Financial Management MCQ PDF

1\. Financial management is mainly concern with the: a\. All aspects of acquiring and utilizing financial resources for firm's activities b\. Arrangement of funds c\. Efficient Management of every business d\. Profit maximization 2\. The primary goal of the financial management is\_\_\_\_\_\_....

1\. Financial management is mainly concern with the: a\. All aspects of acquiring and utilizing financial resources for firm's activities b\. Arrangement of funds c\. Efficient Management of every business d\. Profit maximization 2\. The primary goal of the financial management is\_\_\_\_\_\_. a\. to maximize the return b\. to minimize the risk c\. to maximize the wealth of owners d\. to maximize profit 3\. In his traditional role the finance manager is responsible for: a\. Proper utilization of funds b\. Arrangement of financial resources c\. Acquiring capital assets of the organization d\. Efficient management of capital 4\. Market value of the shares are decided by: a\. The respective companies b\. The investment market c\. The government d\. Shareholders 5\. The expansion of CAPM is: a\. Capital Amount Pricing Model b\. Capital Asset Pricing Model c\. Capital Asset Printing Model d\. Capital Amount Printing Model 6\. If you deposit money today in Himalayan Bank ltd that pays 5% annual Interest, how long will it take to double your money? a\. 11 years b\. 11.01 years c\. 11.5 years d\. 11.75 years 7\. Who issues the debentures? a\. Sole trading b\. Partnership c\. Government and corporation d\. Non-government organization 8\. If the current market price of security is less than its intrinsic value is called: a\. Undervalued b\. Overvalued c\. True value d\. Can't say 9\. Cost of equity can be calculated from: a\. Dividend discount model b\. Price earning model c\. Corporate valuation model d\. All of the above 10\. In capital budgeting, positive net present value results in\_\_\_\_\_\_. a\. negative economic value added b\. positive economic value added c\. zero economic value added d\. percent economic value added 11\. First step in calculation of net present value is to find out\_\_\_\_\_\_. a\. present value of equity b\. future value of equity c\. present value cash flow d\. future value of cash flow 12\. The only feasible purpose of financial management is\_\_\_\_\_\_. a\. wealth maximization b\. sales maximization c\. profit maximization d\. assets maximization 13\. Financial management process deals with\_\_\_\_\_\_. a\. investments b\. financing decisions c\. Strategic decisions d\. operations 14\. Agency cost consists of\_\_\_\_\_\_. a\. binding b\. monitoring c\. opportunity and structure cost d\. all of the above 15\. Which of the following capital budgeting techniques takes into account the Incremental accounting income rather than cash flows? a\. Net present value b\. Internal rate of return c\. Accounting/Simple rate of return d\. Cash payback period 16\. Which of the following techniques does not take into account the time value of Money? a\. Internal rate of return method b\. Simple cash payback method c\. Net present value method d\. Discounted cash payback method 17\. The current worth of a sum of money to be received at a future date is called a\. \_\_\_\_\_\_. b\. real value c\. future value d\. present value e\. salvage value 18\. If present value of total cash outflow is \$15,000 and present value of total cash a\. Inflow is \$14,000, what is the net present value of the project? b\. \$1,000 c\. -\$1,000 d\. 0 e\. 2,000 19\. In finance, \"working capital\" means the same thing as: a\. Total assets b\. Fixed assets c\. Current assets d\. Current assets minus current liabilities 20\. A loan of Rest. 5040 is taken & is to be repaid in 2 equal installments. If the rate a\. Of interest is 10% pea, calculate the amount of installment. b\. 2704 c\. 2904 d\. 2604 e\. 2804 21\. Which one is not tax deductible outflow of an entity? a\. Advertisement expense b\. Dividend c\. Interest d\. Depreciation 22\. If we deposit Rest. 1000 today at an annual interest rate of 10 percent, it is a\. Compounded to \_\_\_\_\_\_at end of 2 years. b\. 1000 c\. 2000 d\. 1210 e\. 1410 23\. in the constant growth dividend valuation model, the required rate of return a\. On a common stock is equal to the sum of dividend yield plus: b\. Yield to Maturity c\. Cost of Capital d\. Present Value Yield e\. Capital Gain Yield 24\. Which of the following sources of fund, has generally the highest servicing a\. Cost? b\. Preference Share c\. Equity Share d\. Loan e\. Bond 25\. Annual Depreciation under Straight Line Method is equals to: a\. (Cost - B.S.V.)