Financial Management solved MCQs

1 of 30

1. All business need to have which fundamental essential element

a. human resources

B. balance sheet

c. labour team

d. stategy

2. Which of the following variable is not known in IRR?

a. discount rate

B. terminal inflows

c. life of the project

d. intitial cash flows

3. Acccording to the traditional approach what is the effect of increase in degree of leverage on the valuation of the firm

a. remains unaffected

B. increase first and then decreases

c. decreases

d. increases

4. The maximum expenses that an equity scheme charge to an investor is ____________

a. 0.025

B. 0.0225

c. 0.0175

d. 0.02

5. The bonds with shorter maturity will have ______ duration

a. moderate

B. higher

c. lower

d. average

6. Relaxed or libral credit implies -credit to customers

a. higher

B. both a and b

c. lower

d. neither a nor b

7. Objectives of financial planning are

a. determining capital structure

B. framing loan policies

c. determining cash requirement

d. determining finance ratio

8. PI of project is the ratio of present value of inflows to-

a. total outflows

B. initial cost

c. pv of outflows

d. total cash inflows

9. Bird in hand - argument is given by

a. residuals theory

B. walter model

c. mm model

d. gordon\s model

10. When the required rate of return is less than the coupon rate the premium on the bond-

a. remains same

B. variable

c. declines

d. increases

11. Evaluation of firms credit policy can be done by computing expected ___________ from it

a. net benefit

B. net loss

c. net profit

d. net cost

12. All listed and traded securities are valued at _______

a. book value

B. cost

c. cost+ profit

d. closing market price

13. Financial manager would not supervise on the following area

a. cost analyst

B. working capital advisor

c. financial accounting and auditing

d. cash flow advisor

14. In case of risky projects the required rate of return would generally be-

a. neutral

B. lower

c. moderate

d. higher

15. Residuals theory argues that dividend is as -

a. passive decision

B. irrelevant decision

c. active decision

d. relevant decision

16. Investors subscriptions are accounted as _____________

a. cash

B. deposits

c. liabilities

d. unit capital

17. Face value is the value stated on the face of the bond and is known as-

a. redemption value

B. per value

c. intrinsic value

d. market value

18. _________Policy refers to the procedure follow to collect accounts receivable after the expiry of the credit period

a. risk

B. collection

c. profit

d. manangment

19. Financial mananger would play the role of __________ in area of finance

a. budget analyst

B. cash analyst

c. cash flow examiners

d. persoanl financial advisors

20. Accountng rate of return is based on _____________

a. life of the project

B. average expected profit

c. average cash profit

d. average past profit

21. MM model of dividend irrelevance uses arbitrage between-

a. dividend and capital issue

B. dividend and bonus

c. profit and investment

d. none of the above

22. __________ Can be traded thourgh out the trading day at market prices

a. mmmf

B. debt fund

c. etf

d. equity fund

23. Intrinsic value of a bond is ______________ vlaue of the all future cash flows

a. past

B. present

c. estimated

d. future

24. ______ Means the basic criteria for the extension of credit to customers

a. credit standards

B. finnacial position

c. cash standards

d. living standards

25. The Presence of Taxes in capital budgeting analysis will cause ___________

a. the arr to remain same

B. the npv to increase

c. the irr to decrease

d. all of the above

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