Financial Management MCQs
Financial Management MCQs
Our team has conducted extensive research to compile a set of Financial Management MCQs. We encourage you to test your Financial Management knowledge by answering these 70+ multiple-choice questions provided below.
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1: Financial Management is mainly concerned with
A. Arrangement of funds
B. All aspects of acquiring and utilizing financial resources for firm’s activities
C. Efficient management of every business
D. None of these.
2: In his traditional role the finance manager is responsible for
A. Arrangement and efficient utilization of funds
B. Arrangement and efficient utilization of funds
C. Acquiring capital assets for the organization
D. None of these.
3: Financial accounting is designed
A. To record the financial history of the firm
B. To help predicting future
C. To solve managerial problems
D. None of these.
4: 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. None of these.
5: Capital budgeting is related to
A. Long –term assets
B. Medium term assets
C. Short term assets
D. Short term assets
6: . Working capital management is managing
A. Long- term assets and liabilities
B. Short-term assets and liabilities
C. Only short-term assets
D. None of these.
7: The decision to issue various securities in different proportions is called
A. The capital structure decision
B. Portfolio analysis decision
C. Investment statement policy
D. None of these
8: ____ is quantitative aspect of the financial planning of an enterprise, if denotes total amount of securities issued by a company.
A. Capitalisation
B. Capital structure
C. Financial structure
D. None of these
9: _____ means the entire liabilities side of the balance sheet (long term and short term) (debt and equity)
A. Financial structure
B. Capital structure
C. Capital budgeting
D. None of these
10: v
A. Debt
B. Preference shares
C. Equity shares
D. Retained earnings.
11: The decision to issue various securities in different proportions is called
A. The capital structure decision
B. Portfolio analysis decision
C. Investment statement policy
D. None of these.
12: The company’s cost of capital is called
A. Leverage rate
B. Hurdle rate
C. Risk rate
D. None of these.
13: Market value of the cost of capital is decided by
A. The respective companies
B. The investment market
C. The government
D. None of these.
14: Cost of retained earnings is equal to
A. Cost of equity
B. Cost of debt
C. Cost of term-loans
D. None of these.
15: The expansion of CAPM is
A. Capital Amount Pricing Model
B. Capital Asset Pricing Model
C. Capital Asset Printing Model
D. None of these.
16: The company’s’ average cost of capital is
A. The average cost of equity, shares and debentures
B. The average cost of equity, preference shares and debentures
C. The average cost of all sources of long-term funds
D. None of these
17: The cost of capital of a long-term debt is generally
A. Lower than the owned funds
B. Equal to that of owned funds
C. Higher than that of owned funds
D. None of these.
18: Interest on debt-capital provides a _______ to the equity holders
A. Added profit
B. Tax shield
C. Additional financial burden
D. None of these
19: The overall cost of capital is used as the minimum acceptable return on
A. All investment to be made by the company with similar risk
B. All projects to be carried out in the future
C. Any assets to be bought by the company
D. None of these
20: The required rate of return for an investment project should
A. Leave the market price of the stock unchanged
B. Increase the market price
C. Reduce the market price
D. None of these.
21: _____ approach prove that the cost of capital is not affected by changes in the capital structure
A. Net operating income
B. Net income
C. Both a & b
D. None of these
22: In_____ approach the debt-equity mix is irrelevant in determination of cost of capital and the value of a firm.
A. Net operating income
B. Net income
C. Both a & b
D. None of these
23: _____ approach is based upon certain unrealistic assumptions such a perfect market, or the expected earnings of all the firms have identical risk etc.,
A. M and M approach
B. Net income approach
C. Net operating income approach
D. Traditional approach
24: n _____ approach a firm can minimize the weighted average cost of capital and increase the value of a firm and market price of equity share by using debt to the maximum
A. Net income approach
B. Net operating income approach
C. Traditional approach
D. M and M approach
25: Net operating income theory is suggested by
A. Durand
B. Solomon
C. Ezra
D. Modigliani and Millar
26: In _____ approach, the change in the capital structure of company does not affect the market value of the firm
A. Net income approach
B. Net operating income approach
C. Both a and b
D. None of these
27: In _____ approach the value of the firm and overall cost of capital remains constant irrespective of method of financing. (Debt-equity)
A. Net income approach
B. Net operating income approach
C. Both a and b
D. None of these
28: In which approach there is nothing as an optimal capital structure and every capital structure is the optimum capital structure
A. Net operating income approach
B. Net income approach
C. Traditional approach
D. None of these.
29: _____ approach is a compromise between the two extremes of net income approach and net operating income approach.
