Financial Management MCQ
Multiple Choice Questions and Answers
This Financial Management MCQ is for B.COM,BBA,CA,CS,MBA,CMA and More
Financial Management MCQ also useful for NTA NET EXAM (Commerce 08)
| Financial Management MCQ |
| Table of content |
| A. Choose the appropriate answer |
| B. Fill in the blanks |
| C. True and False |
| All the Answers of financial management mcq are given |
Definition of Financial Management
Financial management refers to the strategic planning, organizing, directing and controlling of financial undertakings in an organization or an institution. It also involves applying management principles to an organization's financial assets, while also playing an important role in financial management.
Given below are the financial management MCQ question and answer so you can understand the topic without any difficulty.
A. Choose the appropriate answer from the given alternatives on Financial Management MCQ:
1. Financial decisions involve with:
a) Investment, financing and dividend decisions
b) Investment, financing and sales decisions
c) Financing, dividend and cash decisions
Ans. Investment, financing and dividend decisions
2. Factoring is a method of raising:
a) Long term finance
b) Medium term finance
c) Short term finance
Ans. Short term finance
3. Financing leverage =
a) Contribution/Earnings before interest and tax
b) Earnings before interest and tax/Earnings before tax
c) Earning after interest and tax/Earnings after tax
Ans. Earning after interest and tax/Earnings after tax
4. Debenture securities carry:
a) Voting rights and dividend
b) Interest and voting rights
c) Interest and dividend
d) Interest only
Ans. Interest only
5. The prime objective of an enterprise is:
a) Maximization of sales
b) Maximization of owner's equity
c) Maximization of profit
Ans. Maximization of owner's equity
6. Non-members can trade in securities at stock exchanges with the help of
a) Jobbers
b) Brokers
c) Authorized clerk
Ans. Brokers
7. Financial Leverage is intended to:
a) Increase return on capital employed
b) Increase net equity return
c) Decrease volatility in return
d) Increase return on capital employed and net equity
Ans. Increase return on capital employed and net equity
8. The extent to which an organization uses fixed cost on its cost structure is called:
a) Overall leverage
b) Financial leverage
c) Fixed Leverage
d) Operating leverage
Ans. Financial leverage
9. Use of fixed interest securities in the capital structure is called:
a) Operating leverage
b) Financial leverage
c) Overall leverage
d) None of the above
Ans. Financial leverage
10. What are the considerations in designing capital structure of a corporate?
a) Trading on Equity
b) Cost of capital
c) Profitability
d) All of the above
Ans. All of the above
11. Capital structure designing has nothing to do with:
a) Profitability
b) Solvency
c) Flexibility
d) Transferability
Ans. Transferability
12. Capital structure represents:
a) Ratio between different forms of capital
b) All liabilities
c) All assets
d) Assets and liabilities
Ans. Ratio between different forms of capital
13. Cost of capital does not mean:
a) Cut off rate decided by management
b) Rate of interest
c) Expectations of investors for dividend
d) Money paid to SEBI for permission to acquire capital
Ans. cut off rate decided by management
14. In dividend decision, w hich of the following is not very much relevant?
a)
b) Industry practice
c) Availability of disposable profit
d) Investor's expectations for dividend
Ans. Capital market conditions
15. M – M Theory in perfect market suggests that dividend payment –
a) Has a positive impact on the value of firm
b) Has no impact on the value of a firm
c) Has a negative impact on the value of firm
d) Has negligible impact on the firm
Ans. Has no impact on the value of a firm
16. According to Walter, firm should pay 100% dividend if –
a) r > k
b) r = k
c) r < k
d) None of these
Ans. r > k
17. The rate of discount at which NPV of a project becomes zero is also known as
a) Average Rate of Return
b) Internal Rate of Return
c) Alternative Rate of Return
d) None of the above
Ans. Internal Rate of Return
18. Who propounded t he dividend irrelevance theorem to share valuation –
a) Myron Gordon
b) Modigliani and Miller
c) James E. Walter
d) None of the above
Ans. Modigliani and Miller
19. Approximately, IRR is inverse of:
a) Payback period
b) NPV
c) Adjusted Accounting Rate of Return
d) None of the above
Ans. Adjusted Accounting Rate of Return
20. If NPV is positive, the IRR will be:
a) Positive
b) K = K
c) K < R
d) None of these
Ans. K < R
21. Consider the following steps in the process of Capital Budgeting:
1) Identification of investment proposals.
2) Fixing priorities.
3) Evaluation of various proposals.
4) Selection and preparation of Capital Budgets.
5) Implementation.
6) Performance Review.
Which of the sequence of these steps is correct?
A. 1, 2, 3, 4, 5, 6
B. 2, 1, 3, 4, 5, 6
C. 1, 3, 2, 4, 5, 6
D. 1, 4, 3, 2, 5, 6
Ans. 1, 2, 3, 4, 5, 6
For more financial management MCQ you can here:-
Leverage Multiple Choice Questions MCQ
Capital Budgeting MCQ
Working Capital Management MCQ
Capital Structure MCQ
Cost of Capital MCQ
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