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Financial Management Multiple Choice Questions and Answers | Financial Management MCQs

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Free download in PDF Financial Management Multiple Choice Questions and Answers for competitive exams. These short objective type questions with answers are very important for Board exams as well as competitive exams like UPSC, NDA, SSC etc. These short solved questions or quizzes are provided by Gkseries./p>

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(1) If the Present Value of Cash Inflows are greater than the Present Value of Cash Outflows, the project would be
[A] Accepted
[B] Rejected with condition
[C] Rejected with approval
[D] Rejected
Answer: Accepted
(2) Finance functions are
[A] Planning for funds
[B] Raising of funds
[C] Allocation of Resources
[D] All of the above
Answer: All of the above

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(3) Assertion (A) : Special rules and procedures are followed in the import and export trade.

Reason (R) : The need for import and export trade is explained by the principles of 'Comparative Cost Theory'.

[A] Both A and R are true and R is the correct explanation of A
[B] Both A and R are true but R is not a correct explanation of A
[C] A is true but R is false
[D] A is false but R is true
Answer: Both A and R are true but R is not a correct explanation of A
(4) The relationship between the cost of equity and financial leverage in accordance with MM proposition II can be expressed by
[A] R = Equity/100
[B] R = Equity/Debt x 100
[C] rE = r0 + (r0 - rD)(1 - TC)
[D] R = Equity/Income
Answer: rE = r0 + (r0 - rD)(1 - TC)
(5) The call-option value of a callable bond is likely to be high when
[A] interest rates are volatile.
[B] interest rates are low and expected to remain low.
[C] interest rate are high and expected to remain high.
[D] markets are inefficient.
Answer: interest rates are volatile.
(6) A project's profitability index is equal to the ratio of the _______ of a project's future cash flows to the project's ______.
[A] present value; initial cash outlay
[B] net present value; initial cash outlay
[C] present value; depreciable basis
[D] net present value; depreciable basis
Answer: present value; initial cash outlay
(7) Earning Yield computed by
[A] EPS/Current Market Price Per Share
[B] Paid up value of Share/100
[C] EPS/Profit x 100
[D] EPS/Market Price
Answer: EPS/Current Market Price Per Share
(8) The Present Value of all inflows are cumulated in
[A] Order of Investment
[B] Order of Cash
[C] Order of Time
[D] Order of Sales
Answer: Order of Timec
(9) The cost of debt capital is calculated on the basis of
[A] Net proceeds
[B] Annual Interest
[C] Capital
[D] Annual Depreciation
Answer: Annual Interest
(10) A(n) __________ would be an example of a principal, while a(n)___________would be an example of an agent.
[A] shareholder; manager
[B] manager; owner
[C] accountant; bondholder
[D] shareholder; bondholder
Answer: shareholder; manager

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