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

Finacial Management MCQs

  

 

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