MCQ on Financial Management
Dear Students, We have prepared MCQ on Financial Management with answers. 200 Number of MCQ on Financial Management are given below with answers.
Practise these MCQ on Financial Management to get success in competitive exams.
Question :1. Financial planning is ———- function of a finance manager
(a) Executive
(b) Incidental
(c) Auxiliary
(d) None of these
Show Answer :
Answer : (A)
Question :2. Profit maximization may lead to better and efficient utilization of the recourses only when there is ———–
(a) Monopoly
(b) Oligopoly
(c) Perfect competition
(d) None of these
Show Answer :
Answer : (C)
Question :3. Wealth maximization concept focuses maximizing ………………………………
(a) Efficiency
(c) Profits of the business
(b) Fixed assets of the company
(d) Market value of shares
Show Answer :
Answer : (D)
Question :4. Under wealth maximization concept the benefits from projects are measured in terms of ………………………..
(a) a. Cash flows
(e) Accounting profits
(c) Capital app
f. After tax profits
Show Answer :
Answer : (A)
Question :5. During inflationary period the risk free interest rate will be …………………………….
(a) Lower
(b) Does not change
(c) Higher
(d) Cannot say
Show Answer :
Answer : (C)
Question :6. Implicit cost also called ………………………….
(a) Marginal cost
(b) Composite cost
(c) Opportunity cost
(d) Average cost
Show Answer :
Answer : (C)
Question :7. After tax cost of debt is equal to (1-t)x
(a) Ko
(b) WACC
(c) Before tax cost of debt
(d) KE
Show Answer :
Answer : (C)
Question :8. Cost of irredeemable preferences share capital is equal to kp=preference dividend divided by
(a) Total liabilities
(b) Face value Preference issue
(c) Total capital
(d) Net proceeds
Show Answer :
Answer : (D)
Question :9. In India ,preference shares must be redeemed within a period
(a) 3 year of issue
(b) 6 years of issue
(c) 10 years of issue
(d) 20 years of issue
Show Answer :
Answer : (C)
Question :10. Dividend yield method the cost of equality is ascertained as a percentage of
(a) Expected dividend
(b) IRR
(c) WACC
(d) Expected profits
Show Answer :
Answer : (A)
Question :11. In the case of existing shares cost of equity is computed under dividend yield method by dividing dividend per share with
(a) Face value
(b) Market value
(c) Net proceeds
(d) None of these
Show Answer :
Answer : (B)
Question :12. The weighted average cost of new or additional capital is called
(a) Opportunity cost
(b) Composite cost
(c) Marginal cost
(d) Average cost
(e)
Show Answer :
Answer : (C)
Question :13. The ratio between debt and equity in the total capitalization is called
(a) Capital gearing
(b) Capitalization
(c) Capital structure
(d) Financial structure
Show Answer :
Answer : (A)
Question :14. Capital composition of a company including long term, medium term and short term finances
(a) Capital gearing
(b) Capitalization
(c) Capital structure
(d) Financial structure
Show Answer :
Answer : (D)
Question :15. The theory that a company can increase its value by increasing the volume of debt in the capital composition
(a) Net operating income
(b) Net income
(c) MM theory
(d) Walters theory
Show Answer :
Answer : (B)
Question :16. According NO1 theory, increase in EBIT will
(a) Increase the value of the firm
(b) Decrees the value of firm
(c) Not affect value
(d) Increase when debt is increased
Show Answer :
Answer : (A)
Question :17. According NO1 theory ,value of firm is
(a) Related to its capital structure
(b) Not related to its capital structure
(c) Related to debt
(d) Related to overall cost of capital
Show Answer :
Answer : (B)
Question :18. …………………………………….theory provides that it is possible to increase the value of a firm by increasing the volume of debt in the capital structure of the firm
(a) Net income c. Net operating income
(b) MM theory
(d) Fixed Ko theory
Show Answer :
Answer : (A)
Question :19. ————— theory says that the value of a firm will be different stages of growth
(a) Net income
(b) NOI
(c) M M theory
(d) Traditional theory
Show Answer :
Answer : (D)
Question :20. According to traditional theory the value of firm will decrease due to leverage at the ——– of growth
(a) First stage
(b) Third stage
(c) Second stage
(d) None of these
Show Answer :
Answer : (C)
Question :21. When there is sales exceeding break even point. Operating leverage is
(a) Favorable
(b) No effect
(c) Unfavorable
(d) None of these
Show Answer :
Answer : (A)
Question :22. ————– theory of capitalization says that the amount of capital must be equal to the sum total of all the costs of the firm.
