Capital Budgeting and Inflation Multiple Choice Questions with Answers – PDF Download

MCQ 1: If the nominal rate is 26% and the inflation rate is 12%, then the real rate can be:

1. 13.75%
2. 11.65%
3. 12.50%
4. 13.50%

MCQ 2: If the real rate is 16% and an inflation rate is 8%, then the nominal rate of return will be:

1. 27.28%
2. 25.28%
3. 22.28
4. 21.28

MCQ 3: The rate of return to cover a risk of investment and decrease in purchasing power, as a result of inflation is known as:

1. nominal rate of return
2. accrual accounting rate of return
3. real rate of return
4. required rate of return

MCQ 4: The rate of return, which is made up of risk free and business risk element is known as:

1. nominal rate of return
2. accrual accounting rate of return
3. real rate of return
4. required rate of return

MCQ 5: The rate of required return to cover the risk of investment, in absence of inflation is classified as:

1. real rate of return
2. required rate of return
3. nominal rate of return
4. none of above