Business Finance MCQs

Question 1

Match the following. List-I List-II a. Market risk 1. It is known as insolvency risk b. Inflation risk 2. Risk caused due to demand and supply pressure c. Credit risk 3. Risk due to inability to meet firm's financial obligations d. Financial risk 4. Exchange in real value of return as a result of rise in production cost

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 2

Arbitrageurs in foreign exchange markets

Accepted Answer

take advantages of the small inconsistencies that develop between markets

Answer

attempt to make profits by outguessing the market

Answer

make their profits through the spread between bid and offer rates of exchange

Answer

need foreign exchange in order to buy foreign good

Question 3

A/An . . . . . . . . hedge protects the company from adverse exchange rate movements but allow the company to benefit from favoarable movements.

Accepted Answer

options market

Answer

balance sheet

Answer

forward market

Answer

money market

Question 4

Net working capital refers to

Accepted Answer

current assets minus current liabilities

Answer

total assets minus fixed assets

Answer

current assets minus inventories

Answer

current assets

Question 5

Which of the following is a reason to hedge a portfolio?

Accepted Answer

To limit exposure to risk

Answer

To increase the probability of gains

Answer

To profit from capital gains when interest rates fall

Answer

All of the above

Question 6

Identify by the web-based financial software from the following.

Accepted Answer

WINGS 2013

Answer

Private Equity Software

Answer

Share Accounting Software

Answer

Wealth Management Software

Question 7

Working capital(s) is/are also called

Accepted Answer

Both A and B

Answer

revolving capital

Answer

circulating capital

Answer

None of these

Question 8

Which of the following statement is incorrect?

Accepted Answer

The needs of working capital for a large business is less than these of a small business

Answer

If the company allows liberal credit to its customers, high amount would be invested in debtors

Answer

Working capital requirement will be high only in seasons

Answer

None of the above

Question 9

Match the items of the following two lists and suggest the correct answer: List-I List-II a. Realized Yield Method 1. Cost of equity share capital b. Taxation 2. Cost of equity capital c. Cost of total capital employed 3. Cost of debt capital d. Dividend growth is a consideration 4. Weighted cost of capital

Accepted Answer

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

Answer

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

Answer

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

Answer

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