Business Finance MCQs

Question 1

As per Section 62(1) of Companies Act, 2013, the mechanism by which companies can raise additional capital from existing shareholders is

Accepted Answer

Rights shares

Answer

Bonus shares

Answer

Sweat equity shares

Answer

Differential Voting Rights shares

Question 2

A debenture mostly

Accepted Answer

Is a long-term loan

Answer

Does not require security

Answer

Receives dividend payments

Answer

Is a short-term loan

Question 3

Factors that are considered to solve the financial problems of business organisations are 1. cost of capital supply 2. importance and objectives of capital 3. different types of benefits Select the correct answer by using the options given below

Accepted Answer

Both 1 and 2

Answer

Both 1 and 3

Answer

Both 2 and 3

Answer

All of the above

Question 4

Which of the following is/are not a current asset?

Accepted Answer

Land and building

Answer

B/R

Answer

Debtors

Answer

All of these

Question 5

The rate of discount at which NPV of a project becomes zero is also known as

Accepted Answer

Internal Rate of Return

Answer

Average Rate of Return

Answer

Alternate Rate of Return

Answer

None of the above

Question 6

Assertion (A): The important aspect of dividend policy is to determine the amount of earnings to be distributed to shareholders, and the amount to be retained in the firm. Reason (R): Dividend policy of the firm has its effect on both the long-term financing and the wealth of shareholders.

Accepted Answer

Both (A) and (R) are correct, and (R) is the correct explanation of (A)

Answer

Both (A) and (R) are correct, but (R) is not the correct explanation of (A)

Answer

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

Answer

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

Question 7

Which of the following examples best represents a passive dividend policy?

Accepted Answer

The firm pays dividends with the remains of net income after taking acceptable investment projects

Answer

The proportion of dividends paid from net income remains constant

Answer

The quantity (rupee amount per share) of dividends paid from net income remains constant

Answer

All of the above examples indicate passive dividend policies

Question 8

Match the following. List-I (Concepts) List-II (Meanings) a. Regular dividend policy 1. Part of divisible profits of a company, which is distributed among its shareholders b. Dividend 2. Application of planning and control functions to the finance function c. Capitalisation 3. Payment of dividend at usual rate d. Financial management 4. Refers to the process of determining the quantum of funds required for a firm

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 9

Arrange the following steps involved in capital budgeting in order of their occurrence i. Project selection ii. Project appraisal iii. Project generation iv. Follow up v. Project execution

Accepted Answer

iii, ii, i, v, iv

Answer

ii, iii, i, v, iv

Answer

i, iii, ii, v, iv

Answer

i, ii, iii, v, iv