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.
| 401. |
Which of the following recognizes risk in capital budgeting analysis by adjusting estimated cash flows and employs risk free rate to discount the adjusted cash flows? |
| A. | Pay back period |
| B. | Certainty equivalent approach |
| C. | Cash |
| D. | Inventory |
| Answer» C. Cash | |
| 402. |
Capital budgeting process involves -------------------- |
| A. | Final approval |
| B. | Performance review |
| C. | Establishing priorities |
| D. | All of these |
| Answer» E. | |
| 403. |
Cost of irredeemable preferences share capital is equal to kp=preference dividend divided by |
| A. | Total liabilities |
| B. | Face value Preference issue |
| C. | Total capital |
| D. | Net proceeds |
| Answer» E. | |
| 404. |
Capital rationing is applied in a situation where |
| A. | It is difficult to bring in required amount of capital |
| B. | Financial institutions are doubtful or not sure of the validity of the project |
| C. | A large number of investment proposals compete for limited funds |
| D. | The dividend is converted into capital for completion of a new project |
| Answer» D. The dividend is converted into capital for completion of a new project | |
| 405. |
Which are the determinants of capital structure? |
| A. | Requirement of investors |
| B. | Control |
| C. | Tax |
| D. | Govt. policy |
| Answer» E. | |
| 406. |
Which is the current liability? |
| A. | Bills payable |
| B. | Bank overdraft |
| C. | Creditors and proposed dividend |
| D. | All of these |
| Answer» E. | |
| 407. |
The term “Operating Profit” means profit before __________________. |
| A. | interest |
| B. | tax |
| C. | interest and tax |
| D. | interest or tax |
| Answer» D. interest or tax | |
| 408. |
In India commercial paper is regulated by ------------------- |
| A. | RBI |
| B. | SEBI |
| C. | SBI |
| D. | Indian companies act 1956 |
| Answer» B. SEBI | |
| 409. |
A sound dividend policy contains the ------------- features |
| A. | Stability |
| B. | Distribution of dividend in cash |
| C. | Gradually rising dividend ratio |
| D. | All of these |
| Answer» E. | |
| 410. |
The proposal is accepted if the profitability index is more than ----- |
| A. | One by zero |
| B. | Three |
| C. | Five |
| D. | Ten |
| Answer» B. Three | |
| 411. |
Capital budgeting investment decision involves ----------------------- |
| A. | Long term function |
| B. | Long term asset |
| C. | Capital expenditure |
| D. | All of these |
| Answer» B. Long term asset | |
| 412. |
Investment in a project is Rs. 200 lakhs and Net Present Value is Rs. 50 lakhs. Then theamount of inflows is : |
| A. | Rs. 150 lakhs |
| B. | Rs. 200 lakhs |
| C. | Rs. 100 lakhs |
| D. | Rs. 250 lakhs |
| Answer» E. | |
| 413. |
Which of the following qualitative aspect of financial planning? |
| A. | Capitalization |
| B. | Capital structure |
| C. | Organization structure |
| D. | None of these |
| Answer» C. Organization structure | |
| 414. |
Baumol's Model of Cash Management attempts to: |
| A. | Minimise the holding cost |
| B. | Minimization of transaction cost |
| C. | Minimization of total cost |
| D. | Minimization of cash balance |
| Answer» D. Minimization of cash balance | |
| 415. |
The cash inflows on account of operations are presumed to have been reinvested at the cutoff rate in case of |
| A. | Pay back method |
| B. | NPV |
| C. | Accounting rate of return |
| D. | IRR |
| Answer» C. Accounting rate of return | |
| 416. |
The value of a firm on the basis of net operating income approach can be determined bydividing the earnings before interest and taxes by |
| A. | Cost of equity |
| B. | Cost of debt |
| C. | Overall cost of capital |
| D. | None of the above |
| Answer» D. None of the above | |
| 417. |
Which helps in deciding whether funds should be raised by internal equity or by borrowings> |
| A. | Capital structure |
| B. | Loan |
| C. | Cash |
| D. | Trading on equity |
| Answer» E. | |
| 418. |
