MCQOPTIONS
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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Net operating income(NOI) approach was propounded by ------------ |
| A. | Solomon Ezra |
| B. | David Durand |
| C. | Modigilani-Miller |
| D. | None of these |
| Answer» D. None of these | |
| 2. |
Objective of Financial Management is |
| A. | Management of Liquidity |
| B. | Maximization of Profit |
| C. | Maximization of Shareholders’ Wealth |
| D. | Management of Fixed Assets |
| Answer» D. Management of Fixed Assets | |
| 3. |
In optimal capital structure the company’s cost of capital will be |
| A. | Minimum |
| B. | Maximum |
| C. | Medium |
| D. | None of these |
| Answer» B. Maximum | |
| 4. |
--------------- leverage is obtained from the equation EBIT/EBT |
| A. | Operating leverage |
| B. | Financial leverage |
| C. | Combined leverage |
| D. | None of these |
| Answer» C. Combined leverage | |
| 5. |
The capital raised through equity share is ---------- for the company |
| A. | Floating capital |
| B. | Variable capital |
| C. | Temporary capital |
| D. | Permanent or fixed capital |
| Answer» E. | |
| 6. |
The present value of total cash inflows should be compared with present value of ---------------------- |
| A. | Cash inflows |
| B. | Cash outflows |
| C. | Investment |
| D. | Income |
| Answer» C. Investment | |
| 7. |
Which is the time adjusting method of capital budgeting |
| A. | NPV method |
| B. | IRR method |
| C. | Profitability Index Method |
| D. | All of these |
| Answer» E. | |
| 8. |
The treatment of interest and dividends received and paid depends upon the natureof the enterprise. For this purpose, the enterprises are classified as ____________. |
| A. | (i) Financial enterprises, and (ii) Operating enterprises |
| B. | (i) Financial enterprises, and (ii) Other enterprises |
| C. | (i) Financial enterprises, and (ii) Non-Financial enterprises |
| D. | (i) Trading enterprises, and (ii) Non - Trading enterprises |
| Answer» C. (i) Financial enterprises, and (ii) Non-Financial enterprises | |
| 9. |
The equity shareholders are owners of --------------------- |
| A. | Residual income of the company |
| B. | Cost of asset |
| C. | Limited liability |
| D. | Cost of capital |
| Answer» B. Cost of asset | |
| 10. |
The combination of debt and equity that leads to the maximum value of the firm is called |
| A. | Financial structure |
| B. | Capital structure |
| C. | Optimal capital structure |
| D. | None of these |
| Answer» D. None of these | |
| 11. |
The lease period in such a contract is less than the useful life of asset. Here we aretalking about _______. |
| A. | Operating or Service Lease |
| B. | Service Lease |
| C. | Financial Lease |
| D. | None of the above |
| Answer» B. Service Lease | |
| 12. |
Which of the following factors are considered when a capital structure decision is taken? |
| A. | Cost of capital |
| B. | Dilution of control |
| C. | Floatation cost |
| D. | All of the above |
| Answer» E. | |
| 13. |
If funds are required for unproductive purpose or general development on permanent basis ------- finance is suitable |
| A. | Debt |
| B. | Equity |
| C. | Bank overdraft |
| D. | None of these |
| Answer» C. Bank overdraft | |
| 14. |
Borrowings carry ----------- |
| A. | Fixed rate of interest |
| B. | A flexible rate of interest |
| C. | A fixed dividend |
| D. | A flexible dividend |
| Answer» B. A flexible rate of interest | |
| 15. |
GP Margin=20%, GP= Rs. 54000, Sales= |
| A. | Rs. 300000 |
| B. | Rs. 270000 |
| C. | Rs. 280000 |
| D. | Rs. 290000 |
| Answer» C. Rs. 280000 | |
| 16. |
When a company liberalizes its cash discount policy |
| A. | It increases the cost of discount |
| B. | It leads to an increase in the average collection period |
| C. | The discount period may be lengthened |
| D. | All of the above |
| Answer» E. | |
| 17. |
Which of the following is not considered while preparing cash budget? |
| A. | Accrual Principal |
| B. | Difference in Capital and Revenue items |
| C. | Conservation Principle |
| D. | All of the above |
| Answer» E. | |
| 18. |
A company can increase its value and reduce the overall cost of capital by increasing theproportion of debt in its capital structure according to ----- approach |
| A. | Net income approach |
| B. | Net operating income approach |
| C. | Traditional approach |
| D. | None of these |
| Answer» B. Net operating income approach | |
| 19. |
A company has earnings before interest and taxes of Rs1,00,000. It expects a return oninvestment at a rate of 12.5%. What is the total value of the firm according to MM Theory? |
| A. | Rs6,00,000 |
| B. | Rs7,00,000 |
| C. | Rs8,00,000 |
| D. | Rs9,00,000 |
| Answer» D. Rs9,00,000 | |
| 20. |
There is a reciprocal relationship between ………………. |
| A. | DOL and DFL |
| B. | DOL and margin of safety ratio |
| C. | DFL and margin of safety ratio |
| D. | DOL and break-even-point |
| Answer» C. DFL and margin of safety ratio | |
| 21. |
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 |
| Answer» E. | |
| 22. |
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 |
| Answer» B. The rate of dividend is 20% | |
| 23. |
Which of the following quantitative aspect of financial planning? |
| A. | Capitalization |
| B. | Capital structure |
| C. | Organization structure |
| D. | None of these |
