Budgeting and Forecasting MCQs 2026

44 questions with detailed answers · 17 from past papers · 5 quiz batches available

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Page 1 of 1 Questions 1–10 of 44

Q1 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 11: 48% in Asset A (return 9%) and 52% in Asset B (return 11%). Expected portfolio return is
1. A 9%
2. B 10%
3. C 11%
4. D 16.0%
💡 Explanation:
Weighted average of returns.
Q2 medium

Portfolio problem 9: 40% in Asset A (return 7%) and 60% in Asset B (return 19%). Expected portfolio return is
1. A 14.2%
2. B 7%
3. C 19%
4. D 20.2%
💡 Explanation:
Weighted average of returns.
Q3 medium

Portfolio problem 7: 39% in Asset A (return 13%) and 61% in Asset B (return 17%). Expected portfolio return is
1. A 15.4%
2. B 13%
3. C 17%
4. D 21.4%
💡 Explanation:
Weighted average of returns.
Q4 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 5: 31% in Asset A (return 11%) and 69% in Asset B (return 15%). Expected portfolio return is
1. A 11%
2. B 15%
3. C 13.8%
4. D 19.8%
💡 Explanation:
Weighted average of returns.
Q5 medium

Portfolio problem 3: 23% in Asset A (return 9%) and 77% in Asset B (return 13%). Expected portfolio return is
1. A 9%
2. B 13%
3. C 12.1%
4. D 18.1%
💡 Explanation:
Weighted average of returns.
Q6 medium

Portfolio problem 1: 15% in Asset A (return 7%) and 85% in Asset B (return 11%). Expected portfolio return is
1. A 7%
2. B 11%
3. C 16.4%
4. D 10.4%
💡 Explanation:
Weighted average of returns.
Q7 Past Paper · PPSC/FPSC/NTS easy

Portfolio expected return with two assets equals
1. A weighted sum of individual expected returns
2. B product of returns
3. C difference of returns
4. D maximum of the two returns only
💡 Explanation:
E(Rp) = w1E(R1) + w2E(R2).
Q8 easy

A stock with beta greater than 1 is
1. A less volatile than the market
2. B risk-free
3. C more volatile than the market
4. D uncorrelated with market
💡 Explanation:
High beta amplifies market movements.
Q9 Past Paper · PPSC/FPSC/NTS hard

Security Market Line (SML) plots
1. A return against unsystematic risk only
2. B expected return against beta
3. C price against volume only
4. D debt against inventory
💡 Explanation:
CAPM relation shown on SML.
Q10 hard

Capital Market Line (CML) applies when
1. A no risk-free rate exists
2. B a risk-free asset can be combined with risky portfolio
3. C only bonds are traded
4. D short selling is prohibited always
💡 Explanation:
CML extends efficient frontier with risk-free lending/borrowing.
Q11 Past Paper · PPSC/FPSC/NTS hard

Minimum variance portfolio on efficient frontier has
1. A lowest risk among efficient combinations
2. B highest possible return always
3. C zero beta always
4. D only debt instruments
💡 Explanation:
MVP minimizes variance for given universe.
Q12 medium

Correlation coefficient of +1 between two assets means
1. A returns are always unrelated
2. B returns move exactly opposite
3. C one asset has zero risk
4. D returns move perfectly together
💡 Explanation:
Perfect positive correlation limits diversification benefit.
Q13 Past Paper · PPSC/FPSC/NTS medium

Unsystematic risk can be reduced by
1. A increasing leverage only
2. B holding one industry only
3. C avoiding all equities
4. D holding a well-diversified portfolio
💡 Explanation:
Diversification eliminates firm-specific risk.
Q14 medium

Systematic risk is measured by
1. A inventory turnover
2. B beta
3. C current ratio
4. D dividend payout ratio
💡 Explanation:
Beta captures market-related risk.
Q15 Past Paper · PPSC/FPSC/NTS hard

Efficient frontier represents
1. A portfolios with maximum return for each risk level
2. B all portfolios with negative returns
3. C only government bonds
4. D random asset combinations
💡 Explanation:
Efficient portfolios dominate inefficient ones.
Q16 Past Paper · PPSC/FPSC/NTS medium

