Q1- When rate of inflation is greater than the nominal rate of interest, then the real rate of interest will be:

a. Negative b. Positive c. Can't determined d-Zero

Q2- James is interested to invest $ 1,000 in an investment account that pays 10% interest p.a. If the current rate of inflation is 7% p.a., then the total real return on the investment will be:

A. $ 28 B. $ 1028 C.$ 300 D . $ 100

Q3 - The following are characteristics of the expected value of NPV except:

a. It is merely a weighted average of the cash flow distribution

b . It identifies areas which are crucial to success of the project

c. It recognizes the presence of several possible outcomes rather than a single value forecast

d. It ignores the investor's attitude to risk level

Q4 -A profitability index (PI) of 0.92 for a project means that

A .the project's NPV is greater than zero

b. the project returns OMR 0.92 in present value for each current OMR invested

c. the project's cost is less than the present value of the project's benefits

d. the project's NPV is greater than

Q5- A situation where the probability distribution of the cash flow of an investment proposal is quantifiable is refer to:

a. Risk

b. Uncertainty

c. Adjusted Risk

d. Expected Value