(a) Earnings theory
(b) MM theory
(c) Cost theory
(d) Net income theory
Show Answer :
Answer : (B)
Question :23. ———- theory suggest a stage in the growth of a firm where it can reach optimum capital structure
(a) Net operating income
(b) Net income
(c) Traditional
(d) MM
Show Answer :
Answer : (B)
Question :24. If the operational costs of fixed nature are more than variable costs, the firm has
(a) Financial leverage
(b) Optimum capital structure
(c) Operating leverage
(d) Financial break even
Show Answer :
Answer : (B)
Question :25. The percentage change in EPS for a given percentage change in the sales level is
(a) Financial leverage
(b) Combined leverage
(c) Operating leverage
(d) P/V ratio
Show Answer :
Answer : (C)
Question :26. Redundant working capital means
(a) Optimum working capital
(b) Shortage of working capital
(c) Idle working capital
(d) None of these
Show Answer :
Answer : (C)
Question :27. Floating capital means
(a) Liquid capital
(b) Permanent working capital
(c) Redundant working capital
(d) Gross working capital
Show Answer :
Answer : (A)
Question :28. According to ————- approach, cash inflow from assets should match with the cash outflow required to acquire them.
(a) Aggressive approach
(b) Hedging approach
(c) Conservative approach
(d) Optimization
Show Answer :
Answer : (B)
Question :29. Capital gearing refers to the relationship between equity capital and ———-
(a) Long term dept
(b) Mid term debt
(c) Short term debt
(d) None of these
Show Answer :
Answer : (A)
Question :30. It is better for a company to remain in ———— gear during the period of depression
(a) High
(b) Medium
(c) Low
(d) None of these
Show Answer :
Answer : (B)
Question :31. The appropriate objective of an enterprise is :
(a) Maximization of sales
(b) Maximization of owners wealth
(c) Maximization of profits
(d) None of these
Show Answer :
Answer : (B)
Question :32. The job of finance manager is confined to:
(a) Raising of funds
(b) Management of cash
(c) Raising of funds and their effective utilization
(d) None of the above
Show Answer :
Answer : (C)
Question :33. Financial decision involve
(a) Investment, financing and dividend decisions
(b) Investment, financing and sales decisions
(c) Financing, dividend and cash decisions
(d) None of the above
Show Answer :
Answer : (A)
Question :34. According to M&M theory the total value of a firm is —————
(a) Static
(b) Flexible
(c) Dynamic
(d) None of the above
Show Answer :
Answer : (A)
Question :35. Simplest capital budgeting technique is —————-
(a) Pay-back period
(b) IRR method
(c) NPV period
(d) Profitability index method
Show Answer :
Answer : (A)
Question :36. The fund may be raised through owners is called ———————
(a) Owner’s equity
(b) Trading on equity
(c) Creditor’s equity
(d) None of these
Show Answer :
Answer : (A)
Question :37. The degree of ———- leverage depends up on the amount of fixed elements in the cost structure.
(a) Operating leverage
(b) Composite leverage
(c) Financial leverage
(d) None of these
Show Answer :
Answer : (A)
Question :38. ————– decisions refer to the decision regarding the deployment of funds in various forms of long term & short term assets
(a) Investment decisions
(b) Dividend decisions
(c) Financing decisions
(d) Liquidity decisions
Show Answer :
Answer : (A)
Question :39. Decisions regarding the procurement of funds required for a firm is called ————–
(a) Financing decision
(b) Dividend division
(c) Investment decision
(d) Liquidity division
Show Answer :
Answer : (A)
Question :40. ————- refers to the management of current asset and current liabilities and investment of surplus cash for short term periods
(a) Liquidity decision
(b) Finance decision
(c) Dividend decision
(d) Investment decision
Show Answer :
Answer : (A)
Question :41. —————— bonds are sold directly to a limited number of institutional investors
(a) Privately placed bonds
(b) Sinking fund bonds
(c) Junk bonds
(d) None of these
Show Answer :
Answer : (A)
Question :42. In the case of ————— funds ,the issuing company redeems a fraction of the issue every year
(a) Privately placed bonds
(b) Sinking fund bonds
(b) Junk bonds
(d) None of these
Show Answer :
Answer : (C)
Question :43. A ————– is an instrument whereby one person binds himself to another for payment of a specified sum of money on a specified date
(a) Equity share
(b) Bond
(c) Preference shares
(d) Debentures
Show Answer :
Answer : (C)
Question :44. The possibility that a company will have lower than anticipated profits is called ———————
(a) Financial risk
(b) Operational risk
(c) Business risk
(d) Technological risk
Show Answer :
Answer : (C)
Question :45. ——————– refers to the risk associated with the capital structure composition
(a) Financial risk
(b) Operational risk
(c) Business risk
(d) Technological risk
Show Answer :
Answer : (A)
Question :46. When contribution is dividend with EBIT we get
(a) Operating leverage
(b) Financial leverage.
