Business Finance MCQs

Question 1

In a land lease, if title does not pass at the end of a lease to the lessee, it is normally treated as

Accepted Answer

operating lease

Answer

finance lease

Answer

mixed lease

Answer

accounting lease

Question 2

Match the following. List-I (Source of Fund) List-II (Example) a. Commercial Bank 1. IFCT b. International Capital Market 2. SBI c. International Commercial Bank 3. GDR d. Financial Institution 4. Standard Chartered Bank (SCB)

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 3

Which of the following statements is most correct?

Accepted Answer

The future value of an annuity due to greater than an otherwise identical ordinary annuity

Answer

A reduction in the discount rate will increase the future value of an otherwise identical cash flow stream

Answer

Continuous compounding will result in a higher present value relative to an otherwise identical investment compounded monthly at the same nominal rate

Answer

The FVIFA (i%, N periods) equals the sum of the PVIF (i%, n) for n = 1 to N periods

Question 4

In which of the following terms, the quotas are denominated in IMF?

Accepted Answer

Special Drawing Rights

Answer

US dollars

Answer

Chinese renminbi

Answer

British pound

Question 5

The conservative approach is a risk-free strategy of working capital financing that helps in maintaining a higher level of current assets and higher working capital. Which of the following is consistent with a conservative approach to financing working capital?

Accepted Answer

Financing short-term needs with long-term debt

Answer

Financing short-term needs with short-term funds

Answer

Financing seasonal needs with short-term funds

Answer

Financing some long-term needs with short-term funds

Question 6

Funds required for purchasing current assets is an example of

Accepted Answer

working capital requirement

Answer

fixed capital requirement

Answer

lease financing

Answer

ploughing back of profits

Question 7

Which of the followingis not a clear difference between debenture holders and shareholders of a company?

Accepted Answer

Interest and dividends as a form of financial return

Answer

Voting rights in the company

Answer

Ownership of the company

Answer

Impact on the company's working capital

Question 8

Which of the following is not used to estimate cost of equity capital?

Accepted Answer

Capital asset pricing model

Answer

External yield criterion

Answer

Dividend plus growth rate

Answer

Equity capitalisation approach

Question 9

Dividend capitalization model was developed by

Accepted Answer

Myron J. Gordon

Answer

Ezra Solomon

Answer

James E. Walter

Answer

Merton H. Miller and Franco Modigliani