Finance Management MCQ

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Question 61 : A capital investment is one that

  1. has the prospect of long-term benefits
  2. has the prospect of short-term benefits
  3. is only undertaken by large corporations
  4. applies only to investment in fixed assets
  

Question 62 : Assume that Project X costs ₹ 2,500 now and is expected to generate year-end cash inflows of ₹ 900, ₹ 800, ₹ 700, ₹ 600 and ₹ 500 in years 1 through 5. The opportunity cost of the capital may be assumed to be 10 per cent. Calculate the NPV?

  1. 250
  2. 225
  3. 325
  4. 275
  

Question 63 : What is the major cash outflow for a firm?

  1. Increase in deferred tax liability
  2. Payment of taxes
  3. Increase in reserves
  4. Increase in term loans
  

Question 64 : Which one of the following asset would not be normally depreciated?

  1. Land
  2. Machinery
  3. Computer
  4. Patent
  

Question 65 : Which among the following is a current asset?

  1. Patents
  2. Plants & Equipment
  3. Goodwill
  4. Cash Balance
  

Question 66 : PBIT stands for ___________

  1. Profit before Income taxes
  2. Profit before interest and taxes
  3. Payment before Income taxes
  4. Paid Interest because of Income tax.
  

Question 67 : Deposit Rs.1,000 annually in a bank for 5 years with compound interest rate of 10 percent pa. What will be the value of this series of deposits (an annuity) at the end of 5 years?

  1. 6000
  2. 6105
  3. 6205
  4. 6250
  

Question 68 : In Sensitivity Analysis, the emphasis is on assessment of sensitivity of

  1. Net Economic Life
  2. Net Present Value
  3. Both (a) and (b)
  4. None of (a) and (b)
  

Question 69 : Ali purchased a stock for Rs. 6,000. At the end of the year the stock is worth Rs. 7,500. Ali was paid dividends of Rs. 260. Calculate the total return received by Ali.

  1. 0.043
  2. 0.293
  3. 0.25
  4. 0.1
  

Question 70 : What is the riskier source of finance?

  1. Equity capital
  2. Debt capital
  3. Term loan
  4. Tangible asset redemption
  

Question 71 : _________________are a long-term promissory notes with maturities ranging from 5 to 30 years.

  1. Notes
  2. Shares
  3. Bonds
  4. Commercial Papers
  

Question 72 : According to the residual theory of dividends, if the firm’s equity need exceeds the amount of retained earnings, the firm would

  1. borrow to pay the cash dividend
  2. sell additional stock to pay the cash dividend
  3. pay no cash dividends.
  4. not need to consider its dividend policy
  

Question 73 : Which of the following would not be financed from working capital?

  1. Cash float
  2. Accounts receivable
  3. Credit sales
  4. A new personal computer for the office
  

Question 74 : ____________ is the length of time between the firm’s actual cash expenditure and its own cash receipt.

  1. Net operating cycle
  2. Cash conversion cycle
  3. Working capital cycle
  4. Gross operating cycle
  

Question 75 : While taking into consideration the trade-off between profitability and risk, a firm with low net working capital will have:

  1. Low Risk and Low Profitability
  2. Low Risk and High Profitability
  3. High Risk and Low Profitability
  4. High Risk and High Profitability
  

Question 76 : Beta Represents the:

  1. Unsystematic risk
  2. Systemic Risk
  3. Systemic as well as unsystemic risks
  4. Foreign Exchange Risk
  

Question 77 : Given an investment of Rs. 10,000 for a period of one year, it is better to invest in a scheme that pays:

  1. 12% interest compounded daily
  2. 12% interest compounded monthly
  3. 12% interest compounded annually
  4. 12% interest compounded quarterly
  

Question 78 : Equity market is the financial market for

  1. Residual claim
  2. Fixed claim
  3. Variable Claim
  4. 1 and 2
  

Question 79 : Which of the following statements about financial markets and securities are false?

  1. Few common stocks are traded over-the-counter, although the over-the-counter markets have grown in recent years
  2. A corporation acquires new funds only when its securities are sold in the primary market
  3. Capital market securities are usually more widely traded than longer term securities and so tend to be more liquid
  4. Financial Markets and securities are not standardised and not regulated
  

Question 80 : A deposit of Rs 2,000 per year at the beginning of the year in a bank for 5 years with interest rate of 10 percent pa compounded annually. What will be the value of this series of deposits at the end of 5 years in Rs?

  1. 13431
  2. 13000
  3. 14000
  4. 12341
  

Question 81 : Funds required for purchasing current assets is an example of

  1. Fixed capital requirement
  2. Ploughing back of profits
  3. Working capital requirement
  4. Lease financing
  

Question 82 : A series of fixed receipts or payments starting at the beginning of each period for a specified number of period is called

  1. Hire purchase
  2. Perpetuity
  3. Lease
  4. Annuity due
  

Question 83 : Which of the following is not true about Line of credit

  1. The firm can borrow up to that amount of money without asking, since it is pre-approved
  2. Usually informal agreement and may change over time
  3. More often, it is in the form of a lost discount that would be given to firms who pay earlier
  4. Usually covers peak demand times, growth spurts
  

Question 84 : ____________________ and __________________________ are the two versions of goals of the financial management of the firm

  1. Profit maximisation, Wealth maximization
  2. Production maximisation, Sales maximisation
  3. Sales maximisation, Profit maximization
  4. Value maximisation, Wealth maximisation
  

Question 85 : Exchange Traded Funds are part of

  1. Private Placement
  2. Secondary Market
  3. Domestic Market
  4. Derivatives Market
  

Question 86 : Which of the following would be consistent with a more aggressive approach to inancing working capital?

  1. Financing short-term needs with short-term funds
  2. Financing permanent inventory buildup with long-term debt
  3. Financing seasonal needs with short-term funds
  4. Financing some long-term needs with short-term funds
  

Question 87 : When current assets are less than current liabilities, then the net working capital is:

  1. Positive
  2. Negative
  3. Zero
  4. Can’t be calculated
  

Question 88 : ___________________ of a firm refers to the composition of its long-term funds and its capital structure.

  1. Capitalisation
  2. Over-capitalisation
  3. Under-capitalisation
  4. Market capitalization
  

Question 89 : What is the period of Financial statement in india?

  1. 1st January to 31st December in the same year
  2. 1st July in the first year to 30th June in the next year
  3. 1st April in the first year to 31st March in the next year
  4. Any period during the same year
  

Question 90 : Which of the following is true for MM Model?

  1. Share price goes up if dividend is paid
  2. Share price goes down if dividend is paid
  3. Market value is unaffected by Dividend policy
  4. Share price goes up if dividend is not paid
  
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