(c) P/V ratio
(d) EPS
Show Answer :
Answer : (A)
Question :47. According to —————— the degree of leverage is irrelevant in determining the value of a firm
(a) MM theory
(b) Walter’s model
(c) Baumol’s model
(d) None of these
Show Answer :
Answer : (A)
Question :48. ————— leverage is obtained from the equation EBIT/EBT
(a) Operating leverage
(b) Financial leverage
(c) Combined leverage
(d) None of these
Show Answer :
Answer : (B)
Question :49. Buying a security from low priced market and selling at high priced market is called ————-
(a) Speculation
(b) Arbitrage
(c) Gangbling
(d) Investment
Show Answer :
Answer : (B)
Question :50. The traditional approach of capital structure was propounded by ——————-
(a) David Durand
(b) Solomon Ezra
(c) Modigilani-Mille
(d) None of these
Show Answer :
Answer : (B)
Question :51. Net operating income(NOI) approach was propounded by ————
(a) Solomon Ezra
(b) David Durand
(c) Modigilani-Miller
(d) None of these
Show Answer :
Answer : (C)
Question :52. According to NOI theory, the value of the firm depends on ———–
(a) Financial risk
(b) Operational risk
(c) Technological risk
(d) Business risk
Show Answer :
Answer : (C)
Question :53. ————— theory is applicable only when the dividend pay out ratio is 100%
(a) MM theory
(b) NOI theory
(c) Net income approach
(d) None of these
Show Answer :
Answer : (A)
Question :54. Which is the limitation of traditional approach of financial management
(a) Ignores allocation of resources
(b) One sided approach
(c) More emphasis on long term problems
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :55. The finance function is/are ———————-
(a) Determination of financial requirement of the firm
(b) Obtaining necessary finance from the appropriate sources at minimum possible cost
(c) The allocation of finance in different assets
(d) All of these
(e) None of the above
Show Answer :
Answer : (D)
Question :56. Financial management is a part of ———————
(a) Financial accounting
(b) Business management
(c) Accounting
(d) Tax law
(e) All of these
Show Answer :
Answer : (B)
Question :57. The financial management is responsible for the
(a) Controlling of the Organization
(b) Organizing trading programs
(c) Recording the transaction
(d) Finance function of the firm
(e) All the above
Show Answer :
Answer : (D)
Question :58. Financial management includes ——————-
(a) Measurement of performance
(b) Finance function
(c) Financial resources
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :59. Profit maximization includes ———————
(a) It is indicator of economic efficiency
(b) Source of incentive
(c) Maximization of social benefit
(d) Measurement of success of business decisions
(e) All of these
Show Answer :
Answer : (D)
Question :60. Finance functions are —————————–
(a) Allocation of resources
(b) Raising of funds
(c) Planning for funds
(d) Control of funds
(e) All of these
Show Answer :
Answer : (E)
Question :61. Which is the functions of finance as per John J Hampton
(a) Managing funds
(b) Managing assets
(c) Liquidity function
(d) Profitability functions
(e) All of these
Show Answer :
Answer : (E)
Question :62. Which type of function may be performed by the finance manager for management of profitability
(a) Cost control
(b) Pricing
(c) Forecasting future profits
(d) Measuring cost of capital
(e) All of these
Show Answer :
Answer : (E)
Question :63. Which is the function of treasurer
(a) Management of cash
(b) Management of credit
(c) Management of pension
(d) Banking transaction
(e) All of these
Show Answer :
Answer : (E)
Question :64. Which is the element of finance manager
(a) Financial analysis and performance appraisal
(b) Financing decisions
(c) Investing decisions
(d) Dividend decisions
(e) All of these
Show Answer :
Answer : (E)
Question :65. Which is the task of financial manager
(a) Financial control
(b) Dividend decision
(c) Management of income
(d) Financial analysis
(e) All of these
Show Answer :
Answer : (E)
Question :66. The finance manager plays an important role is ——————–
(a) Amalgamation
(b) Reconstruction
(c) Liquidation decisions
(d) All of these
(e) None of these
Show Answer :
Answer : (E)
Question :67. Function of finance officers includes ———————–
(a) Continuous credit
(b) Co-ordination in fund
(c) Preparation of cost account
(d) Adequate liquidity
(e) All of these
Show Answer :
Answer : (E)
Question :68. Which is the function of financial control
(a) Accounting functions
(b) Planning for control
(c) Audit
(d) Tax administration
(e) All of these
Show Answer :
Answer : (E)
Question :69. Which is the type of value
(a) Market value
(b) Intrinsic value
(c) Liquidation value
(d) Replacement value
(e) All of these
Show Answer :
Answer : (E)
Question :70. The term value implies the ————
(a) Task of estimating the worth of an asset
(b) Task of estimating the worth of a security
(c) Task of estimating the value of a business
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :71. An value implies on ————————-
(a) Valuation of a plant
(b) Valuation of machinery
(c) Valuation of goodwill
(d) Valuation of stock
(e) All of these
Show Answer :
Answer : (E)
Question :72. Which is a type of value
(a) Book value
(b) Retailer or wholesaler value
(c) Plant value
(d) Domestic value
(e) Firm value
Show Answer :
Answer : (A)
Question :73. Which is the approach of valuation
