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1. ____________ in business and economics refers to the period of time required for the return on an investment to “repay” the sum of the original investment.

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Ans: Payback period

2. The __________ must be compensated for the declining spending/purchasing power of money.

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Ans: lender

3. _________ is a way of comparing the value of money now with the value of money in the future.

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Ans: Net Present Value (NPV)

4. The NPV is greatly affected by the discount rate, so selecting the proper rate – sometimes called the ________ is critical to making the right decision.

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Ans: hurdle rate

5. The firm term on the right hand side of this equation captures the value of ________ in place and the second term the value of ___________.

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Ans: growth opportunities

6. To some extent, the selection of the ________ is dependent on the use to which it will be put.

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Ans: discount rate

7. Using variable rates over time, or discounting _________ cash flows different from _________ cash flows may be a superior methodology, but is seldom used in practice.

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Ans: guaranteed

8. The internal rate of return (IRR) of a project is the discount rate which makes its NPV equal to _________

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Ans: zero

9. In the NPV calculation we assume that the discount rate (cost of capital) is ________ and determine the NPV.

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Ans: IRR

10. ____________ is an alternative method of evaluating software investments without estimating the discount rate.

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Ans: IRR

11. The main problem with the IRR method is that it often gives __________ rates of return.

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Ans: unrealistic

12. A project selected according to the NPV may be ____________ if the IRR method is used.

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Ans: rejected

13. The IRR is a __________ that makes the present value of estimated cash flows equal to the initial investment.

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Ans: discount rate

14. ____________ are common term used by many flexibly to denote specific action plans.

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Ans: Projects

15. __________ is the process of assessing the project viability, both economic and technical, in a structured way, using economic appraisal or some other decision analysis.

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Ans: Project appraisal

16. The ___________ aspects of appraisal are fundamental as they logically precede all other aspects.

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Ans: economic

17. An ___________ study aspect refers to the appropriate and location selection of a geographical area where the project should be located the selection.

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Ans: industrial feasibility

18. In setting up an _________ project, estimation of demand for the productgroup of products proposed to be produced by a promoter is the first important step.

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Ans: industrial

19. Project appraisal – the process of assessing and questioning proposals before resources are committed- is done by the ____________

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Ans: Project Appraisal Division

20. _________ is an essential part of project finance; it involves a thorough analysis of the ability of the project to fulfil the desired objectives.

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Ans: Project appraisal

21. ________ is used to analyse whether an entity is stable, solvent, liquid, or profitable enough to be invested in.

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Ans: financial analysis

22. _________ ratios indicate the ease of turning assets into cash.

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Ans: Liquidity Ratios

23. _________ is more a measure of cash flow than a ratio.

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Ans: Working Capital

24. _________ ratio is the percentage of sales dollars left after subtracting the cost of goods sold from net sales.

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Ans: Gross Margin Ratio

25. ___________ ratio is the percentage of sales dollars left after subtracting the Cost of Goods sold and all expenses, except income taxes.

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Ans: Net Profit Margin Ratio

26. ____________ratio reveals how well inventory is being managed.

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Ans: Inventory Turnover Ratio

27. ____________ratio indicates how well accounts receivable are being collected.

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Ans: Accounts Receivable Turnover Ratio

28. ____________is the long term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of the project sponsors.

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Ans: Project Finance

29. A riskier or more expensive project may require ___________ recourse financing secured by a surety from sponsors.

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Ans: limited

30. An important (but not universal) feature of a corporation is ________

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Ans: limited liability

31. ________ are chartered by a state, and regulated by the laws enacted by that state.

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Ans: Corporations

32. Typically a corporation is governed by a _______ which has a fiduciary duty to look after the interests of the corporation.

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Ans: board of directors

33. A ________ is an entity that is a group of people organized for some profitable or charitable purpose.

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Ans: business

34. A ________ is a business organization owned and operated by a group of individuals for their mutual benefit.

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Ans: cooperative (also co-operative; often referred to as a co-op)

35. A ________ is an arrangement where entities and/or individuals agree to cooperate to advance their interests.

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Ans: partnership

36. If a partnership has both general partners and limited partners, it is sometimes termed a _______

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Ans: Limited Partnerships

37. The advantage to an _______ is that the liability of members is limited to their investment.

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Ans: LLC

38. In accounting, the _______ concept treats a business as distinct and separate from its owners.

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Ans: separate entity

39. _________ of a business unit refers to shutting down of the various functional as well as non-functional areas of the company.

