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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 26

Q1 | LIBOR is a term of -------------
  • Capital market
  • Accounting
  • Common market
  • International Financial Market
Q2 | Foreign bonds are -------------------
  • Domestic currency bonds
  • Foreign currency bonds
  • Product loan
  • Currency
Q3 | 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 -------------------
  • Foreigner’s fund
  • Domestic holder’s fund
  • Firm’s fund
  • All of these
Q4 | Euro bond is a ------------
  • Debt instrument
  • Foreign currency bond
  • Paper
  • Bill
Q5 | Eurobonds are debt instruments denominated in a currency issued -----
  • Outside the country
  • In the country
  • In the firm
  • Outside the firm
Q6 | Bills discounting is a -----------------------
  • Product of company
  • Accounting paper
  • Short term source of finance
  • Capital
Q7 | The cost of capital is the rate of return of a company must earn on investment to maintain ----------------
  • The value of the company
  • The value of the product
  • Price
  • Product quality
Q8 | The cost of capital is --------------
  • The maximum rate of return
  • The minimum rate of return
  • A profit
  • A product
Q9 | The debt capital can be raised from issue of -----
  • Bonds
  • Equity share capital
  • Right share
  • Preference share capital
Q10 | The cost of debt capital is the ratio of interest payable on ---------
  • Debenture
  • Equity share capital
  • Preference share capital
  • Retained earning
Q11 | Dividends are the ---------- of a company distributed amongst members in proportion to their shares
  • Divisible profits
  • Indivisible profits
  • Reserves
  • Assets with cash and bank
Q12 | A sound dividend policy contains the ------------- features
  • Stability
  • Distribution of dividend in cash
  • Gradually rising dividend ratio
  • All of these
Q13 | This item can be treated as an item of current liability or as an item of appropriation
  • Dividend
  • Debentures
  • Reserve
  • Debtors
Q14 | Shareholder wealth" in a firm is represented by:
  • the number of people employed in the firm.
  • the book value of the firm's assets less the book value of its liabilities
  • the amount of salary paid to its employees.
  • the market price per share of the firm's common stock.
Q15 | The long-run objective of financial management is to:
  • maximize earnings per share.
  • maximize the value of the firm's common stock.
  • maximize return on investment.
  • maximize market share.
Q16 | What are the earnings per share (EPS) for a company that earned Rs. 100,000 last year in after-tax profits, has 200,000 common shares outstanding and Rs. 1.2 million in retained earning at the year end?
  • Rs. 100,000
  • Rs. 6.00
  • Rs. 0.50
  • Rs. 6.50
Q17 | A(n) would be an example of a principal, while a(n) would be an example of an agent.
  • shareholder; manager
  • manager; owner
  • accountant; bondholder
  • shareholder; bondholder
Q18 | The market price of a share of common stock is determined by:
  • the board of directors of the firm.
  • the stock exchange on which the stock is listed.
  • the president of the company.
  • individuals buying and selling the stock.
Q19 | The focal point of financial management in a firm is:
  • the number and types of products or services provided by the firm.
  • the minimization of the amount of taxes paid by the firm.
  • the creation of value for shareholders.
  • the dollars profits earned by the firm.
Q20 | ___________________ of a firm refers to the composition of its long-term funds and its capital structure.
  • Capitalisation
  • Over-capitalisation
  • Under-capitalisation
  • Market capitalization
Q21 | In the _______________, the future value of all cash inflow at the end of time horizon ata particular rate of interest is calculated.
  • Risk-free rate
  • Compounding technique
  • Discounting technique
  • Risk Premium
Q22 | ______________ is the price at which the bond is traded in the stock exchange.
  • Redemption value
  • Face value
  • Market value
  • Maturity value
Q23 | _____________ enhance the market value of shares and therefore equity capital is notfree of cost.
  • Face value
  • Dividends
  • Redemption value
  • Book value
Q24 | In _______________ approach, the capital structure decision is relevant to the valuation of the firm.
  • Net income
  • Net operating income
  • Traditional
  • Miller and Modigliani
Q25 | When __________ is greater than zero the project should be accepted.
  • Internal rate of return
  • Profitability index
  • Net present value
  • Modified internal rate of return