(a) Asset based approach to valuation
(b) Earnings based approach to valuation
(c) Market value based approach to valuation
(d) All f these
(e) None of these
Show Answer :
Answer : (A)
Question :74. Total assets – Total external liabilities equal to ———————
(a) Net asset
(b) Net liabilities
(c) Net cost
(d) Net depreciation
(e) None of these
Show Answer :
Answer : (A)
Question :75. The arrangement of working capital and current assets can be done only by ——————-
(a) Short term sources
(b) Long term sources
(c) Cost of capital
(d) Financial plan
(e) All of these
Show Answer :
Answer : (D)
Question :76. Which is the source of short term
(a) Trade credit
(b) Short term bank finance
(c) Public deposits
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :77. Which is the type of trade credit
(a) Open account
(b) Bills of exchange
(c) Promissory note
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :78. Which is/are the demerits of trade credit
(a) The high price is charged in case of credit purchases
(b) The customers have to accept even inferior quality of goods
(c) This facility is not given to new customers and institutions
(d) All of these
(e) None of these
Show Answer :
Answer : (E)
Question :79. Which is the form of credit
(a) Overdraft
(b) Cash credit
(c) Discounting of trade bills
(d) Loans and advances
(e) All of these
Show Answer :
Answer : (A)
Question :80. Current asset less current liabilities equal to ——————–
(a) Working capital
(b) Reserve
(c) Goodwill
(d) All of these
(e) None of the above
Show Answer :
Answer : (E)
Question :81. Which is the characteristics of share capital
(a) Getting permanent capital
(b) Payment of dividend is not compulsory
(c) No mortgage of property
(d) Limited liability
(e) All of these
Show Answer :
Answer : (A)
Question :82. The ownership capital of Joint Stock Companies is dividend in its ————–
(a) Equity shares
(b) Debentures
(c) Bonds
(d) Debentures and preference shares
(e) Loans
Show Answer :
Answer : (D)
Question :83. If the company is new, then there are no —————
(a) Retained earnings
(b) Share capital
(c) Employees
(d) Directors
(e) Chartered accountant
Show Answer :
Answer : (E)
Question :84. The payment of dividend is not compulsory on ——————
(a) Equity share capital and preference share capital
(b) Bonds
(c) Debentures
(d) Share capital
(e) Trade credit
Show Answer :
Answer : (D)
Question :85. Which statement is true about equity share capital
(a) Limited liability
(b) Right to sell own shares
(c) No mortgage of property required
(d) Right of management
(e) All of these
Show Answer :
Answer : (E)
Question :86. The capital raised through equity share is ———- for the company
(a) Floating capital
(b) Variable capital
(c) Temporary capital
(d) Permanent or fixed capital
(e) All of these
Show Answer :
Answer : (D)
Question :87. The control and management of the company is in the hands of —-
(a) Debenture holders
(b) Bondholders
(c) Equity shareholders
(d) Employees
(e) Suppliers
Show Answer :
Answer : (C)
Question :88. Who have the last right on the company assets
(a) Bondholders
(b) Equity shareholders
(c) Debenture holders
(d) Preference shareholders
(e) Managers
Show Answer :
Answer : (B)
Question :89. The equity shareholders are owners of ———————
(a) Residual income of the company
(b) Cost of asset
(c) Limited liability
(d) Cost of capital
Show Answer :
Answer : (A)
Question :90. Which is the advantage of the share capital
(a) Permanent capital by sharing risk
(b) No fixed burden of dividend by all of these
(c) All of these
(d) None of these
Show Answer :
Answer : (D)
Question :91. When the expansion of business and income is there, then the market value increases which result in ——————
(a) Capital gain by capital loss
(b) Capital expense
(c) Reserves
(d) None of these
Show Answer :
Answer : (A)
Question :92. If the company announces dividend then it is necessary to pay if
(a) Within a certain time
(b) Within five years
(c) Within six years
(d) Within seven years
(e) Within three years
Show Answer :
Answer : (A)
Question :93. Which ratio explains that how much portion of earning is distributed in the form of dividend
(a) Dividend per Share Ratio
(b) Pay Out Ratio
(c) Earning yield Ratio
(d) Equity Capital Ratio
(e) Equity Debt Ratio
Show Answer :
Answer : (B)
Question :94. Preference shares are those shares whose holders have ————-
(a) Certain common rights
(b) Certain preferential Rights
(c) Return on capital ownership on shares
(d) Return on capital
(e) All of above
Show Answer :
Answer : (B)
Question :95. Preference shares contain, the which type of element?
(a) Maturity
(b) Preference over income
(c) Preference over Assets
(d) No rights in management and control
(e) All of above
Show Answer :
Answer : (E)
Question :96. Which is the type of preference shares?
(a) Cumulative Preference shares
(b) Non Cumulative Preference shares
(c) Redeemable Preference shares
(d) Participating Preference Shares
(e) All of above
Show Answer :
Answer : (E)
Question :97. When preference shareholders have a right to convert their preference shares in to equity shares after a pre-decided dare such shares are called ——– shares.
(a) Participating
(b) Convertible
(c) Redeemable
(d) Irredeemable
(e) None of these
Show Answer :
Answer : (A)
Question :98. Which is the element of cumulative convertible preference shares?