Markowitz portfolio theory emphasizes
1. A concentrating all wealth in one stock
2. B ignoring correlation between assets
3. C maximizing single asset return only
4. D diversification to reduce unsystematic risk
💡 Explanation:
Combining low-correlation assets reduces portfolio variance.
Q17 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 65: 208% in Asset A (return 7%) and -108% in Asset B (return 15%). Expected portfolio return is
1. A 7%
2. B 15%
3. C 4.4%
4. D -1.6%
💡 Explanation:
Weighted average of returns.
Q18 medium

Portfolio problem 35: 123% in Asset A (return 9%) and -23% in Asset B (return 15%). Expected portfolio return is
1. A 9%
2. B 15%
3. C 13.6%
4. D 7.6%
💡 Explanation:
Weighted average of returns.
Q19 medium

Portfolio problem 33: 115% in Asset A (return 7%) and -15% in Asset B (return 13%). Expected portfolio return is
1. A 6.1%
2. B 7%
3. C 13%
4. D 12.1%
💡 Explanation:
Weighted average of returns.
Q20 medium

Portfolio theory case 32: correlation -0.1 between bonds and equities implies diversification benefit is
1. A zero because correlation is always 1
2. B substantial risk reduction from combining assets
3. C negative meaning risk always doubles
4. D irrelevant to portfolio variance
💡 Explanation:
Case 32: ρ=-0.1.
Q21 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 31: 107% in Asset A (return 13%) and -7% in Asset B (return 11%). Expected portfolio return is
1. A 13.1%
2. B 13%
3. C 11%
4. D 19.1%
💡 Explanation:
Weighted average of returns.
Q22 medium

Portfolio problem 29: 99% in Asset A (return 11%) and 1% in Asset B (return 19%). Expected portfolio return is
1. A 11%
2. B 19%
3. C 17.1%
4. D 11.1%
💡 Explanation:
Weighted average of returns.
Q23 medium

Portfolio problem 27: 98% in Asset A (return 9%) and 2% in Asset B (return 17%). Expected portfolio return is
1. A 9%
2. B 9.2%
3. C 17%
4. D 15.2%
💡 Explanation:
Weighted average of returns.
Q24 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 25: 90% in Asset A (return 7%) and 10% in Asset B (return 15%). Expected portfolio return is
1. A 7.8%
2. B 7%
3. C 15%
4. D 13.8%
💡 Explanation:
Weighted average of returns.
Q25 medium

Portfolio theory case 20: correlation 0.2 between local equity and global ETF implies diversification benefit is
1. A zero because correlation is always 1
2. B negative meaning risk always doubles
3. C moderate risk reduction potential
4. D irrelevant to portfolio variance
💡 Explanation:
Case 20: ρ=0.2.
Q26 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 19: 73% in Asset A (return 9%) and 27% in Asset B (return 19%). Expected portfolio return is
1. A 9%
2. B 19%
3. C 11.7%
4. D 17.7%
💡 Explanation:
Weighted average of returns.
Q27 medium

Portfolio problem 17: 65% in Asset A (return 7%) and 35% in Asset B (return 17%). Expected portfolio return is
1. A 7%
2. B 17%
3. C 10.5%
4. D 16.5%
💡 Explanation:
Weighted average of returns.
Q28 medium

Portfolio problem 15: 57% in Asset A (return 13%) and 43% in Asset B (return 15%). Expected portfolio return is
1. A 13%
2. B 15%
3. C 19.9%
4. D 13.9%
💡 Explanation:
Weighted average of returns.
Q29 medium

Portfolio problem 13: 56% in Asset A (return 11%) and 44% in Asset B (return 13%). Expected portfolio return is
1. A 11.9%
2. B 11%
3. C 13%
4. D 17.9%
💡 Explanation:
Weighted average of returns.
Q30 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 45: 149% in Asset A (return 11%) and -49% in Asset B (return 15%). Expected portfolio return is
1. A 9%
2. B 11%
3. C 15%
4. D 15.0%
💡 Explanation:
Weighted average of returns.
Q31 medium

