MCQOPTIONS
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MCQOPTIONS
This section includes 2436 Mcqs, each offering curated multiple-choice questions to sharpen your Commerce knowledge and support exam preparation. Choose a topic below to get started.
| 501. |
A project having a profitability index of ------ is accepted |
| A. | PI<1 |
| B. | PI>1 |
| C. | PI=1 |
| D. | None of these |
| Answer» C. PI=1 | |
| 502. |
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 |
| Answer» B. Goodwill is less | |
| 503. |
Which of the following is not a function of a finance manager? |
| A. | Mobilization of funds |
| B. | Manipulate share price of the company |
| C. | Deployment of funds |
| D. | Control over use of funds |
| Answer» C. Deployment of funds | |
| 504. |
Which of the following is/ are the assumptions of net income approach? |
| A. | The cost of debt is less than the cost of equity |
| B. | There are no taxes |
| C. | The risk perception of investors is not changed by the use of debt |
| D. | All of the above |
| Answer» E. | |
| 505. |
The ratio between debt and equity in the total capitalization is called |
| A. | Capital gearing |
| B. | Capitalization |
| C. | Capital structure |
| D. | Financial structure |
| Answer» B. Capitalization | |
| 506. |
Which of the following is a Profitability Ratio? |
| A. | Proprietary Ratio |
| B. | Debt –equity Ratio |
| C. | Price Earnings Ratio |
| D. | Fixed Asset Ratio |
| Answer» D. Fixed Asset Ratio | |
| 507. |
The type of debt whose rate of interest changes according to the changes in the rate of interest payable on gilt edged securities or the prime lending rate of the bank is called |
| A. | Floating rate debt |
| B. | Variable rate debt |
| C. | Fixed rate debt |
| D. | Both a or b |
| Answer» E. | |
| 508. |
To judge the comparative risk of projects having same cost and different NPV whichmethod is used |
| A. | Certainty equivalent method |
| B. | Sensitivity technique |
| C. | Standard deviation method |
| D. | Coefficient of variation method |
| Answer» E. | |
| 509. |
Profit Maximization is the main objective of business because: |
| A. | Profit acts as a measure of efficiency and |
| B. | It serves as a protection against risk |
| C. | Both |
| D. | none |
| Answer» D. none | |
| 510. |
-------------------- refers to the risk associated with the capital structure composition |
| A. | Financial risk |
| B. | Operational risk |
| C. | Business risk |
| D. | Technological risk |
| Answer» B. Operational risk | |
| 511. |
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 |
| Answer» B. Domestic holder’s fund | |
| 512. |
Which one of the following activities is outside the purview of dividend decision infinancial management? |
| A. | Identification of the profit after taxes |
| B. | Measurement of the cost of funds |
| C. | Deciding on the pay-out ratio |
| D. | Considering issue of bonus shares to equity shareholders |
| Answer» C. Deciding on the pay-out ratio | |
| 513. |
Which is a type of value |
| A. | Book value |
| B. | Retailer or wholesaler value |
| C. | Plant value |
| D. | Domestic value |
| Answer» B. Retailer or wholesaler value | |
| 514. |
Depreciation is included in cost in case of |
| A. | Pay back method |
| B. | NPV |
| C. | Accounting rate of return |
| D. | Present value index |
| Answer» D. Present value index | |
| 515. |
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 |
| Answer» B. Capital expense | |
| 516. |
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 |
| Answer» B. 20 years | |
| 517. |
The interest on debenture may be --------------- |
| A. | Fixed liability |
| B. | Flexible liability |
| C. | More cost |
| D. | Less cost |
| Answer» B. Flexible liability | |
| 518. |
What should be the optimum Dividend payout ratio, when r=12% and Ke=10%? |
| A. | Zero |
| B. | 50% |
| C. | 12% |
| D. | 100% |
| Answer» B. 50% | |
| 519. |
The debentures are issued on the security of ---------------- |
| A. | Fixed assets |
| B. | Fixed capital |
| C. | Current Assets |
| D. | Current liabilities |
| Answer» B. Fixed capital | |
| 520. |
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 |
| Answer» E. | |
| 521. |
Capital gearing refers to the relationship between equity capital and----- |
| A. | Long term debt |
| B. | Short term debt |
| C. | Preference capital |
| D. | None of these |
| Answer» B. Short term debt | |
| 522. |
In mutually exclusive projects, projects which are selected for comparison must have |
| A. | positive net present value |
| B. | negative net present value |
| C. | zero net present value |
| D. | none of the above |
| Answer» B. negative net present value | |
| 523. |
The entire items on the liability side of a balance sheet is called |
| A. | Capital structure |
| B. | Financial structure |
| C. | Long term source |
| D. | Short term source |
| Answer» C. Long term source | |
| 524. |
Bills discounting is a ----------------------- |