A. Traditional approach
B. M and M approach
C. Net income approach
D. None of these
30: In _____ theory, the value of the firm can be increased initially or the cost of capital can be decreased by using more debt is a cheaper source of funds than equity
A. Traditional approach
B. Net income approach
C. Net operating income approach
D. None of these
31: ____ refers to that part of profits of a company which is distributed by the company among its shareholders
A. Dividend
B. Interest
C. Tax
D. None of these
32: In which theory dividend decision does not affect the share holders wealth and valuation of the firm
A. Theory of irrelevance
B. Theory of relevance
C. Both a and b
D. None of these
33: In which theory dividend decision materially affects the shareholders wealth and also the valuation of the firm
A. Theory of irrelevance
B. Theory of relevance
C. Both a and b
D. None of these
34: The residual approach and MM approach come under
A. Theory of irrelevance
B. Theory of relevance
C. Both a and b
D. None of these
35: The Walter’s approach and Gordon’s approach come under
A. Theory of irrelevance
B. Theory of relevance
C. Both a and b
D. None of these
36: Myron Gordon, Jone Linter, James Walter and Richardson supports
A. Theory of irrelevance
B. Theory of relevance
C. Both a and b
D. None of these
37: Walter model is based on the relationship between the firms return on investment (r) and ____
A. Cost of capital or required rate of return (k)
B. Capital budgeting
C. Capital structure
D. None of these
38: If the firms earns a higher rate of return on its investments than the required rate of return (r>k) it is called
A. Growth firm
B. Decline firm
C. None of these
39: If the firm is r>k means the earnings must be
A. Retain
B. Distribute
C. Both a & b
D. None of these
40: Pay-out ratio denotes that
A. Payment of dividend to shareholders
B. Retain the dividend
C. Both a and b
D. None of these
41: . Difference between inflow and outflow of funds is known as ___________
A. Working capital b
B. Fixed assets
C. Current asset
D. Profit
42: ________ refers to the amount of funds invested in various components of current assets. It consists of raw materials, work in progress, debtors, finished goods, etc.
A. Gross working capital
B. Net working capital
C. Fixed capital
D. None of these
43: . The difference between current assets and current liabilities of the business concern is termed as ____________
A. Gross working capital
B. Net working capital
C. Fixed capital
D. None of these
44: The surplus of current assets over current liabilities is known as ______
A. Positive working capital
B. Negative working capital
C. Fixed working capital
D. None of these
45: The minimum amount of working capital which even required during the dullest season of year is known as ___________
A. Permanent working capital
B. Variable working capital
C. Net working capital
D. Gross working capital
46: The amount owned to a company resulting from the company providing goods and services on credit is known as __________
A. Accounts receivable
B. Cash receivable
C. Inventory receivable
D. None of these
47: __________ motive refers to the need to hold cash to satisfy normal disbursement collection activities associated with firm’s ongoing operation.
A. Transaction motive
B. Precautionary motive
C. Speculative motive
D. None of these
48: Accounts receivables are also known as __________
A. Customer receivables
B. owner receivables
C. Margin of safety
D. None of these
49: Decision relating to working capital and short term financing are referred to as ____________
A. Working capital management
B. Assets management
C. Receivables management
D. None of these.
50: Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs is known as _______
A. Cash management
B. Inventory management
C. Debtors management
D. Short-term financing
51: Benefit packages typically comprise about _______% of an employee’s base pay.
A. 20–30%
B. 30–40%
C. 50–60%
D. 20–40%
52: In this decade the average reserve requirement has been in the area of __________ percent.
A. 15
B. 12
C. 10
D. 11
53: In a business formula such as return on investment, ""on"" means ________.
A. Divided by
B. On top of
C. Deducted from
D. Subtracted from
54: The operating system for a handheld device is stored in ____.
A. Symbian
B. .doc
C. GNU
D. ROM
55: One major expense associated with issuing new shares of common stock is ________.
A. Coupon payment
B. Sunk cost
C. Overvaluation
D. Underpricing
56: The primary goal of a financial manager is ________.
