Business Finance MCQs

Question 1

Combined leverage can be used to measure the relationship between

Accepted Answer

Sales and EPS

Answer

PAT and EPS

Answer

Sales and EBIT

Answer

EBIT and EPS

Question 2

Assertion (A): Acompany should pay a minimum dividend to its shareholders. Reason (R): Dividends are heavily taxed than capital gains.

Accepted Answer

Both (A) and (R) are correct

Answer

Both (A) and (R) are incorrect

Answer

(A) is incorrect, but (R) is correct

Answer

(A) is correct, but (R) is incorrect

Question 3

The segments of international financial market include 1. Foreign Exchange Market 2. International Arbitrage Market 3. International Money Market 4. International Bond Market Select the correct answer by using the options given below

Accepted Answer

All of the above

Answer

Both 1 and 4

Answer

1, 3 and 4

Answer

2, 3 and 4

Question 4

The instrument chosen for enhancement of international liquidity is

Accepted Answer

Special Drawing Rights (SDRs)

Answer

Society for Worldwide Inter-bank Financial Telecommunications (SWIFT)

Answer

Multilateral Netting

Answer

Netting of Payments

Question 5

Which of the following are rules to use when choosing between forward contracts and currency options?

Accepted Answer

When the quantity of a foreign-currency cash outflow is known, buy the currency forward

Answer

When the quantity of a foreign currency cash outflow is unknown, buy the currency forward

Answer

When the quantity of a foreign currency cash flow is partially known and partially uncertain, use a forward contract to hedge the known and unknown portions

Answer

when the quantity of a foreign currency cash inflow is known, buy the currency forward

Question 6

The overall capitalization rate and the cost of debt remain constant for all degrees of financial leverage. It is advocated by

Accepted Answer

Net Operating Income Approach

Answer

Traditional Approach

Answer

Net Income Approach

Answer

M-M Approach

Question 7

In which of the following ways should the discount rate be adjusted to increase a given future value?

Accepted Answer

Upward

Answer

Downward

Answer

First upward and then downward

Answer

We should use PVIF to get the answer

Question 8

Net present value is equal to

Accepted Answer

Total present value of cash inflow - Total present value of cash outflows

Answer

Total present value of cash outflow - Total present value of cash inflows

Answer

Total present value of cash outflows + Inflows

Answer

None of the above

Question 9

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is

Accepted Answer

futures

Answer

forwards

Answer

options

Answer

swaps