/Life b\. (Cost - C.S.V.)/Life c\. (B.S.V. -- Cost)/ Life d\. None of the above 26\. By deducting total depreciation from total cost, we get: a\. Cash Salvage Value b\. Cash Flow after Tax c\. Book Salvage Value d\. All of the above 27\. If annual sales of a company is one million and its operating expenses a\. Excluding depreciation is 0.8 million, then annual saving of the company is: b\. 1.2 million c\. 0.8 million d\. 0.2 million e\. 1.8 million 28\. Lease alternative covers \_\_\_\_\_\_ percent of financing. a\. 70 b\. 80 c\. 90 d\. 100 29\. Lease alternative shield tax from: a\. Interest b\. Depreciation c\. Rent d\. Interest & Depreciation 30\. The term finance refers to\_\_\_\_\_\_. a\. identify the source of funds b\. identification of potential investment opportunities c\. select the best alternative for investment d\. all of them 31\. Two basic component of time value of money are\_\_\_\_\_\_. a\. cash flow & interest rate b\. cash flow & time duration c\. interest rate & time duration d\. interest rate & Discount Rate 32\. When a series of equal payment occurs for identifies period of time is called: a\. annuity b\. perpetuity c\. amortization d\. annuity due 33\. Which of the following is NOT an example of intangible assets? i\. Franchise rights ii\. Goodwill iii\. Patents iv\. Land 34\. Annual percentage rate do not recognize the effect of\_\_\_\_\_\_. a\. inflation b\. compounded interest c\. present value d\. future value 35\. Calculate the amount of cash if: Total assets=\$10,000, Total a\. Liabilities=\$10,000 and Total Capital=\$5000. b\. \$6000 c\. \$10,000 d\. \$5000 e\. \$1000 36\. \_\_\_\_\_\_\_\_\_\_\_ is series of equal payment occurred at equal interval of time a\. Throughout an infinite period. i\. Annuity ii\. Perpetuity iii\. Amortization iv\. Revenue 37\. What is the present value of Rest 10,500 due in year 4, discounted at 5%? i\. Rest 7,576 ii\. Rest 7,567 iii\. Rest 7,767 iv\. Rest 7,678 38\. The first payment being made today is known as \_\_\_\_\_\_. a\. perpetuity b\. annuity c\. annuity due d\. deferred annuity 39\. A car loan requiring quarterly payment carries an APR of 8%. What is the a\. Effective annual Rate (EAR) of the interest loan? i\. 24 ii\. 24 iii\. 24 iv\. 24 40\. The bond having no fixed maturity period is called\_\_\_\_\_\_\_. a\. zero coupon bond b\. redeemable bond c\. perpetual bond d\. callable bond 41\. Bond selling above the par value is called \_\_\_\_\_\_. a\. premium bond b\. par bond c\. discount bond d\. none of them 42\. If the required rate of return is greater than the interest rate the value of a\. Bond will be: b\. equal with Par value c\. more than par value d\. less than par value e\. equal with par value in near future 43\. \_\_\_\_\_\_\_are financial assets which provides fixed coupon interest rate at the a\. End of each period and principal at maturity. i\. Preferred stock ii\. Common stock iii\. Bond iv\. All of them 44\. In case of \_\_\_\_\_\_\_ common stock, value of common stock is computed by a\. Dividing dividend per share by investors required rate of return. b\. normal growth c\. zero growth d\. constant growth e\. super normal growth 45\. The primary emphasis of the financial manager is in \_\_\_\_\_\_\_\_. a\. efficient utilization of resources b\. deciding sources of financing c\. making dividend decision d\. all of them 46\. The primary goal of financial manager is: i\. Minimizing risk ii\. Maximizing wealth. iii\. Maximizing profit. iv\. Minimizing return. 47\. \_\_\_\_\_\_ refers to the minimum stock level to be maintained to work against a\. The uncertainty. i\. Safety stock ii\. Shortage cost iii\. Re order point iv\. Economic order quantity. 48\. ABC limited recently extended its credit period from net 30 days to net 40 a\. Days. This represents a change in the firm\'s\_\_\_\_\_\_. b\. credit standard c\. credit terms d\. collection policy e\. credit granting policy. 