Corporate and Management Accounting MCQ on Methods of Valuation with Answers Pdf free download. Corporate and Management Accounting MCQ on Methods of Valuation Questions for Corporate and Management Accounting with Answers were prepared based on the latest exam pattern. We have provided Corporate and Management Accounting MCQ on Methods of Valuation with Answers to help students understand the concept very well. Students should practice CS Executive MCQ on Methods of Valuation Questions with Answers based on the latest syllabus.

MCQ on Methods of Valuation

1. Capital Asset Pricing Model (CAPM) provides the link between –
(A) Return and total risk
(B) Risk and covariance
(C) Return and non-diversifiable risk
(D) Return and diversifiable risk

2. If the expected return is more than the required return as per CAPM, then –
(A) Security is overvalued and hence can be bought
(B) Security is correctly priced and hence should behold
(C) Security is undervalued and hence can be sold
(D) Security is undervalued and hence can be bought

3. Which of the following investment advice will you provide to your client investor if CAPM Return < Expected return?
(A) Sell
(B) Hold
(C) Buy
(D) Short

4. Which of the following investment advice will you provide to your client investor if CAPM Return > Expected return?
(A) Sell
(B) Buy
(C) Hold
(D) None of the above

5. Market risk is also called:
(A) Systematic risk and unique risk
(B) Unique risk & non-diversifiable risk
(C) Systematic risk & diversifiable risk
(D) Non-diversihable risk & systematic risk

6. Beta is a measure of _____.
(A) Non-diversifiable risk
(B) Diversifiable risk
(C) Total risk
(D) Covariance

7. Which of the following investment advice will you provide to your client investor if CAPM Return = Expected return?
(A) Sell
(B) Buy
(C) Hold
(D) Put

8. Investors should be agreeing to invest in riskier investments merely –
(A) If a return is short
(B) If there are no safe alternatives except for holding cash
(C) If the expected return is adequate for risk level
(D) If there are true speculators

9. If the required return as per CAPM is more than the expected return, then –
(A) Security is undervalued and can be sold
(B) Security is correctly priced and hence should behold
(C) Security is overvalued and hence can be bought
(D) Security is undervalued and hence can be bought

10. The beta of the risk-free asset is:
(A) 0
(B) 0.5
(C) 2.0
(D) 1.0

11. According to the CAPM, overpriced securities have:
(A) Negative alphas
(B) Positive alphas
(C) Zero betas
(D) Zero alphas

12. Capital asset pricing theory asserts that portfolio returns are best explained by:
(A) Economic factors
(B) Systematic risk
(C) Specific risk
(D) Diversification

13. ____ is also called specific risk.
(A) Systematic risk
(B) Unsystematic risk
(C) Covariance
(D) Coefficient

14. In contrast to the capital asset pricing model, arbitrage pricing theory:
(A) Uses risk premiums based on micro variables
(B) Requires normally distributed security returns
(C) Has fewer restrictive assumptions
(D) Specifies the number and identities of specific factors that determine expected returns

15. Alpha is denoted by the symbol –
(A) A
(B) ¥
(C) α
(D) Δ

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