(a) The rate of dividend will be 10%
(b) The rate of dividend is 20%
(c) No risk
(d) No return
(e) No cost
Show Answer :
Answer : (A)
Question :99. ———– have veto power to protect their preferential rights
(a) Preference shareholder
(b) Debenture holders
(c) Common preference share
(d) Right shares
(e) Equity shares
Show Answer :
Answer : (C)
Question :100. The company can reduce its capital by ————-
(a) Convertible share
(b) Payment of loan
(c) Redemption of redeemable preference shares
(d) Payment of interest
(e) Reserve
Show Answer :
Answer : (A)
Question :101. Preference shares are ———-
(a) Less risky
(b) More flexible more risky
(c) Costly
(d) Non redeemable
(e) All of above
Show Answer :
Answer : (E)
Question :102. Which is the disadvantage of the preference share?
(a) Loss to equity share holders
(b) Fixed economic burden
(c) Difficulty in getting additional capital
(d) High cost of capital
(e) All of above
Show Answer :
Answer : (E)
Question :103. Which is the type of dividend?
(a) Cash dividend
(b) Interest
(c) Profit cum reserve
(d) Flexible capital
(e) Profit
Show Answer :
Answer : (A)
Question :104. The dividend on equity shares is only paid when dividend on ———- has already been paid
(a) Equity shares
(b) Preference shares
(c) Bond
(d) Debenture
(e) Bonus shares
Show Answer :
Answer : (B)
Question :105. Which shares are not redeemed during lifetime of the company?
(a) Equity shares
(b) Preference shares
(c) Redeemable pre-shares
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :106. “ A debenture is a document which either creates a debt or acknowledge it” . who said?
(a) Justice Chitty
(b) Tophan’s Company law
(c) J. Betty
(d) Hoston D
(e) None of these
Show Answer :
Answer : (A)
Question :107. Which is a type of debenture?
(a) Secured debenture
(b) unsecured debenture
(c) convertible debenture
(d) non convertible debenture
(e) all of these
Show Answer :
Answer : (E)
Question :108. Which is the current liability?
(a) Bills payable
(b) Bank overdraft
(c) Creditors and proposed dividend
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :109. Reserve is an —————
(a) Additional part of profit
(b) Additional loss
(c) Liability
(d) Cost
(e) Value
Show Answer :
Answer : (A)
Question :110. If there is over capitalization in the company, the redemption of debenture can lead to—————
(a) Cost of capital
(b) Balanced capital structure
(c) Equity
(d) Dividend
(e) Bond
Show Answer :
Answer : (B)
Question :111. The interest on debenture may be —————
(a) Fixed liability
(b) Flexible liability
(c) More cost
(d) Less cost
(e) All of these
Show Answer :
Answer : (A)
Question :112. The issue of debenture is done only by the ————–
(a) New company
(b) New firm
(c) New partnership
(d) Established and reputed companies
(e) None of these
Show Answer :
Answer : (D)
Question :113. Which type of debentures are issued in India?
(a) Registered debentures
(b) Redeemable debentures
(c) Bearer debentures
(d) Irredeemable debentures
(e) All of these
Show Answer :
Answer : (E)
Question :114. The debentures are used only by those companies whose ————
(a) Goodwill is more
(b) Goodwill is less
(c) Worth is less
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :115. The debentures are issued on the security of —————-
(a) Fixed assets
(b) Fixed capital
(c) Current Assets
(d) Current liabilities
(e) None of these
Show Answer :
Answer : (A)
Question :116. The debentures are issued for ——————–
(a) Establishment of new projects
(b) Expansion and modernization
(c) Amalgamation
(d) Mergers
(e) All of these
Show Answer :
Answer : (E)
Question :117. Every debenture holders is a —————-
(a) Owner of the company
(b) Creditor of the company
(c) Supplier of the company
(d) Customer of the company
(e) Firm
Show Answer :
Answer : (B)
Question :118. A company should arrange the capital structure in such a way that there is maximum flexibility in the capital and cost of capital is
(a) Maximum
(b) Minimum
(c) Expensive
(d) All of the above
(e) None of these
Show Answer :
Answer : (B)
Question :119. Term loans are those loans which are payable after one or more ______________
(a) years
(b) Time
(c) Costly
(d) All of these
(e) None of the above
Show Answer :
Answer : (A)
Question :120. The redemption means
(a) The payment of amount
(b) The depreciation of the amount
(c) The allocation of cost
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :121. Refunding means
(a) Issue of new debenture
(b) Issue of capital
(c) Disposable cost
(d) Issue new debentures in place of old debentures
(e) All of these
Show Answer :
Answer : (D)
Question :122. Conversion means
(a) Debentures are converted in to equity shares
(b) Registration of cost
(c) Accounting the transaction
(d) Debenture holders are allotted equity shares
(e) All of above
Show Answer :
Answer : (D)
Question :123. Stock is ——————–
(a) Current asset
(b) Fixed asset
(c) Fixed capital
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :124. Earnings means ———————–
(a) Profit
(b) Loss
(c) Capital
(d) Reserve
(e) None of these
Show Answer :
Answer : (A)
Question :125. Face value per debenture less issue expenses equal to —————
(a) Net proceeds per debentures
(b) Cost of capital
(c) Loss
(d) Profit
Show Answer :
Answer : (A)
Question :126. Capital budgeting means —————————-
(a) Planning for capital asset
(b) Planning for sales
(c) Planning for cash
(d) Planning for profit
(e) All of these
Show Answer :
Answer : (A)
Question :127. Capital budgeting is the process of making investment decisions in the ———-
(a) Sales
(b) Sales planning
