Business Finance MCQs

Question 1

If an opposing position is taken in two positively correlated securities, it is called

Accepted Answer

Cross hedging

Answer

Simple hedging

Answer

Leading

Answer

Lagging

Question 2

According to Walter, a firm should pay 100% dividend, if

Accepted Answer

r = k

Answer

r > k

Answer

r < k

Answer

None of these

Question 3

The working capital requirement (WCR) is

Accepted Answer

Inventories plus receivables minus payables plus prepayments minus accruals

Answer

Working capital minus short-term debt minus cash

Answer

Inventories plus receivables minus payables

Answer

Working capital plus short-term debt plus cash

Question 4

The conflicts in project ranking in capital budgeting as per NPV and IRR may arise because of

Accepted Answer

All the above

Answer

Size disparity

Answer

Time disparity

Answer

Life disparity

Question 5

Which of the following statements are true in the context of securitization of assets?

Accepted Answer

All of the above

Answer

It is a process that enhances liquidity in the market

Answer

The company clubs its different financial assets or debts to form a consolidated financial instrument issued to investors

Answer

The investors may get interest as a return to them

Question 6

Arrange the following in chronological order about the steps of capital budgeting process. 1. Project selection 2. Project evaluation 3. Project generation 4. Project execution

Accepted Answer

3, 2, 1, 4

Answer

3, 1, 2, 4

Answer

2, 3, 4, 1

Answer

4, 3, 2, 1

Question 7

Match the items of List-I with List-II and indicate the correct answer: List-I List-II a. ABC Analysis 1. Dividend Decision b. Walter Model 2. Capital Budgeting Decision c. Capital Rationing 3. Capital Structure Decision d. Net Operating Income Approach 4. Working Capital Management Decision

Accepted Answer

a-4, b-1, c-2, d-3

Answer

a-1, b-3, c-2, d-4

Answer

a-2, b-1, c-3, d-4

Answer

a-3, b-1, c-2, d-4

Question 8

Which of the following is/are included under causes of undercapitalisation?

Accepted Answer

All of the above

Answer

Under estimation of income

Answer

Promotion during deflation

Answer

Conservative dividend policy

Question 9

The concept of present value is based on the

Accepted Answer

Principle of discounting

Answer

Principle of compounding

Answer

Both A and B

Answer

None of the above