A process through which loans and other receivables are underwritten and sold in aform of asset is known as: |
| A. | Factoring |
| B. | Forfeiting |
| C. | Securitisation |
| D. | Bill Discounting |
| Answer» D. Bill Discounting | |
| 419. |
Redundant working capital means |
| A. | Optimum working capital |
| B. | Shortage of working capital |
| C. | Idle working capital |
| D. | None of these |
| Answer» D. None of these | |
| 420. |
“Capital budgeting is long term planning for making and financing proposed capital outlays”. Who said? |
| A. | Charles T. Horngreen |
| B. | Philippatos |
| C. | J Betty |
| D. | Lynch |
| Answer» B. Philippatos | |
| 421. |
Which of the following is not an assumption of EOQ model? |
| A. | Cost of carrying is a fixed proportion of the average value of inventory |
| B. | The demand is even throughout the year |
| C. | The usage for one year can be anticipated |
| D. | Cost per order is proportional to the size of the order |
| Answer» E. | |
| 422. |
The term Float is used in |
| A. | Receivable Management |
| B. | Cash Management |
| C. | Marketable Management |
| D. | Inventory Management |
| Answer» C. Marketable Management | |
| 423. |
According NO1 theory, increase in EBIT will |
| A. | Increase the value of the firm |
| B. | Decrees the value of firm |
| C. | Not affect value |
| D. | Increase when debt is increased |
| Answer» B. Decrees the value of firm | |
| 424. |
Which of the following is not an assumption of Miller and Modigliani approach? |
| A. | There are no corporate or personal income tax |
| B. | Investors are assumed to be rational and behave accordingly |
| C. | There is no corporate tax though there are personal income tax |
| D. | Capital markets are perfect |
| Answer» D. Capital markets are perfect | |
| 425. |
The issue of debenture is done only by the -------------- |
| A. | New company |
| B. | New firm |
| C. | New partnership |
| D. | Established and reputed companies |
| Answer» E. | |
| 426. |
Which of the following is not incorporated in Capital Building? |
| A. | Tax-Effect |
| B. | Time Value of Money |
| C. | Required Rate of Return |
| D. | Rate of Cash Discount |
| Answer» E. | |
| 427. |
Capital Budgeting techniques which considers the time value of money is based on |
| A. | Cash Flows of the organization |
| B. | Accounting Profit of the organization |
| C. | Interest Rate on Borrowings |
| D. | Last Dividend Paid |
| Answer» B. Accounting Profit of the organization | |
| 428. |
Net Income Approach to capital structure decision was proposed by ……. |
| A. | J. E. Walter |
| B. | M.H. Miller and D.Orr |
| C. | E. Solomon |
| D. | D. Durand |
| Answer» E. | |
| 429. |
The persons interested in the analysis of financial statements can be grouped as_________. |
| A. | Owners or investors |
| B. | Creditors |
| C. | Financial executives |
| D. | All of the above |
| Answer» E. | |
| 430. |
When the cost of the project differ significantly which method of capital budgeting is used |
| A. | NPV |
| B. | IRR |
| C. | Pay back method |
| D. | Profitability index |
| Answer» E. | |
| 431. |
------- is a graphical representation of the relationship between a present decision and futureevents, future decisions and their consequences. |
| A. | Certainty equivalent method |
| B. | Sensitivity technique |
| C. | Standard deviation method |
| D. | Decision tree analysis |
| Answer» E. | |
| 432. |
Who have the last right on the company assets |
| A. | Bondholders |
| B. | Equity shareholders |
| C. | Debenture holders |
| D. | Preference shareholders |
| Answer» C. Debenture holders | |
| 433. |
The finance function is/are ---------------------- |
| A. | Determination of financial requirement of the firm |
| B. | Obtaining necessary finance from the appropriate sources at minimum possible cost |
| C. | The allocation of finance in different assets |
| D. | All of these |
| Answer» E. | |
| 434. |
When an option is allowed to be exercised only on maturity date is called -------------- |
| A. | Indian option |
| B. | European option |