(c) Cash
(d) Capital expenditure
(e) None of these
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Answer : (D)
Question :128. Capital budgeting is ————–
(a) Actually the process of making investment decision in capital expenditure
(b) A cost
(c) A sales
(d) A profit
(e) None of these
Show Answer :
Answer : (A)
Question :129. Capital budgeting is known as —————–
(a) Cost of sales
(b) Capital expenditure
(c) Cost of product
(d) Profit
(e) Expenses
Show Answer :
Answer : (B)
Question :130. Capital budgeting is ————————
(a) Related to long time
(b) Related to short time
(c) A profit
(d) A sales
(e) A plan of production
Show Answer :
Answer : (A)
Question :131. Capital budgeting actually the process of making investment decisions in ———–
(a) Production process and style
(b) Sales planning
(c) Fixed asset
(d) Current asset
(e) Fixed capital
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Answer : (C)
Question :132. Capital budgeting is also known as ——————–
(a) Investment decision making
(b) Capital expenditure decisions
(c) Planning capital expenditure
(d) All of these
(e) None of these
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Answer : (D)
Question :133. “Capital budgeting is long term planning for making and financing proposed capital outlays”. Who said?
(a) Charles T. Horngreen
(b) Philippatos
(c) J Betty
(d) Lynch
(e) None of these
Show Answer :
Answer : (A)
Question :134. Capital budgeting investment decision involves ———————–
(a) Long term function
(b) Long term asset
(c) Capital expenditure
(d) All of these
(e) None of these
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Answer : (A)
Question :135. Which is the element of capital budgeting decision
(a) Long term effect
(b) Long term investment
(c) Capital expenditure
(d) Large investment
(e) All of these
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Answer : (D)
Question :136. The significance of capital budgeting arises mainly due to the ——
(a) Large investment
(b) Irreversible in nature
(c) Complications of investment decisions
(d) All of these
(e) None of these
Show Answer :
Answer : (E)
Question :137. Capital budgeting process involves ——————–
(a) Final approval
(b) Performance review
(c) Establishing priorities
(d) All of these
(e) None of these
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Answer : (D)
Question :138. Which is the step of capital budgeting process?
(a) Project generation
(b) Project evaluation
(c) Project selection
(d) Project execution
(e) All of these
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Answer : (D)
Question :139. Which is the method of capital budgeting?
(a) Payback period
(b) Rate of return method
(c) Net present value method
(d) All of these
(e) None of these
Show Answer :
Answer : (E)
Question :140. Which is the traditional method of capital budgeting
(a) Payback period
(b) Pay out method
(c) Accounting method
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :141. Which is the time adjusting method of capital budgeting
(a) NPV method
(b) IRR method
(c) Profitability Index Method
(d) All of these
(e) None of these
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Answer : (D)
Question :142. If the annual cash inflows are constant, the payback period can be computed by dividing cash outlay by —————-
(a) Annual cash inflow
(b) Profit
(c) Expenses
(d) Annual sales flows
(e) None of these
Show Answer :
Answer : (D)
Question :143. If a project requires Rs.20,000 as initial investment and it will generate an annual inflow of Rs.2,000 for the 20 years, the pay back period will be ——————
(a) 10 years
(b) 20 years
(c) 9 years
(d) 2 years
(e) None of these
Show Answer :
Answer : (D)
Question :144. Projects which yields the highest earnings are ——————
(a) Selected
(b) Rejected
(c) Budgeted
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :145. The present value of total cash inflows should be compared with present value of ———————-
(a) Cash inflows
(b) Cash outflows
(c) Investment
(d) Income
(e) Production
Show Answer :
Answer : (B)
Question :146. The proposal is accepted if the profitability index is more than —–
(a) One by zero
(b) Three
(c) Five
(d) Ten
Show Answer :
Answer : (A)
Question :147. The proposal is rejected in case the profitability index is ————
(a) Less than one
(b) Less than zero
(c) Less than two
(d) Less than five
(e) Less than six
Show Answer :
Answer : (A)
Question :148. Capital budgeting process involves ——————-
(a) Identification of investment proposal
(b) Screening the proposal
(c) Evaluation of various proposal
(d) Establishing priorities
(e) All of these
Show Answer :
Answer : (E)
Question :149. The present value of all inflows are cumulated in ——————-
(a) Order of sales by order of cash
(b) Order of time
(c) Order of investment
(d) All of these
Show Answer :
Answer : (C)
Question :150. The performance report supplement with date on non-financial performance measures includes ——————
(a) Market performance measures
(b) Quality measures
(c) Delivery measures
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :151. The investment of long term funds is made after a careful assessment of the various projects through ——————-
(a) Cost of capital
(b) Fund flow
(c) Capital budgeting by sales
(d) Marketing planning
Show Answer :
Answer : (C)
Question :152. Which is the function of finance manager
(a) Estimating the requirement of funds
(b) Investment decision
(c) Cash management
(d) All of these
Show Answer :
Answer : (E)
Question :153. Which is the objective of a firm’s finance management?