49\. \_\_\_\_\_\_is the ratio of contribution margin to taxable income. i\. Degree of operating leverage (DOL) ii\. Degree of financial leverage (DFL) iii\. Degree of combined leverage (DCL) iv\. None of them. 50\. Financial leverage arises due to the: a\. variable operating cost b\. fixed operating cost c\. fixed charge capital d\. all of them 51\. If YTM changes, the effect will be greatest on: a\. long term bond b\. short term bond c\. government bond d\. all of them 52\. The\_\_\_\_\_\_\_ represents the debt holders in dealing with the issuing company. a\. stakeholder b\. broker c\. investment Banker d\. trustee 53\. Stocks holders' equity includes all of the following EXCEPT: i\. Common stock at par ii\. Treasury stock iii\. Contributed capital in excess of par iv\. Retained earnings 54\. The market value of common stock is primarily based on: i\. Book value ii\. Total assets iii\. Retained earning iv\. The firms future earning 55\. Initial investment outlay of a project includes: i\. Price of the machine ii\. Erection cost iii\. Investment in working capital iv\. All of them 56\. NPV method considers: i\. Time value of money ii\. Risk of the Project iii\. Cash flow stream of the Project iv\. All of them 57\. Payback period is time to require to: a\. repay the long term loan b\. recover the cost of the project c\. repay the short term loan d\. repay both short term & long term loan. 58\. Capital structure is the proportionate mix of: a\. short term & long term financing b\. different component of Assets. c\. permanent or long term financing d\. long term assets 59\. According to the Pecking order theory, the most preferred source of financing a\. Is: b\. debt c\. retained earning d\. preferred stock e\. external financing 60\. Maximization of current value of outstanding shares refers to: a\. Profit maximization objective b\. Wealth maximization objective c\. Revenue maximization objective d\. All of the above 61\. An excess of capital in relation to its activity level and requirements: a\. Over capitalization b\. Optimum capitalization c\. Under capitalization d\. None of the above 62\. Cost of equity which is raised by reinvesting earnings internally must be a\. Lower than the \_\_\_\_\_\_. b\. cost of initial offering c\. cost of new common equity d\. cost of preferred equity e\. cost of floatation 63\. If coupon rate is equal to going rate of interest then bond will be sold \_\_\_\_\_\_. a\. at par value b\. below its par value c\. more than its par value d\. seasoned par value 64\. The primary goal of a finance manager is: a\. Minimizing risk b\. Maximizing profit c\. Maximizing wealth of shareholders d\. Stabilizing return 65\. Which of the following is NOT the managerial finance function? a\. Investment decision b\. Financing decision c\. Maintaining financial records d\. Dividend decision 66\. Working Capital is NOT defined as: a\. Excess of current assets over current liabilities b\. Investment of a company's funds in assets which are expected to be realized Within a relatively short period of time c\. C. It is an investment in an asset with a long life d\. Represents funds which are continually in use and are turned over many times in a year 67\. Which of the following is one of the Time Adjusted Method in Capital a\. Budgeting Techniques? b\. ARR c\. IRR d\. Pay Back Period e\. All of the above 68\. Saving account are\_\_\_\_\_\_ but are not \_\_\_\_\_\_. a\. negotiable; liquid b\. marketable; liquid c\. liquid; personal d\. liquid; marketable 69\. The coupon rate is another name for: a\. Market interest rate b\. Current yield c\. Stated interest rate d\. Yield to maturity 70\. The assumption of constant growth is: a\. g\k c\. g = k d\. None of the above 71\. Current price of a stock is Rest. 36, its last dividend was Rest. 40 and its a\. Required rate of return is 12%. What is expected stock price 5 years from? b\. Now? c\. Rest. 44 d\. Rest. 45 e\. Rest. 491 f\. Rest. 494 72\. The only feasible purpose of financial management is: a\. Wealth Maximization b\. Sales Maximization c\. Profit Maximization d\. Assets maximization 73\. Financial management process deals with: a\. Investments b\. Financing decisions c\. Both A and B d\. None of the above 74\. Project is accepted when: a\. Project payback period is less than life of the project b\. NPV is positive c\. IRR is greater than required rate of return d\. All of the above 75\. Presently a firm is selling at the term 3/15, net 4 Its sales will increase if it a\. Sells at the term: b\. 3/15, net 30 c\. 3/10, net 45 d\. 3/10, net 30 e\. 3/15, net 60 76\. If the stock has greater risk related to it, then the required return is: a\. Higher b\. Lower c\. Zero d\. All of the above 77\. If the payout ratio is 0.45 then the retention ratio is: a\. 