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.
| 551. |
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 |
| Answer» C. Equity | |
| 552. |
Projects which yields the highest earnings are ------------------ |
| A. | Selected |
| B. | Rejected |
| C. | Budgeted |
| D. | All of these |
| Answer» B. Rejected | |
| 553. |
To judge the comparative risk of projects having same cost and same NPV which method is used |
| A. | Certainty equivalent method |
| B. | Sensitivity technique |
| C. | Standard deviation method |
| D. | Coefficient of variation method |
| Answer» D. Coefficient of variation method | |
| 554. |
A firm has a capital of Rs. 10 lakhs, sales of Rs. 5 lakhs, gross profit of Rs. 2 lakhs andexpenses of Rs. 1 lakh. The Net Profit Ratio is: |
| A. | 50% |
| B. | 40% |
| C. | 20% |
| D. | 10% |
| Answer» D. 10% | |
| 555. |
A project costs Rs50,000 and will yield annual cash inflows of Rs20,000 for 5years.Calculate its payback period. |
| A. | 2 years |
| B. | 5 years |
| C. | 2.5 years |
| D. | 3 years |
| Answer» D. 3 years | |
| 556. |
Financial management includes ------------------- |
| A. | Measurement of performance |
| B. | Finance function |
| C. | Financial resources |
| D. | All of these |
| Answer» B. Finance function | |
| 557. |
Which of the following is not a source of long term finance? |
| A. | Equity capital |
| B. | Preference capital |
| C. | Commercial paper |
| D. | Debenture capital |
| Answer» D. Debenture capital | |
| 558. |
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 |
| Answer» E. | |
| 559. |
----------- have veto power to protect their preferential rights |
| A. | Preference shareholder |
| B. | Debenture holders |
| C. | Common preference share |
| D. | Right shares |
| Answer» D. Right shares | |
| 560. |
Earnings means ----------------------- |
| A. | Profit |
| B. | Loss |
| C. | Capital |
| D. | Reserve |
| Answer» B. Loss | |
| 561. |
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 |
| Answer» D. Is a cost | |
| 562. |
Capital budgeting is also known as -------------------- |
| A. | Investment decision making |
| B. | Capital expenditure decisions |
| C. | Planning capital expenditure |
| D. | All of these |
| Answer» E. | |
| 563. |
Refunding means |
| A. | Issue of new debenture |
| B. | Issue of capital |
| C. | Disposable cost |
| D. | Issue new debentures in place of old debentures |
| Answer» E. | |
| 564. |
Liquid Liability = Current Liability – Bank Overdraft – ___________ |
| A. | Cash Credit |
| B. | Trade Credit |
| C. | Both of the above |
| D. | None of the above |
| Answer» B. Trade Credit | |
| 565. |
Which is the step of capital budgeting process? |
| A. | Project generation |
| B. | Project evaluation |
| C. | Project selection |
| D. | Project execution |
| Answer» E. | |
| 566. |
To financial analysts, "net working capital" means the same thing as __________. |
| A. | total assets |
| B. | fixed assets |
| C. | current assets |
| D. | current assets minus current liabilities |
| Answer» E. | |
| 567. |
Which shares are not redeemed during lifetime of the company? |
| A. | Equity shares |
| B. | Preference shares |
| C. | Redeemable pre-shares |
| D. | All of these |
| Answer» B. Preference shares | |
| 568. |
Higher the risk involved in a firm, ------- is the cost of capital |
| A. | High |
| B. | Low |
| C. | Medium |
| D. | None of these |
| Answer» B. Low | |
| 569. |
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 |
| Answer» B. Convertible | |
| 570. |
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 |
| Answer» E. | |
| 571. |
The traditional approach of capital structure was propounded by ------------------- |
| A. | David Durand |
| B. | Solomon Ezra |
| C. | Modigilani-Mille |
| D. | None of these |
| Answer» C. Modigilani-Mille | |
| 572. |
Which of the following is a non discounting technique for appraising a project? |
| A. | Net present value |
| B. | Pay back period |
| C. | Internal rate of return |
| D. | Cost benefit ratio |
| Answer» C. Internal rate of return | |
| 573. |
If EBIT = Rs. 1,00,000, Fixed Assets = Rs. 2,00,000, Sales = Rs. 10,00,000 and VariableCost = Rs. 7,00,000. Then, the Operating Leverage will be |
| A. | 2 |
| B. | 3 |
| C. | 6 |
| D. | 4 |
| Answer» C. 6 | |
| 574. |
A project requires an investment of Rs500000and has scrape value of Rs.20000 after five years. It is expected to yield profits after depreciation and taxes during the five years amounting to Rs.40000,Rs60000, Rs.50000,Rs70000 and Rs20000.What is the average rate of return on the investment? |
| A. | 10% |
| B. | 11% |
| C. | 12% |
| D. | 13% |
| Answer» B. 11% | |
| 575. |
While evaluating capital investment proposals, the time value of money is considered in case of |
| A. | Pay back method |
| B. | NPV |
| C. | Accounting rate of return |
| D. | None of these |
| Answer» C. Accounting rate of return | |
| 576. |
Which of the following would be consistent with a conservative approach to financingworking capital? |
| A. | Financing short-term needs with short-term funds |
| B. | Financing short-term needs with long-term debt |
| C. | Financing seasonal needs with short-term funds |
| D. | Financing some long-term needs with short-term fund |
| Answer» C. Financing seasonal needs with short-term funds | |
| 577. |