| C. | American option |
| D. | Option |
| Answer» C. American option | |
| 435. |
The control and management of the company is in the hands of ---- |
| A. | Debenture holders |
| B. | Bondholders |
| C. | Equity shareholders |
| D. | Employees |
| Answer» D. Employees | |
| 436. |
Which of the following is not considered for cost benefit analysis of capital decisions |
| A. | Opportunity cost |
| B. | Incremental cost |
| C. | Sunk cost |
| D. | All of these |
| Answer» D. All of these | |
| 437. |
In Cash Flow Statement, Cash includes________________. |
| A. | cash on hand |
| B. | demand deposits with banks |
| C. | cash on hand and demand deposits with banks |
| D. | cash on hand or demand deposits with banks |
| Answer» D. cash on hand or demand deposits with banks | |
| 438. |
All listed companies are required to prepare |
| A. | Funds Flow statement |
| B. | Cash Flow Statement |
| C. | Statement of Affairs |
| D. | All of the above |
| Answer» C. Statement of Affairs | |
| 439. |
Agency cost arises due to |
| A. | Cost over run in implementing new projects |
| B. | Failure of budget cost |
| C. | Restrictions imposed by the supplier of debt capital |
| D. | Rise in the cost of production |
| Answer» D. Rise in the cost of production | |
| 440. |
Annual credit sales Rs. 4,00,000; Average collection period 45 days (assume 360 days in a year). What is Average debtors? |
| A. | Rs. 60,000 |
| B. | Rs. 74,000 |
| C. | Rs. 50,000 |
| D. | Rs. 4,00,000 |
| Answer» D. Rs. 4,00,000 | |
| 441. |
Financial planning is ---------- function of a finance manager |
| A. | Executive |
| B. | Incidental |
| C. | Auxiliary |
| D. | None of these |
| Answer» B. Incidental | |
| 442. |
The ownership capital of Joint Stock Companies is dividend in its -------------- |
| A. | Equity shares |
| B. | Debentures |
| C. | Bonds |
| D. | Debentures and preference shares |
| Answer» E. | |
| 443. |
The bond yield plus risk premium approach is a method of finding out the cost of |
| A. | Preference capital |
| B. | Equity capital |
| C. | Debenture capital |
| D. | Term loans |
| Answer» C. Debenture capital | |
| 444. |
Financial leverage is ---------------- |
| A. | EBIT/100* sales |
| B. | EBIT/EBT |
| C. | Sales/fixed asset |
| D. | Profit/sales*capital |
| Answer» C. Sales/fixed asset | |
| 445. |
The term mutually exclusive investments mean: |
| A. | Choose only the best investments |
| B. | Selection of one investment precludes the selection of an alternative |
| C. | The elite investment opportunities will get chosen |
| D. | There are no investment options available |
| Answer» C. The elite investment opportunities will get chosen | |
| 446. |
The net cash flows of the project and their present values are as followsYear 1 2 3 4 Net cash flow (Rs) 5100 5100 5100 7100 PVIF @12% 0.893 0.797 0.712 0.636 Present Value (Rs) 4554 4065 3631 4516 The initial investment in the project is Rs12500, What is the NPV of the project? |
| A. | 4066 |
| B. | 4166 |
| C. | 4266 |
| D. | 4566 |
| Answer» D. 4566 | |
| 447. |
Capital structure is the proportion of |
| A. | Long term funds and short term funds |
| B. | Debt and equity |
| C. | Current assets and fixed assets |
| D. | Equity and retained earnings |
| Answer» C. Current assets and fixed assets | |
| 448. |
The cost of capital is the rate of return of a company must earn on investment to maintain ---------------- |
| A. | The value of the company |
| B. | The value of the product |
| C. | Price |
| D. | Product quality |
| Answer» B. The value of the product | |
| 449. |
Which is the form of credit |
| A. | Overdraft |
| B. | Cash credit |
| C. | Discounting of trade bills |
| D. | Loans and advances |
| Answer» B. Cash credit | |
| 450. |
Under trading means |
| A. | Having low amount of working capital |
| B. | High turnover of working capital |
| C. | Sales are less compared to assets employed |
| D. | Assets are less compared to sales generated |
| Answer» D. Assets are less compared to sales generated | |