Financial Management | Chapter 4 | Part 2 | MBA MCQs | FM

Finacial Management MCQs

  

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1. ____________dividend promises to pay shareholders at future date
   1.   stock
   2.   Scrip
   3.   cash
   4.   Propoerty
2. Discounted cash flow analysis is also classified as
   1.   time value of stock
   2.   time value of treasury bonds
   3.   time value of money
   4.   .time value of bonds
3. Degree of total leverage can be applied in measuring change in _________.
   1.   EPS to a percentage change in EBIT
   2.   EBIT to a percentage change in quantity
   3.   EPS to a percentage change in quantity
   4.   Quantity to a percentage change in EBIT
4. Price per share is Rs 25 and cash flow per share is Rs 6 then price to cash flow ratio would be
   1.   4.16%
   2.   0.24 times
   3.   24.00%
   4.   4.16 times
5. Financial securities that can be converted into cash at closing to their book value price are classified as
   1.   cash equivalents
   2.   long-term investments
   3.   inventories
   4.   short-term investments
6. __________ is concerned with the maximization of a firm's stock price
   1.   shareholder wealth maximization
   2.   Profit maximization
   3.   Stakeholder welfare maximization
   4.   EPS maximization
7. Investors can normally afford to assume larger risks in the ____ phase of the life- cycle.
   1.   gifting
   2.   accumulation
   3.   spending
   4.   consolidation
8. __________ is the most important investment decision because it determines the risk-returncharacteristics of the portfolio.
   1.   Performance measurement
   2.   Hedging
   3.   Asset allocation
   4.   Market timing
9. company may raise capital from the primary market through _____________.
   1.   Rights issue
   2.   Bought out deals
   3.   Public issue
   4.   All of the above
10. According to traditional approach, the average cost of capital _______________.
    1.   Decrease at an increasing rate with increase in leverage
    2.   Decrease up to certain point, remains unchanged for moderate increase in leverage and rises beyond acertain point
    3.   Remains constant up to a degree of leverage and rises sharply thereafter with every increase inleverage
    4.   Rises constantly with increase in leverage
11. A fixed rate of _________ is payable on debentures
    1.   interest
    2.   dividend
    3.   brokerage
    4.   commission
12. Prices of bonds will be decreased if an interest rates
    1.   rises
    2.   declines
    3.   none of the above
    4.   equals
13. An individual stock required return is equal to risk free rate plus bearing risk premium is anexplanation of
    1.   capital market line
    2.   aggregate market line
    3.   beta market line
    4.   security market line
14. Formula such as net income available for common stockholders divided by total assets is used to calculate
    1.   return on debt
    2.   return on total assets
    3.   return on total equity
    4.   return on sales
15. Low price for earning ratio is result of
    1.   high marginal rate
    2.   high risky firms
    3.   low dividends paid
    4.   low risky firms
16. Stocks which has lower book for market ratio are considered as
    1.   less risky
    2.   more risky
    3.   pessimistic
    4.   optimistic
17. The value of EBIT at which EPS is equal to zero is known as ____________.
    1.   Operating break-even point
    2.   Break-even point
    3.   Financial break-even point
    4.   Overall break-even point
18. Real risk-free rate is applicable when it is expected that there will be
    1.   high inflation
    2.   low inflation
    3.   None of the above
    4.   No inflation
19. The long-run objective of financial management is to________.
    1.   maximize market share
    2.   maximize the value of the firm's common stock
    3.   maximize earnings per share
    4.   maximize return on investment
20. In capital budgeting, a technique which is based upon discounted cash flow is classified as
    1.   net future value method
    2.   net present value method
    3.   net capital budgeting method
    4.   net equity budgeting method