0.55 b\. 50 c\. 05 d\. 0.45 78\. To compute the required rate of return for equity in a company using the a\. CAPM, it is necessary to know all of the following EXCEPT: b\. The risk-free rate c\. The beta for the firm d\. The earnings for the next time period e\. The market return expected for the time period 79\. A firm has a DOL of 5 at Q units. What does this tell us about the firm? a\. If sales rise by 5% at the firm, then EBIT will rise by 1%. b\. If EBIT rises by 5% at the firm, then EPS will rise by 1%. c\. If EBIT rises by 1% at the firm, then EPS will rise by 5%. d\. If sales rise by 1% at the firm, then EBIT will rise by 5%. 80\. The value of a bond and debenture is \_\_\_\_\_\_. a\. present value of interest payments it gets b\. present value of contractual payments it gets till maturity c\. present value of redemption amount d\. none of the above 81\. Time value of money supports the comparison of cash flows recorded at a\. Different time period by \_\_\_\_\_\_. b\. discounting all cash flows to a common point of time c\. compounding all cash flows to a common point of time d\. using either a or b e\. none of the above 82\. Which of the following sources of fund has generally the highest servicing a\. Cost? b\. Preference Share c\. Equity Share d\. Loan e\. Bond 83\. Cost of common stock is 14% and bond risk premium is 9% then bond yield a\. Will be: b\. 0.0156 c\. 0.05 d\. 0.23 e\. 0.6428 84\. By deducting total depreciation from total cost, we get: a\. Cash Salvage Value b\. Cash Flow after Tax c\. Book Salvage Value d\. All of the above 85\. If annual sales of a company is one million and its operating expenses a\. Excluding depreciation is 0.8 million, then annual saving of the company is: b\. 1.2 million c\. 0.8 million d\. 0.2 million e\. None of the above 86\. \_\_\_\_\_\_ varies inversely with profitability. a\. Liquidity b\. Risk c\. Blue d\. False 87\. Net working capital refers to: a\. Total assets minus fixed assets b\. Current assets minus current liabilities c\. Current assets minus inventories d\. Current assets 88\. Financial Management is the \_\_\_\_\_\_\_\_\_. a\. planning, directing, monitoring & controlling the monetary resources of the b\. Organization c\. B. recording of day to day transaction d\. C. management of credit transaction e\. D. none of the above 89\. Corporate finance is concerned with \_\_\_\_\_\_ a\. public finance b\. household finance c\. finance of partnership firm d\. managerial finance 90\. An investment decision is related to \_\_\_\_\_\_. a\. inventory b\. fixed assets c\. account receivables d\. notes payable 91\. Financial planning process does not consider\_\_\_\_\_\_. i\. Development of financial goals ii\. Identification of alternative course of action iii\. Evaluation of alternatives iv\. None of them 92\. Over capitalization is related to\_\_\_\_\_\_\_. i\. An excess of capital in relation to its requirements ii\. An excess of true assets in relation to its requirements iii\. An excess of fixed assets in relation to its requirements iv\. An excess of current assets in relation to its requirements 93\. A stream of equal payments for forever refers to\_\_\_\_\_\_. a\. present value b\. future value c\. perpetuity d\. annuity due 94\. Which ratio of current assets to current liabilities is the optimal level of a\. Working capital? i\. 1:2 ii\. 3:1 iii\. 2:1 iv\. 1:3 95\. Which of the following is not the motive of holding adequate cash balance? i\. Precautionary Motive ii\. Transaction Motive iii\. Speculative Motive iv\. Risk bearing Motive 96\. Which one of the following is not feature of capital budgeting? i\. Huge investment ii\. Long time period iii\. Risk and Uncertainty iv\. Predictability 97\. Time value of money is not considered by i\. Payback period ii\. Discounted payback period iii\. Net present Value iv\. Internal Rate of Return 98\. From which of the following in weighted average cost of capital a company can affect its capital cost? a\. policy of capital structure b\. policy of dividends c\. policy of investment d\. all of above 99\. A firm\'s degree of operating leverage (DOL) depends primarily upon a\. its\_\_\_\_\_\_. b\. sales variability c\. level of fixed operating costs d\. closeness to its operating break-even point e\. debt-to-equity ratio 100\. Which is not objective of inventory management? i\. Transaction motive ii\. Speculative motive iii\. Precautionary motive iv\. Holding motive