| A. | Product of company |
| B. | Accounting paper |
| C. | Short term source of finance |
| D. | Capital |
| Answer» D. Capital | |
| 525. |
Under NPV method, cash flows are assured to be reinvested at |
| A. | Risk free rate of return |
| B. | Cost of debt |
| C. | IRR |
| D. | Discount rate at which NPV is computed |
| Answer» E. | |
| 526. |
Capital budgeting actually the process of making investment decisions in ----------- |
| A. | Production process and style |
| B. | Sales planning |
| C. | Fixed asset |
| D. | Current asset |
| Answer» D. Current asset | |
| 527. |
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 |
| Answer» C. Conservative approach | |
| 528. |
Degree of financial leverage of business indicates. |
| A. | Total risk |
| B. | Operating risk |
| C. | Financial risk |
| D. | None of these |
| Answer» D. None of these | |
| 529. |
Which of the following variables is not known in Internal Rate of Return? |
| A. | Initial Cash Flows |
| B. | Discount Rate |
| C. | Terminal Inflows |
| D. | Life of the Project |
| Answer» C. Terminal Inflows | |
| 530. |
β (Beta) of a security measures its: |
| A. | Diversifiable risk |
| B. | Financial risk |
| C. | Market risk |
| D. | None of above |
| Answer» D. None of above | |
| 531. |
Which is the element of capital budgeting decision |
| A. | Long term effect |
| B. | Long term investment |
| C. | Capital expenditure |
| D. | Large investment |
| Answer» E. | |
| 532. |
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 |
| Answer» C. Bond | |
| 533. |
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 |
| Answer» D. None of these | |
| 534. |
Financial management is a part of --------------------- |
| A. | Financial accounting |
| B. | Business management |
| C. | Accounting |
| D. | Tax law |
| Answer» C. Accounting | |
| 535. |
Cash Flow Statement is _____________ for Income Statement or Funds Flow Statement. |
| A. | not a substitute |
| B. | a substitute |
| C. | depends on situation |
| D. | None of the above |
| Answer» B. a substitute | |
| 536. |
Cost of Capital refers to |
| A. | Floatation Cost |
| B. | Dividend |
| C. | Required Rate of Return |
| D. | None of the above |
| Answer» D. None of the above | |
| 537. |
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 |
| Answer» D. All of these | |
| 538. |
Commercial paper effective from --------------------- |
| A. | 1-1-1980 |
| B. | 1-1-1990 |
| C. | 1-1-1975 |
| D. | 1-1-1995 |
| Answer» C. 1-1-1975 | |
| 539. |
Capital budgeting is -------------- |
| A. | Actually the process of making investment decision in capital expenditure |
| B. | A cost |
| C. | A sales |
| D. | A profit |
| Answer» B. A cost | |
| 540. |
Ratio Analysis can be used to study liquidity, turnover, profitability etc., of a firm. What does Debt-Equity Ratio help to study? |
| A. | Solvency |
| B. | Liquidity |
| C. | Profitability |
| D. | Turnover |
| Answer» B. Liquidity | |
| 541. |
Which of the following is true about NPV? |
| A. | It considers all the cash flows |
| B. | It gives more weightage to distant flows than to near term flows |
| C. | It considers time value of money |
| D. | Both a and c above |
| Answer» E. | |
| 542. |
Return on assets is a ratio which measures ---------------- |
| A. | Cost of capital |
| B. | Cost of production |
| C. | Profitability |
| D. | Cost of sales |
| Answer» D. Cost of sales | |
| 543. |
If risk free rate of return is 8%, Return on market portfolio is 12%, beta = 1.5, then theexpected rate of return according to CAPM is equal to |
| A. | 10% |
| B. | 14% |
| C. | 18% |
| D. | 24% |
| Answer» C. 18% | |
| 544. |
Floating capital means |
| A. | Liquid capital |
| B. | Permanent working capital |
| C. | Redundant working capital |
| D. | Gross working capital |
| Answer» B. Permanent working capital | |
| 545. |
The genesis of financial risk lies in ……………. |
| A. | capital budgeting decision |
| B. | capital structure decision |
| C. | dividend decision |
| D. | liquidity decision |
| Answer» C. dividend decision | |
| 546. |
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 |
| Answer» B. By sales of goods | |
| 547. |
ROI (Return on Investment) can be decomposed into the following ratios: |
| A. | Overall Turnover Ratio and Current Ratio |
| B. | Net Profit Ratio and Fixed Assets Turnover |
| C. | Working Capital Turnover Ratio and Net Profit Ratio |
| D. | Net Profit Ratio and Overall Turnover Ratio |
| Answer» E. | |
| 548. |
Cash & Bank Rs. 20,000; Debtors Rs. 2,00,000; Stock Rs. 2,80,000 and Current Liabilities:Creditors Rs. 1,00,000; Bills Payable Rs. 50,000. Then the working capital is: |
| A. | Rs. 4,00,000 |
| B. | Rs. 3,80,000 |
| C. | Rs. 3,50,000 |
| D. | Rs. 70,000 |
| Answer» D. Rs. 70,000 | |
| 549. |
--------------- 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 |
| Answer» E. | |
| 550. |
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 |
| Answer» C. Net proceeds | |