Business Finance MCQs

Question 1

In multinational capital budgeting, the value of project is determined by

Accepted Answer

net present value of future cash flow

Answer

discounted cash flow

Answer

net present value of present cash outflow

Answer

risk factor cash flow

Question 2

According to which of the following, the firm's market value is not affected by capital structure?

Accepted Answer

MM Hypothesis

Answer

Net Income Approach

Answer

The Traditional View

Answer

None of the above

Question 3

Which type of lease is presumed, when the present value of minimum lease payments is approximately equal to the fair value of the lease assets?

Accepted Answer

Finance lease

Answer

Operating lease

Answer

Mixed lease

Answer

All of the above

Question 4

The true cost of hedging transaction exposure by using forward market is

Accepted Answer

difference between agreed rate and spot rate on the due date of contract

Answer

difference between agreed rate and spot rate at the time of entering into contract

Answer

forward premium

Answer

discount annualised

Question 5

Which of the following is a nonrecurring dividend paid to shareholders in addition to the regular dividend?

Accepted Answer

Extra dividend

Answer

Stock split

Answer

Stock dividend

Answer

Regular dividend

Question 6

A view that the dividend policy of a firm has a bearing on share valuation advocated byJames E. Walter, is based on which one of the following assumptions?

Accepted Answer

Retained earnings are the only source of financing

Answer

The cost of capital does not remain constant

Answer

The return on investment fluctuates

Answer

All of the above

Question 7

Debentures represent

Accepted Answer

loan capital of the company

Answer

fixed capital of the company

Answer

permanent capital of the company

Answer

fluctuating capital of the company

Question 8

The exchange rate is

Accepted Answer

the price of one currency relative to another

Answer

the price of one currency relative to gold

Answer

the value of a currency relative to inflation

Answer

the change in the value of money over time

Question 9

Mutually exclusive projects can be more accurately ranked as per

Accepted Answer

Net Present Value Method

Answer

Internal Rate of Return Method

Answer

Modified Internal Rate of Returns Method

Answer

Accounting or Average Rate of Return Method