| Answer» B. Capital structure | |
| 24. |
Working Capital Management involves financing and management of |
| A. | All Assets |
| B. | All Current Assets |
| C. | Cash and Bank Balance |
| D. | Receivables and Payables |
| Answer» C. Cash and Bank Balance | |
| 25. |
Which of the following is not a Source of Fund? |
| A. | Issue of Capital |
| B. | Issue of Debenture |
| C. | Decrease in working capital |
| D. | Increase in working capital |
| Answer» E. | |
| 26. |
Ratio analysis is based on __________ measure. |
| A. | relative |
| B. | absolute |
| C. | Both of the above |
| D. | None of the above |
| Answer» B. absolute | |
| 27. |
Shelf stock refers to |
| A. | Perishable goods |
| B. | Items that are to be packaged and sold |
| C. | Stocks which is to be stored in the shelf |
| D. | Items that are stored by the firm and sold with little or no modification |
| Answer» E. | |
| 28. |
Net operating income approach was suggested by |
| A. | Modigliani and Miller |
| B. | Durand |
| C. | Walter |
| D. | None of these |
| Answer» C. Walter | |
| 29. |
Which of the following is a feature of Factoring? |
| A. | Tool of short term borrowing |
| B. | Purchase of export bill only |
| C. | Used in Export business only |
| D. | Done without recourse to the client |
| Answer» B. Purchase of export bill only | |
| 30. |
Reserve is an --------------- |
| A. | Additional part of profit |
| B. | Additional loss |
| C. | Liability |
| D. | Cost |
| Answer» B. Additional loss | |
| 31. |
Which is the type of trade credit |
| A. | Open account |
| B. | Bills of exchange |
| C. | Promissory note |
| D. | All of these |
| Answer» E. | |
| 32. |
------ refers to a situation where a firm is not in a position to invest in all profitableprojects due to the constraints on availability of funds |
| A. | Capital budgeting |
| B. | Over capitalization |
| C. | Capital expenditure control |
| D. | Capital rationing |
| Answer» E. | |
| 33. |
Which of the following is/ are the drawbacks of Accounting Rate of Return criterion |
| A. | It gives equal weightage to near flows and distant flows |
| B. | It is calculated using the accounting income and not cash flows |
| C. | The cut off of ARR is arbitrarily fixed |
| D. | All of the above |
| Answer» E. | |
| 34. |
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 |
| Answer» E. | |
| 35. |
Which of the following is not considered by Miller-Orr Model? |
| A. | Variability in cash requirement |
| B. | Cost of transaction |
| C. | Holding cost |
| D. | Total annual requirement of cash |
| Answer» E. | |
| 36. |
Which of the following is not a part of the money market? |
| A. | Call money market |
| B. | Treasury bill market |
| C. | Commercial paper market |
| D. | Stock market |
| Answer» E. | |
| 37. |
A point where profile of net present value crosses horizontal axis at plotted graphindicates project |
| A. | costs |
| B. | cash flows |
| C. | internal rate of return |
| D. | external rate of return |
| Answer» D. external rate of return | |
| 38. |
In Net Profit Ratio, the denominator is: |
| A. | Credit Sales |
| B. | Net Sales |
| C. | Cost of Sales |
| D. | Cost of Goods Sold |
| Answer» C. Cost of Sales | |
| 39. |
Degree of operating leverage is: |
| A. | EBIT / EBT |
| B. | Contribution / EBT |
| C. | Contribution / EBIT |
| D. | None of these |
| Answer» D. None of these | |
| 40. |
Foreign bonds are ------------------- |
| A. | Domestic currency bonds |
| B. | Foreign currency bonds |
| C. | Product loan |
| D. | Currency |
| Answer» C. Product loan | |
| 41. |
Net income approach was suggested by |
| A. | Modigliani and Miller |
| B. | Durand |
| C. | Walter |
| D. | None of these |
| Answer» C. Walter | |
| 42. |
The discount rate which forces net present values to become zero is classified as |
| A. | positive rate of return |
| B. | negative rate of return |
| C. | external rate of return |
| D. | internal rate of return |
| Answer» E. | |
| 43. |
A company should follow the policy of ----- gear during deflation or depression period |
| A. | High gear |
| B. | Low gear |
| C. | Medium gear |
| D. | Any of the above |
| Answer» C. Medium gear | |
| 44. |
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 |
| Answer» D. None of the above | |
| 45. |
Euro bond is a ------------ |
| A. | Debt instrument |
| B. | Foreign currency bond |
| C. | Paper |
| D. | Bill |
| Answer» B. Foreign currency bond | |
| 46. |
The packing order theory is based on ----------- |
| A. | Stable dividend policy |
| B. | A performance for internal |
| C. | All of these |
| D. | None of these |
| Answer» E. | |
| 47. |
Stock is -------------------- |
| A. | Current asset |
| B. | Fixed asset |
| C. | Fixed capital |
| D. | All of these |
| Answer» B. Fixed asset | |
| 48. |
Financial break-even point is that level of EBIT at which …………. |
| A. | EPS > 0 |
| B. | EPS < 0 |
| C. | EPS = 0 |
| D. | EPS > 1 |
| Answer» D. EPS > 1 | |
| 49. |
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 |
| Answer» E. | |
| 50. |
According to which theory two identical firms in all respect except their capital structure can not have different market value or cost of capital because of arbitrage process |
| A. | Net income approach |
| B. | Net operating income approach |
| C. | Traditional theory |
| D. | MM approach |
| Answer» E. | |