A. Maximizing wealth
B. To maximize the return
C. To minimize the risk
D. To maximize profit
57: _____ are also called debentures and are not backed by specific collateral.
A. Dividends
B. Treasury bills
C. Unsecured bonds
D. Trade credits
E. Commercial certificates of deposit
58: A _____ budget allocates resources on the basis of a single estimate of costs.
A. Zero-based
B. Unitary
C. Incremental
D. Cash
E. Fixed or static
59: P/e ratios tend to be _______ when inflation is ______.
A. Higher; higher.
B. Lower; lower.
C. Higher; lower.
D. They are unrelated
60: Due to ____, market forces should realign the spot rate of a currency among banks.
A. Locational arbitrage
B. Triangular arbitrage
C. Both of these
D. None of these
61: _____________ are examples of investment bankers offering traditional commercial banking services.
A. Online brokers
B. Cash management accounts
C. Underwriting corporate debt and equity offers
D. Venture capital funds
62: The need for status, reputation, and recognition are part of _____.
A. Self-actualization
B. Love
C. Esteem
D. Safety
E. Physiological
63: When a patient has a credit balance, ____.
A. Statement should be sent asking the patient to submit the balance
B. The practice can deduct the amount from the patient's account
C. The patient can be allowed to pay it at the next office visit
D. The practice owes the patient money
64: A sole proprietor's income and expenses flow through ________.
A. His or her personal tax returns.
B. Controlling
C. S corporation
D. Sole proprietor
65: Because the yen is viewed as a ______ currency, japan's exports have _____.
A. Safe haven, fallen.
B. Slice
C. Percentage
D. Plurality
66: An organization that provides a wide range of support services to users is called a(n) ____.
A. Help desk
B. Peer support
C. Hotline
D. User support center
67: Renting provides _________ flexibility but can lead to _________ costs in the long-term. a
A. The overhead allocations involve cash expenditures.
B. The firm is currently unable to cover all of its overhead allocations.
C. None of the above.
D. All of the above.
68: Based on the red flags rule, entities are considered creditors if they __________.
A. Furnish information to consumer reporting agencies
B. Extend credit
C. All of the above
D. None of this
69: Identifying risks is a subprocess of the _____ process of project risk management.
A. Planning
B. Executing
C. Monitoring and controlling
D. Closing
70: The banking industry almost exclusively uses ______ for check processing.
A. OCR
B. MICR
C. Magnetic stripes
D. QR codes
71: The outstanding checks total_________________.
A. $48.00
B. $40.60
C. $242.50
D. $25.00
72: For managers, the importance of maslow's contribution is that he showed that workers _____.
A. Are only interested in compensation that helps them fulfill physiological needs.
B. Are as complex as their organization.
C. Have needs that cannot be understood by their employer.
D. Expect an employer to fulfill every level of their hierarchy of needs.
E. Have needs beyond that of just earning a paycheck
73: _____ refers to removing an organization from a firm's distribution channel.
A. Scalable
B. Brands are built throug
C. Crowdsourcing
74: In equity theory, employees are motivated to _____.
A. Resolve feelings of injustice
B. Support organizational change
C. Expectancy theory
D. None of these
75: _____ and _____ are both relatively expensive types of decreasing term life insur
A. Life insurance
B. Credit term
C. Credit life; mortgage life
76: Factors that can help participative management (pm) work include all the following except _____.
A. Middle and supervisory managers are supportive
B. Employees trust managers
C. PM is implemented with total quality management (TQM)
D. Relationships foster competition and defensiveness
77: Swift showed his irish patriotism by writing about _____.
A. Starvation and the devaluation of coins in Ireland
B. Only if individual members were reasonable and responsible for their own behavior
C. Hunted instead of deer
D. None of these
List of Financial Management M...
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Financial Management MCQs
Множественный выбор вопросы по финансовому управлению
Preguntas de opción múltiple de Administración Financiera
ファイナンシャルマネジメントの選択肢問題集
Domande a risposta multipla di Gestione Finanziaria
Questions à choix multiples sur la Gestion Financière
Perguntas de Múltipla Escolha de Gestão Financeira
Finanzmanagement Multiple-Choice-Fragen
财务管理多项选择题
أسئلة الاختيار من متعدد في الإدارة المالية
Soal Pilihan Ganda Manajemen Keuangan
Finansal Yönetim Çoktan Seçmeli Sorular
