MCQOPTIONS
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MCQOPTIONS
This section includes 29 Mcqs, each offering curated multiple-choice questions to sharpen your Bachelor of Business Administration in Finance (BBA Finance) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
_________ function includes a firm s attempts to balance cash inflows and outflows. |
| A. | finance |
| B. | liquidity |
| C. | investment |
| D. | dividend |
| Answer» C. investment | |
| 2. |
Which of the following is a technique that helps the exporter to sell the receivables to any bank or financial institution without recourse? |
| A. | forfeiting |
| B. | leading & lagging |
| C. | derivatives |
| D. | netting |
| Answer» B. leading & lagging | |
| 3. |
The art of managing, within the acceptable level of risk, the consolidated funds optimally and profitably is called _________. |
| A. | integrated treasury |
| B. | treasury management |
| C. | merchant banking |
| D. | none of the above |
| Answer» C. merchant banking | |
| 4. |
If the average balance of debtors has increased, which of the following might not show a change in general? |
| A. | total sales, |
| B. | average payables |
| C. | current ratio |
| D. | bad debt loss. |
| Answer» C. current ratio | |
| 5. |
If the closing balance of receivables is less than the opening balance for a month then which one is true out of |
| A. | collections>current purchases, |
| B. | collections>current sales, |
| C. | collections<current purchases, |
| D. | collections < current sales. |
| Answer» C. collections<current purchases, | |
| 6. |
80% of sales of 10,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm? |
| A. | 45 days and 1,00,000, |
| B. | 360 days and 1,00,000, |
| C. | 45 days and 8,00,000 |
| D. | 360 days and 1,25,000. |
| Answer» B. 360 days and 1,00,000, | |
| 7. |
The basic objective of Tandon Committee recommendations is that the dependence of industry on bank should gradually |
| A. | increase, |
| B. | remain stable |
| C. | decrease |
| D. | none of the above |
| Answer» D. none of the above | |
| 8. |
A lease which is generally not cancellable and covers full economic life of the asset is known as |
| A. | sale and leaseback, |
| B. | operating lease |
| C. | finance lease, |
| D. | economic lease |
| Answer» D. economic lease | |
| 9. |
If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratios would be |
| A. | unequal, |
| B. | zero, |
| C. | equal, |
| D. | negative |
| Answer» D. negative | |
| 10. |
Shares of face value of 10 are 80% paid up. The company declares a dividend of 50%. Amount of dividend per share is |
| A. | . 5, |
| B. | .4 |
| C. | . 80, |
| D. | . 50 |
| Answer» C. . 80, | |
| 11. |
Difference between between the bank balance as per Cash Book and Pass Book may be due to: |
| A. | overdraft, |
| B. | float, |
| C. | factoring, |
| D. | none of the above. |
| Answer» C. factoring, | |
| 12. |
If cash discount is offered to customers, then which of the following would increase? |
| A. | sales |
| B. | debtors, |
| C. | debt collection period, |
| D. | all of the above |
| Answer» B. debtors, | |
| 13. |
If no information is available, the General Rule for valuation of stock for balance sheet is |
| A. | replacement cost, |
| B. | realizable value, |
| C. | historical cost, |
| D. | standard cost. |
| Answer» D. standard cost. | |
| 14. |
Which of the following is true for a company which uses continuous review inventory system |
| A. | order interval is fixed, |
| B. | order interval varies, |
| C. | order quantity is fixed, |
| D. | both (a) and (c). |
| Answer» C. order quantity is fixed, | |
| 15. |
If A = Annual Requirement, O = Order Cost and C = Carrying Cost per unit per annum, then EOQ |
| A. | (2ao/c) 2 , |
| B. | 2ao/c |
| C. | 2a oc, |
| D. | 2aoc. |
| Answer» C. 2a oc, | |
| 16. |
-Under a conservative financing policy a firm would use long-term financing to finance some of the temporary current assets. What should the firm do when a "dip" in temporary current assets causes total assets to fall below the total longterm financing? |
| A. | use the excess funds to pay down long-term debt. |
| B. | invest the excess long-term financing in marketable securities. |
| C. | use the excess funds to repurchase common stock. |
| D. | purchase additional plant and equipment. |