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Ans: Closure

40. __________ of funds as an important aspect of financial management avoids the situations where funds are either kept idle or proper uses are not being made.

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Ans: Effective utilization

41. Funds procured involve a certain _________ and _________

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Ans: cost and risk

42. _______ is the rate at which you can borrow money to finance the equipment you want to buy.

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Ans: Interest Rate

43. ________ is combined federal and provincial business tax rate.

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Ans: Tax Rate

44. ________ is the debt which has no maturity value.

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Ans: Perpetual Debt

45. ________ has a maturity value i.e. these debts are issued for specific time period.

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Ans: Redeemable debt

46. ________ are a hybrid security i.e. a hybrid between debt and common/equity stock.

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Ans: Preferred stocks

47. ________ are preference shares having maturity value. They are held for a specified time period.

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Ans: Redeemable Preference Shares

48. ________ is the minimum rate of return a firm must offer shareholders to compensate for waiting for their returns, and for bearing some risk.

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Ans: Cost of Equity

49. ________ states that expected return to investors from equity stock comprises of 2 components of benefits.

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Ans: Dividend valuation approach or Constant Dividend Growth Model (Gordon’s Model)

50. ________ is the cost incurred in issuing the equity shares to the investors, by the company.

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Ans: Floating cost

51. _______ is an equilibrium model which describes the pricing of assets, as well as derivatives.

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Ans: capital asset pricing model (CAPM)

52. _______ asks what is the value of a derivative relative to the concurrent value of its underlying asset.

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Ans: binomial option pricing model or the Black-Scholes formula

53. _______ describes a relation between the beta and the asset’s expected rate of return.

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Ans: Security Market Line

54. ________is used in finance to measure a firm’s cost of capital.

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Ans: Weighted Average Cost of Capital (WACC)

55. ________ is equivalent to perpetuity, where the holder is entitled to fixed payments forever.

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Ans: Preferred equity

56. The cost of ________ is usually determined using the capital asset pricing model.

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Ans: common equity

57. The ________ is the minimum cost of capital that any firm encounters in the market

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Ans: risk free rate of interest

58. ________ is the risk of debt finance.

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Ans: Financial risk

59. _________ represents ownership capital as equity holders collectively own the company and do not have any maturity date.

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Ans: Equity Capital

60. The _______ of an equity share is the value stated in the memorandum and written on the share scrip.

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Ans: par value

61. The _______ is the price at which the equity share is issued.

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Ans: issue price

62. The amount offered by the company to the investors is called the……………………….

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Ans: issued capital

63. The _________ of an equity share is the price at which it is traded in the market.

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Ans: market value

64. As in the case of income, _________ have a residual claim over the assets of the firm in the event of liquidation.

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Ans: equity shareholders

65. A _________ involves selling securities in the primary market by issuing rights to the existing shareholders.

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Ans: rights issue

66. ________ represents a hybrid form of financing-it partakes some characteristics of equity and some attributes of debentures.

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Ans: Preference capital

67. Preference shares do not carry _______ rights.

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Ans: voting rights

68. There is no _______ liability in the case of perpetual preference shares.

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Ans: redemption

69. The ______ of a firm consist of depreciation charges and retained earnings.

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Ans: internal accruals

70. ______ earnings are that portion of equity earnings (profit after tax less preference dividends) which are ploughed back in the firm.

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Ans: Retained

71. Use of internal accruals, in contrast to _______, eliminates issue costs and losses on account of under-pricing.

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Ans: external equity

72. Term loans are also referred to as ________

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Ans: term finance

73. ________ are employed to finance acquisition of fixed assets and working capital margin.

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Ans: Term Loans

74. Term loans typically represent _______ borrowing.

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Ans: secured

75. In order to protect their interest, financial institutions impose _______ condition on the borrowers.

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Ans: restrictive condition

76. Debenture holders are the _______ of a company.

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Ans: creditors

77. Debentures are typically ______ in nature.

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Ans: redeemable

78. A debt obligation which is derived from another debt obligation is called a ________

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Ans: Structured Note

79. In a private placement, there is greater ___________ in working out the terms of the issue.

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Ans: flexibility

80. Interest on debt is a ________ expense, whereas equity and preference dividend are paid out of profit after tax.

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Ans: tax-deductible

81. _______ entails fixed interest and principal repayment obligation.