Portfolio problem 39: 132% in Asset A (return 13%) and -32% in Asset B (return 19%). Expected portfolio return is
1. A 13%
2. B 19%
3. C 17.1%
4. D 11.1%
💡 Explanation:
Weighted average of returns.
Q32 medium

Portfolio problem 43: 141% in Asset A (return 9%) and -41% in Asset B (return 13%). Expected portfolio return is
1. A 9%
2. B 7.4%
3. C 13%
4. D 13.4%
💡 Explanation:
Weighted average of returns.
Q33 medium

Portfolio theory case 36: correlation 0.3 between stock A and stock B implies diversification benefit is
1. A zero because correlation is always 1
2. B negative meaning risk always doubles
3. C irrelevant to portfolio variance
4. D moderate risk reduction potential
💡 Explanation:
Case 36: ρ=0.3.
Q34 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 37: 124% in Asset A (return 11%) and -24% in Asset B (return 17%). Expected portfolio return is
1. A 11%
2. B 17%
3. C 9.6%
4. D 15.6%
💡 Explanation:
Weighted average of returns.
Q35 medium

Portfolio problem 49: 165% in Asset A (return 7%) and -65% in Asset B (return 19%). Expected portfolio return is
1. A 7%
2. B 19%
3. C -0.8%
4. D 5.2%
💡 Explanation:
Weighted average of returns.
Q36 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 51: 166% in Asset A (return 9%) and -66% in Asset B (return 11%). Expected portfolio return is
1. A 7.7%
2. B 9%
3. C 11%
4. D 13.7%
💡 Explanation:
Weighted average of returns.
Q37 medium

Portfolio problem 41: 140% in Asset A (return 7%) and -40% in Asset B (return 11%). Expected portfolio return is
1. A 7%
2. B 5.4%
3. C 11%
4. D 11.4%
💡 Explanation:
Weighted average of returns.
Q38 medium

Portfolio problem 53: 174% in Asset A (return 11%) and -74% in Asset B (return 13%). Expected portfolio return is
1. A 11%
2. B 9.5%
3. C 13%
4. D 15.5%
💡 Explanation:
Weighted average of returns.
Q39 Past Paper · PPSC/FPSC/NTS medium

Portfolio theory case 54: correlation 0.6 between cement and oil marketing implies diversification benefit is
1. A limited because assets move closely together
2. B zero because correlation is always 1
3. C negative meaning risk always doubles
4. D irrelevant to portfolio variance
💡 Explanation:
Case 54: ρ=0.6.
Q40 medium

Portfolio problem 47: 157% in Asset A (return 13%) and -57% in Asset B (return 17%). Expected portfolio return is
1. A 13%
2. B 10.7%
3. C 17%
4. D 16.7%
💡 Explanation:
Weighted average of returns.
Q41 medium

Portfolio problem 55: 182% in Asset A (return 13%) and -82% in Asset B (return 15%). Expected portfolio return is
1. A 13%
2. B 11.4%
3. C 15%
4. D 17.4%
💡 Explanation:
Weighted average of returns.
Q42 Past Paper · PPSC/FPSC/NTS medium

Portfolio problem 57: 183% in Asset A (return 7%) and -83% in Asset B (return 17%). Expected portfolio return is
1. A -1.3%
2. B 7%
3. C 17%
4. D 4.7%
💡 Explanation:
Weighted average of returns.
Q43 medium

Portfolio theory case 58: correlation 0.5 between textile and banking implies diversification benefit is
1. A moderate risk reduction potential
2. B zero because correlation is always 1
3. C negative meaning risk always doubles
4. D irrelevant to portfolio variance
💡 Explanation:
Case 58: ρ=0.5.
Q44 medium

Portfolio problem 59: 191% in Asset A (return 9%) and -91% in Asset B (return 19%). Expected portfolio return is
1. A 9%
2. B 19%
3. C -0.1%
4. D 5.9%
💡 Explanation:
Weighted average of returns.

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Budgeting and Forecasting MCQs 2026

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