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Financial Management Multiple Choice Questions and Answers | Financial Management MCQ & QUIZ

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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) Given

Ke = DPS/MP x 100, this formula may be used in

[A] Calculating capital structure
[B] Reserve
[C] Depreciation
[D] Calculating Cost of Equity Share Capital
Answer: Calculating Cost of Equity Share Capital
(2) Which formula may be used for 'EPS'?
[A] Net Profit/100 x Share Capital
[B] Dividend/Net Profit x 100
[C] Net Income - Dividend on Preferred Stock/Average outstanding Shares
[D] Net Profit/Sales
Answer: Net Income - Dividend on Preferred Stock/Average outstanding Shares

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(3) Empirical evidence on acquisitions indicates - excess returns on average to the shareholders of the selling company, and _______ excess returns on average to those of the buying company.
[A] no; no
[B] substantial; no
[C] no; substantial
[D] substantial; substantial
Answer: substantial; no
(4) Factoring involves
[A] Purchase and Collection of debts
[B] Sales ledger management
[C] Provision of Specialised Services relating to credit investigation
[D] All of the above
Answer: All of the above
(5) Which method of capital budgeting called benefit cash ratio?
[A] Pay back period
[B] Net present value
[C] Pay out period
[D] Profitability Index Number
Answer: Profitability Index Number
(6) If cash inflows are not uniform, the calculation of pay-back period takes a
[A] Common Profit
[B] Favourable Position
[C] Cumulative Form
[D] All of the above
Answer: Cumulative Form
(7) The investment proposal with the greatest relative risk would have
[A] the highest standard deviation of net present value.
[B] the highest coefficient of variation of net present value.
[C] the highest expected value of net present value.
[D] the lowest opportunity loss likelihood.
Answer: the highest coefficient of variation of net present value.
(8) Degree of Financial leverage is
[A] Profit/Sales x Capital
[B] Percentages change in EPS or EBIT/percentage changes in EBIT - Interest
[C] Sales/Fixed Assets
[D] EBIT/100 x Sales
Answer: Percentages change in EPS or EBIT/percentage changes in EBIT - Interest
(9) The "information effect" refers to the notion that
[A] a corporation's actions may convey information about its future prospects.
[B] management is reluctant to provide financial information that is not required by law.
[C] agents incur costs in trying to obtain information.
[D] the financial manager should attempt to manage sensitive information about the firm.
Answer: a corporation's actions may convey information about its future prospects.
(10) Assertion (A) : The investors in the capital market have been showing a decisive shift in favour of fixed income instruments.

Reason (R) : The dept. instruments have active secondary market.

[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: A is true but R is false

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