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Ans: Debt financing

82. Under a ______ arrangement, a predetermined limit for borrowing is specified by the bank.

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Ans: cash credit or overdraft

83. _____ are advances of fixed amounts to the borrower. The borrower is charged with interest on the entire loan amount, irrespective of how much he draws.

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Ans: Loans

84. Once the application is duly processed, it is put up for sanction to the _______

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Ans: appropriate authority

85. Under _______, the owner of the goods borrows money against the security of movable property, usually inventories.

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Ans: Hypothecation

86. The term ______ seems to be a misnomer because they do not have a physical location.

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Ans: Euromarkets

87. ______ is usually managed by a syndicate of investment banks and offered to investors in many countries.

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Ans: Eurobonds

88. _______ is a way to raise money internationally is to sell securities directly in the domestic capital markets of foreign countries.

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Ans: Foreign Domestic Markets

89. Under ______, credit is provided directly to the Indian buyer for purchase of capital goods and/or technical services from the overseas exporter.

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Ans: Buyer’s Credit

90. A _________ is a combination of constraint and uncertainty

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Ans: risk

91. The _________ illustrates a set of functions that are identified as continuous activities throughout the life cycle of a project.

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Ans: Risk Management Paradigm

92. ________ involves examining how project outcomes might change with modification of risk input variables.

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Ans: Risk analysis

93. _______ is the process of managing risks to achieve the desired outcomes.

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Ans: Risk control

94. There are two stages in the process of Project Risk Management, _______ and _________.

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Ans: Risk Assessment and Risk Control

95. Risk Control cannot be effective without a previous _______

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Ans: Risk Assessment

96. _______ ascertains which risks have the potential of affecting the project and documenting the risks’ characteristics.

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Ans: Risk Identification

97. The _______ statement defines the project boundaries and assumptions.

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Ans: Project Scope Statement

98. _______ is a technique for identifying essential causes of risk.

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Ans: Root cause identification

99. _______ are commonly developed from historical information or lessons learned.

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Ans: Checklists

100. Once risks have been identified, they must then be assessed as to their __________ of loss and to the probability of occurrence.

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Ans: potential severity

101. The fundamental difficulty in risk assessment is determining the rate of _____ since statistical information is not available on all kinds of past incidents.

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Ans: occurrence

102. The technique of building a pilot phase of the project is an example of _______

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Ans: risk mitigation

103. Nothing can be ______ which cannot be measured.

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Ans: controlled

104. _________ includes not performing an activity that could carry risk.

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Ans: Risk Avoidance

105. _________ involves methods that reduce the severity of the loss.

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Ans: Risk Reduction

106. _________ involves accepting the loss when it occurs.

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Ans: Risk Retention

107. ______ needs to be approved by the appropriae level of management.

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Ans: Risk mitigation

108. Initial risk management plans will never be ____

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Ans: perfect

109. Risk analysis results and management plans should be updated ______

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Ans: periodically

110. Internal Audit activity can focus more on areas of risk as identified in the _______

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Ans: Risk Register

111. _______ are particularly useful for managing price risk.

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Ans: Derivatives

112. A _______ analysis provides decision-makers information as to whether or not they can afford to do the project, as well as successfully operate it once constructed.

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Ans: financial feasibility

113. Risk management has become an integral part of ______ and _________

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Ans: Corporate Governance and Business Strategy

114. ________ Risk may involve financial loss in some cases; in other cases, there is no financial loss.

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Ans: Financial and Non-financial risk

115. _______ risks are those resulting from changes in the economy.

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Ans: Dynamic risks

116. Gambling is an example of a _________ risk.

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Ans: speculative risk

117. _____ provide a way of examining the consequences of continuous risk.

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Ans: Simulations

118. The ………………. has announced a scheme on Generation Based Incentive (GBI) for grid connected wind power projects.

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Ans: Ministry of New & Renewable Energy

119. The proposed annual escalations agreed with the utility, as in force, should be reflected in the……

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Ans: PPA

120. The combustion and cogeneration routes are meant for generation of power in………………….scale.

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Ans: Megawatt

121. Any waste of renewable nature or biomass can be mixed to the extent of………………with MSW.

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Ans: 25%

122. The programme for fast track promotion of projects for power generation from MSW involves development of a ………………..for specific cities.