(a) The maximization of firm’s profit
(b) The maximization of firm’s value
(c) The maximization of firm’s wealth
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :154. Book building ——————–
(a) Is a plant
(b) Is a profit cum expenses
(c) Is a process used for marketing a public offer of equity shares of a company
(d) Is a cost
(e) All of these
Show Answer :
Answer : (C)
Question :155. When an option is allowed to be exercised only on maturity date is called ————–
(a) Indian option
(b) European option
(c) American option
(d) Option
(e) All of these
Show Answer :
Answer : (B)
Question :156. Commercial paper effective from ———————
(a) 1-1-1980
(b) 1-1-1990
(c) 1-1-1975
(d) 1-1-1995
(e) 1-1-1970
Show Answer :
Answer : (B)
Question :157. In India commercial paper is regulated by ——————-
(a) RBI
(b) SEBI
(c) SBI
(d) Indian companies act 1956
(e) All of these
Show Answer :
Answer : (A)
Question :158. The interest rate on commercial paper is determined by ————-
(a) RBI
(b) SEBI and Market Force
(c) SBI
(d) Market Force
(e) ICICI
Show Answer :
Answer : (D)
Question :159. The cost of commercial paper includes ———————
(a) Discount
(b) Rating charges
(c) Stamp duty
(d) Issuing cost
(e) All of these
Show Answer :
Answer : (E)
Question :160. Factoring is a —————-
(a) Cost of sales
(b) Production plan
(c) Financial planning
(d) New financial service
(e) Company
Show Answer :
Answer : (D)
Question :161. Factoring involves —————-
(a) Provision of specialized services relating to credit investigation
(b) Sales ledger management
(c) Purchase and collection of debts
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :162. Which of the following recognizes risk in capital budgeting analysis by adjusting estimated cash flows and employs risk free rate to discount the adjusted cash flows?
(a) Pay back period
(b) Certainty equivalent approach
(c) Cash
(d) Inventory
(e) Income
Show Answer :
Answer : (B)
Question :163. ————- rate at which discounts the cash flows to zero
(a) Payback period by economic order quantity
(b) Internal rate of return
(c) Cash flow
(d) None of these
Show Answer :
Answer : (C)
Question :164. The net present value is expressed in financial value, where as internal rate of return(IRR) is expressed in —————
(a) Hundred by percentage terms
(b) One thousand
(c) All of these
(d) None of these
Show Answer :
Answer : (B)
Question :165. Return on assets is a ratio which measures —————-
(a) Cost of capital
(b) Cost of production
(c) Profitability
(d) Cost of sales
(e) All of these
Show Answer :
Answer : (C)
Question :166. Return on equity measures the profitability of ——————- invested in the firm
(a) Capital
(b) Equity funds
(c) Book debt
(d) Debentures and book dept
(e) Sales
Show Answer :
Answer : (B)
Question :167. Which ratio reveals how profitability of the owner’s funds have been utilized by the firm?
(a) Return on equity
(b) Current ratio
(c) Fixed asset ratio
(d) Debt equity ratio
(e) Cash ratio
Show Answer :
Answer : (A)
Question :168. Capital employed is ———-
(a) Assets + cash
(b) Shareholders funds + Long funds
(c) Cash + bank
(d) Bank
(e) Capital
Show Answer :
Answer : (B)
Question :169. Financial leverage is —————-
(a) EBIT/100* sales
(b) EBIT/EBT
(c) Sales/fixed asset
(d) Profit/sales*capital
(e) Sales/capital
Show Answer :
Answer : (B)
Question :170. Shareholder value analysis is an approach to Financial Management Development in ——————
(a) 1970
(b) 1980
(c) 1990
(d) 1996
(e) 1998
Show Answer :
Answer : (B)
Question :171. The term financial engineering is used to —————-
(a) Cost of production
(b) Risk management
(c) Capital
(d) Sales planning
(e) Capital issue
Show Answer :
Answer : (B)
Question :172. The packing order theory is based on ———–
(a) Stable dividend policy
(b) A performance for internal
(c) All of these
(d) None of these
Show Answer :
Answer : (D)
Question :173. SGR is stands for ————–
(a) Sustainable Growth rate
(b) Sales Growth rate
(c) Sales Goodwill rate
(d) Super Goodwill ratio
(e) None of these
Show Answer :
Answer : (A)
Question :174. A company may raise funds by issue of shares or ————-
(a) By borrowings
(b) By sales of goods
(c) By sale of assets
(d) By sale of services
(e) None of these
Show Answer :
Answer : (A)
Question :175. Borrowings carry ———–
(a) Fixed rate of interest
(b) A flexible rate of interest
(c) A fixed dividend
(d) A flexible dividend
Show Answer :
Answer : (A)
Question :176. Which helps in deciding whether funds should be raised by internal equity or by borrowings>
(a) Capital structure
(b) Loan
(c) Cash
(d) Trading on equity
(e) Dept
Show Answer :
Answer : (D)
Question :177. Which factor determines capital structure?