Axis Ltd is issuing 15% debentures ( face value Rs60). The net amount realized perdebenture is Rs54 and they are redeemable at par after 6 years. At a corporate tax rate of 40%, what is the cost of debt? |
| A. | 16.54% |
| B. | 17.54% |
| C. | 10% |
| D. | 14.74% |
| Answer» D. 14.74% | |
| 578. |
The overall cost of capital, according to which theory, decreases up to a certain point,remains more or less unchanged for moderate increase in debt thereafter and increases a certain point |
| A. | Net income approach |
| B. | Net operating income approach |
| C. | Traditional theory |
| D. | MM approach |
| Answer» D. MM approach | |
| 579. |
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 |
| Answer» B. Debentures | |
| 580. |
The term _______means manipulation of accounts in a way so as to conceal vital facts and present the financial statements in a way to show a better position than what it actually is. |
| A. | window dressing |
| B. | creative accounting |
| C. | window accounting |
| D. | modified accounting |
| Answer» B. creative accounting | |
| 581. |
Capital budgeting is known as ----------------- |
| A. | Cost of sales |
| B. | Capital expenditure |
| C. | Cost of product |
| D. | Profit |
| Answer» C. Cost of product | |
| 582. |
According to MM approach, two identical firms in all respects except their capital structurecan not have different market values or cost of capital because of----- |
| A. | Leverage |
| B. | Trading on equity |
| C. | Arbitrage process |
| D. | None of these |
| Answer» D. None of these | |
| 583. |
According to ------ method it is assumed that each of the future cash flows isimmediately reinvested in another project at a certain rate of return until the termination of the project |
| A. | NPV |
| B. | IRR |
| C. | Pay back method |
| D. | Terminal value method |
| Answer» E. | |
| 584. |
A firm following an aggressive working capital strategy would: |
| A. | Hold substantial amount of fixed assets |
| B. | Minimize the amount of short term borrowing |
| C. | Finance fluctuating assets with long term financing |
| D. | Minimize the amount of fund in very liquid assets |
| Answer» E. | |
| 585. |
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 |
| Answer» B. In the country | |
| 586. |
Dividend yield method the cost of equality is ascertained as a percentage of |
| A. | Expected dividend |
| B. | IRR |
| C. | WACC |
| D. | Expected profits |
| Answer» B. IRR | |
| 587. |
Cash management does not call for |
| A. | Lengthening creditor’s period |
| B. | Lengthening debtor’s period |
| C. | Investing surplus funds |
| D. | Nullifying idle funds |
| Answer» C. Investing surplus funds | |
| 588. |
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 |
| Answer» C. All of these | |
| 589. |
Capital employed is ---------- |
| A. | Assets + cash |
| B. | Shareholders funds + Long funds |
| C. | Cash + bank |
| D. | Bank |
| Answer» C. Cash + bank | |
| 590. |
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 |
| Answer» B. Payment of dividend is not compulsory | |
| 591. |
Find the present value of Rs. 1,000 receivable 6 years hence if the rate of discount is10 percent. |
| A. | 564.5 |
| B. | 554.5 |
| C. | 574.5 |
| D. | 600 |
| Answer» B. 554.5 | |
| 592. |
Net salvage value of a fixed asset is |
| A. | Excess of salvage value over book value |
| B. | Excess of book value over salvage value |
| C. | Scrape value |
| D. | Salvage value of fixed assets less any income tax payable on the excess of salvage value over book value |
| Answer» E. | |
| 593. |
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 |
| Answer» D. Marketing planning | |
| 594. |
IPO refers to ____________; the first time a company comes to public to raise money. |
| A. | Immediate Public Offer |
| B. | Immediate Public Offering |
| C. | Initial Public Offer |
| D. | Initial Public Offering |
| Answer» E. | |
| 595. |
Optimum capital structure is obtained when |
| A. | Firm earns maximum profits |
| B. | Firm declares reasonable dividend |
| C. | Market value per equity share is the maximum |
| D. | The debt increases |
| Answer» D. The debt increases | |
| 596. |
The pay back period shows |
| A. | Recovery period of original investment outlay |
| B. | The time value of money |
| C. | The cash inflows |
| D. | None of the above |
| Answer» B. The time value of money | |
| 597. |
Which is the source of short term |
| A. | Trade credit |
| B. | Short term bank finance |
| C. | Public deposits |
| D. | All of these |
| Answer» E. | |
| 598. |
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 |
| Answer» B. Earnings based approach to valuation | |
| 599. |
According to traditional approach, the average cost of capital |
| A. | Remains constant up to a degree of leverage and rises sharply thereafter with every increase in leverage. |
| B. | Rises constantly with increase in leverage. |
| C. | Deceases up to a certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point. |
| D. | Decreases at an increasing rate with increase in leverage. |
| Answer» D. Decreases at an increasing rate with increase in leverage. | |
| 600. |
In a single projects situation, results of internal rate of return and net present valuelead to |
| A. | cash flow decision |
| B. | cost decision |
| C. | same decisions |
| D. | different decisions |
| Answer» D. different decisions | |