| Answer» C. use the excess funds to repurchase common stock. | |
| 17. |
Which of the following stresses on investor's preference reorient dividend than higher future capital gains ? |
| A. | walter's model, |
| B. | residuals theory, |
| C. | gordon's model, |
| D. | mm model. |
| Answer» D. mm model. | |
| 18. |
If a company moves from a "conservative" working capital policy to an "aggressive" policy, it should expect __________. |
| A. | liquidity to decrease, whereas expected profitability would increase |
| B. | expected profitability to increase, whereas risk would decrease |
| C. | liquidity would increase, whereas risk would also increase |
| D. | risk and profitability to decrease |
| Answer» B. expected profitability to increase, whereas risk would decrease | |
| 19. |
How can a firm provide a margin of safety if it cannot borrow on short notice to meet its needs? |
| A. | maintain a low level of current assets (especially cash and marketable securities). |
| B. | shorten the maturity schedule of financing. |
| C. | increasing the level of fixed assets (especially plant and equipment). |
| D. | lengthening the maturity schedule of financing. |
| Answer» E. | |
| 20. |
Which of the following would be consistent with an aggressive approach to financing working capital? |
| A. | financing short-term needs with short-term funds. |
| B. | financing permanent inventory buildup with long-term debt. |
| C. | financing seasonal needs with short-term funds. |
| D. | financing some long-term needs with short-term funds. |
| Answer» E. | |
| 21. |
There is deterioration in the management of working capital of XYZ Ltd. What does it refer to? |
| A. | that the capital employed has reduced, |
| B. | that the profitability has gone up, |
| C. | that debtors collection period has increased, |
| D. | that sales has decreased. |
| Answer» D. that sales has decreased. | |
| 22. |
Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate form for financing a new capital investment in plant and equipment? |
| A. | trade credit. |
| B. | 6-month bank notes. |
| C. | accounts payable. |
| D. | common stock equity. |
| Answer» E. | |
| 23. |
Which of the following statements is correct for an aggressive financing policy for a firm relative to a former conservative policy? |
| A. | the firm will use long-term financing to finance all fixed and current assets. |
| B. | the firm will see an increase in its expected profits. |
| C. | the firm will see a decline in its risk profile. |
| D. | the firm will need to issue additional common stock this period to finance the assets. |
| Answer» C. the firm will see a decline in its risk profile. | |
| 24. |
Your firm has a philosophy that is analogous to the hedging (maturity matching) approach. Which of the following is the most appropriate non- spontaneous form for financing the excess seasonal current asset needs? |
| A. | trade credit. |
| B. | 6-month bank notes. |
| C. | accounts payable. |
| D. | common stock equity. |
| Answer» C. accounts payable. | |
| 25. |
In response to market expectations, the credit pence r j been increased from 45 days to 60 days. This would result in |
| A. | decrease in sales, |
| B. | decrease in debtors, |
| C. | increase in bad debts, |
| D. | increase in average collection period. |
| Answer» E. | |
| 26. |
Under which type of bank borrowing can a borrower obtain credit from a bank against its bills? |
| A. | letter of credit |
| B. | cash |
| C. | purchase or discounting of bills |
| D. | working capital loan |
| Answer» D. working capital loan | |
| 27. |
Which of the following would be consistent with a conservative approach to financing working 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 funds. |
| Answer» C. financing seasonal needs with short-term funds. | |
| 28. |
The amount of current assets that varies with seasonal requirements is referred to as __________ working capital. |
| A. | permanent |
| B. | net |
| C. | temporary |
| D. | gross |
| Answer» D. gross | |
| 29. |
Having defined working capital as current assets, it can be further classified according to __________. |
| A. | financing method and time |
| B. | rate of return and financing method |
| C. | time and rate of return |
| D. | components and time |
| Answer» E. | |