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Ans: project document

123. It is expected that State Nodal Agencies, HUDCO, IREDA, IL&FS, TCOs etc. will develop the projects with the help of……………………

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Ans: consultants

124. A ………. is normally the first (supporting) party to be considered while looking for sources for debt financing.

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Ans: bank

125. Finance companies may restrict financing to ………………..loans.

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Ans: moderate-size

126. In a …………….., more than two individuals or groups share the Ownership of a project.

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Ans: partnership

127. ………………………. provide financing for new, high-risk enterprises that promise very high returns on being successful.

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Ans: Venture Capital Firms

128. In an……….., the user would receive the renewable energy equipment/system directly from the manufacturer in exchange for the purchase price.

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Ans: ordinary sale

129. In ………the owner would purchase the renewable energy system from the manufacturer and then lease it to the end user in return for regular lease payments.

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Ans: Third Party Lease

130. ……………… is primarily suggested for those parties who cannot normally take advantage of the investment tax credits.

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Ans: Sale-leaseback Approach

131. The Indian Renewable Energy Development Agency Ltd. (IREDA) was incorporated as a Public Limited Government Company in…………………..

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Ans: 1987

132 By giving the financial support and revolving funds the IREDA is working for development and deployment of ……………..

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Ans: New and Renewable Sources of Energy (NRSE)

133. IREDA has been operating line of credit from the World Bank for development of …………….. Projects.

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Ans: Small Hydro Power Projects

134. The companies who are eligible as per criteria laid down by………………can apply for loan and can get the loan disbursed without any hassle.

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Ans: IREDA

135. ………………..is the movement of cash into or out of a business, project, or financial product.

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Ans: Cash Flow

136. ………………..is very useful to help plan ahead in a business in such areas as the recruitment of new employees, whether to issue new stock, and/or acquisitions of long-term assets.

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Ans: Project Cash Flow

137. ………………… are the fees associated with the initial setup of a plant or project.

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Ans: Capital costs

138. ………………… are those business costs that are not directly related to the level of production or output.

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Ans: Fixed costs

139. …………………… are those costs which vary directly with the level of output.

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Ans: Variable costs

140. …………………… are those which can be directly attributable to the production of a particular product or service and allocated to a particular cost centre.

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Ans: Direct variable costs

141. A …………. is used to determine how much sales volume your business needs to start making a profit.

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Ans: breakeven analysis

142. …………. is the price that you receive per unit of sales.

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Ans: Average per-unit sales price (per-unit revenue)

143. ………………. is the incremental cost, or variable cost, of each unit of sales.

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Ans: Average per-unit cost

144. _________ is a method of financial modelling in which one or more variables within the model are random.

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Ans: Stochastic Modelling

145. _________ is a review of the impact that changes in selected project inputs, costs or benefits, or a combination of these, can have on the project’s net present value or IRR.

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Ans: Sensitivity Analysis

146. The _____ is an example of a stochastic model used in finance.

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Ans: Monte Carlo Simulation

147. _______ is emulation of reality using mathematical model.

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Ans: Simulation

148. ______ is part of every decision we make.

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Ans: Risk analysis

149. In _______ values are positively skewed, not symmetric like a normal distribution.

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Ans: Lognormal

150. The electricity sector in India is predominantly controlled by the Government of India’s ________

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Ans: public sector undertakings (PSUs)

151. Electricity losses in India during transmission and distribution are extremely high and vary between ________ to _______

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Ans: 30 to 45%

152. _______ reserves in India are substantial high but low in quality.

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Ans: Coal

153. Under ________ a plant is constructed and operated for a predetermined period of time by a private electric power company.

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Ans: BOT

154. A ________, the regulator, allows the price of electricity to increase by set amounts relative to inflation.

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Ans: Director General of Electricity Supply

155. The amount of electricity supplied from hydroelectric plants in Asia represents _________ per cent of the total electricity generated.

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Ans: 16

156. ____________ is one of the leading groups in the private sector for power generation.

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Ans: Reliance Energy Ltd

157. ____________ installed India’s first new generation state of the art power project at Hazira in 1990’s.

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Ans: Essar Oower Ltd

158. _______ of electricity is defined as bulk transfer of power over a long distance at high voltage, generally of 132kV and above.

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Ans: Transmission

159. The total installed generating capacity in the country is over _______

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Ans: 164,700 MW

160. ______ is a critical input for fuelling growth of major infrastructure sectors like power, steel and cement.

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Ans: Coal

161. ______ refers to efforts made to reduce energy consumption.

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Ans: Energy conservation

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