(a) Risk
(b) Cost of capital
(c) Trading on equity
(d) Period of finance
(e) All of these
Show Answer :
Answer : (E)
Question :178. Which are the determinants of capital structure?
(a) Requirement of investors
(b) Control
(c) Tax
(d) Govt. policy
(e) All of these
Show Answer :
Answer : (D)
Question :179. Which is the instrument of finance
(a) Zero coupon bonds
(b) Debt securitization
(c) Credit card
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :180. Which is the part of restrictive covenants
(a) Asset related covenants
(b) Liability related covenants
(c) Cash flow related covenants
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :181. Which is the following is/are of the instrument used for borrowing of funds from the international market?
(a) Syndicated bank loans
(b) Euro bonds
(c) Foreign bonds
(d) Euro commercial papers
(e) All of these
Show Answer :
Answer : (E)
Question :182. LIBOR is a term of ————-
(a) Capital market
(b) Accounting
(c) Common market
(d) International Financial Market
(e) All of these
Show Answer :
Answer : (D)
Question :183. Foreign bonds are ——————-
(a) Domestic currency bonds
(b) Foreign currency bonds
(c) Product loan
(d) Currency
(e) None of these
Show Answer :
Answer : (B)
Question :184. Foreign bonds, are foreign currency bonds and sold at the country of that currency and are subject to the restrictions as placed by that country on the ——————-
(a) Foreigner’s fund
(b) Domestic holder’s fund
(c) Firm’s fund
(d) All of these
(e) None of these
Show Answer :
Answer : (A)
Question :185. Euro bond is a ————
(a) Debt instrument
(b) Foreign currency bond
(c) Paper
(d) Bill
(e) All of these
Show Answer :
Answer : (A)
Question :186. Eurobonds are debt instruments denominated in a currency issued —–
(a) Outside the country
(b) In the country
(c) In the firm
(d) Outside the firm
(e) None of these
Show Answer :
Answer : (A)
Question :187. Bills discounting is a ———————–
(a) Product of company
(b) Accounting paper
(c) Short term source of finance
(d) Capital
(e) Expenses
Show Answer :
Answer : (C)
Question :188. The capital of the firm may be in the form of ———
(a) Debt capital
(b) Equity capital
(c) Preference capital
(d) Retained earnings
(e) All of these
Show Answer :
Answer : (E)
Question :189. The cost of capital is the rate of return of a company must earn on investment to maintain —————-
(a) The value of the company
(b) The value of the product
(c) Price
(d) Product quality
(e) None of these
Show Answer :
Answer : (A)
Question :190. The cost of capital is ————–
(a) The maximum rate of return
(b) The minimum rate of return
(c) A profit
(d) A product
(e) All of these
Show Answer :
Answer : (B)
Question :191. The debt capital can be raised from issue of —–
(a) Bonds
(b) Equity share capital
(c) Right share
(d) Preference share capital
(e) All of these
Show Answer :
Answer : (A)
Question :192. The cost of debt capital is the ratio of interest payable on ———
(a) Debenture
(b) Equity share capital
(c) Preference share capital
(d) Retained earning
(e) None of these
Show Answer :
Answer : (A)
Question :193. Which is helpful in evaluation of financial efficiency of top management?
(a) Capital structure
(b) Brand
(c) Cost of capital
(d) Product quality
(c) Good will
Show Answer :
Answer : (B)
Question :194. The cost of debt capital is calculated on the basis of ————-
(a) Net proceeds br>(b) Capital
(c) Annual depreciation<
(d) Annual interest
(c) Income
Show Answer :
Answer : (A)
Question :195. ATM card may be issued by the ———
(a) Customer
(b) SEBI
(c) Bank
(d) All of these
(e) None of these
Show Answer :
Answer : (B)
Question :196. Which are the items of capital structure?
(a) Debt capital
(b) Preference share capital
(c) Equity capital
(d) Retained capital
(e) All of these
Show Answer :
Answer : (E)
Question :197. The preference share can be issued at ————–
(a) Par
(b) Discount
(c) Premium
(d) All of these
(c) None of these
Show Answer :
Answer : (D)
Question :198. Dividends are the ———- of a company distributed amongst members in proportion to their shares
(a) Divisible profits
(b) Indivisible profits
(c) Reserves
(d) Assets with cash and bank
(e) Fund
Show Answer :
Answer : (A)
Question :199. A sound dividend policy contains the ————- features
(a) Stability
(b) Distribution of dividend in cash
(c) Gradually rising dividend ratio
(d) All of these
(e) None of these
Show Answer :
Answer : (D)
Question :200. This item can be treated as an item of current liability or as an item of appropriation
(a) Dividend
(b) Debentures
(c) Reserve
(d) Debtors
(e)
Show Answer :
Answer : (A)
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