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This set of Financial Management Multiple Choice Questions & Answers (MCQs) focuses on Financial Management Set 1

Q1 | All business need to have which fundamental essential element
  • human resources
  • balance sheet
  • labour team
  • stategy
Q2 | Which of the following variable is not known in IRR?
  • discount rate
  • terminal inflows
  • life of the project
  • intitial cash flows
Q3 | Acccording to the traditional approach what is the effect of increase in degree of leverage on the valuation of the firm
  • remains unaffected
  • increase first and then decreases
  • decreases
  • increases
Q4 | The maximum expenses that an equity scheme charge to an investor is ____________
  • 0.025
  • 0.0225
  • 0.0175
  • 0.02
Q5 | The bonds with shorter maturity will have ______ duration
  • moderate
  • higher
  • lower
  • average
Q6 | Relaxed or libral credit implies -credit to customers
  • higher
  • both a and b
  • lower
  • neither a nor b
Q7 | Objectives of financial planning are
  • determining capital structure
  • framing loan policies
  • determining cash requirement
  • determining finance ratio
Q8 | PI of project is the ratio of present value of inflows to-
  • total outflows
  • initial cost
  • pv of outflows
  • total cash inflows
Q9 | Bird in hand - argument is given by
  • residuals theory
  • walter model
  • mm model
  • gordon\s model
Q10 | When the required rate of return is less than the coupon rate the premium on the bond-
  • remains same
  • variable
  • declines
  • increases
Q11 | Evaluation of firms credit policy can be done by computing expected ___________ from it
  • net benefit
  • net loss
  • net profit
  • net cost
Q12 | All listed and traded securities are valued at _______
  • book value
  • cost
  • cost+ profit
  • closing market price
Q13 | Financial manager would not supervise on the following area
  • cost analyst
  • working capital advisor
  • financial accounting and auditing
  • cash flow advisor
Q14 | In case of risky projects the required rate of return would generally be-
  • neutral
  • lower
  • moderate
  • higher
Q15 | Residuals theory argues that dividend is as -
  • passive decision
  • irrelevant decision
  • active decision
  • relevant decision
Q16 | Investors subscriptions are accounted as _____________
  • cash
  • deposits
  • liabilities
  • unit capital
Q17 | Face value is the value stated on the face of the bond and is known as-
  • redemption value
  • per value
  • intrinsic value
  • market value
Q18 | _________Policy refers to the procedure follow to collect accounts receivable after the expiry of the credit period
  • risk
  • collection
  • profit
  • manangment
Q19 | Financial mananger would play the role of __________ in area of finance
  • budget analyst
  • cash analyst
  • cash flow examiners
  • persoanl financial advisors
Q20 | Accountng rate of return is based on _____________
  • life of the project
  • average expected profit
  • average cash profit
  • average past profit
Q21 | MM model of dividend irrelevance uses arbitrage between-
  • dividend and capital issue
  • dividend and bonus
  • profit and investment
  • none of the above
Q22 | __________ Can be traded thourgh out the trading day at market prices
  • mmmf
  • debt fund
  • etf
  • equity fund
Q23 | Intrinsic value of a bond is ______________ vlaue of the all future cash flows
  • past
  • present
  • estimated
  • future
Q24 | ______ Means the basic criteria for the extension of credit to customers
  • credit standards
  • finnacial position
  • cash standards
  • living standards
Q25 | The Presence of Taxes in capital budgeting analysis will cause ___________
  • the arr to remain same
  • the npv to increase
  • the irr to decrease
  • all of the above