Business Finance MCQs

Question 1

Match the items of List-I with List-II and indicate the correct answer: List-I List-II a. Net Income Approach 1. Working Capital Management b. Profitability Index 2. Over Capitalization c. Concentration Planning 3. Capital Structure Banking d. Lower Rate of Decision 4. Capital Budgeting Return

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 2

The full details for the issue of ADRs by a company must be furnished within 30 days from the date of its closure to

Accepted Answer

Reserve Bank of India (RBI)

Answer

Securities and Exchange Commission (SEC)

Answer

Securities and Exchange Board of India (SEBI)

Answer

Company Law Board (CLB)

Question 3

The Lintner Model shows that the current dividend depends

Accepted Answer

Partly on current earnings and partly on the previous year's dividend

Answer

Partly on the market rate of return and partly on the expected rate of return

Answer

Partly on current earnings and partly on the expected rate of return

Answer

Partly on the previous year's dividend and partly on the market rate of return

Question 4

Financial derivatives include

Accepted Answer

Both B and C

Answer

Stocks

Answer

Forward contracts

Answer

Futures

Question 5

In finance, working capital means the same thing as

Accepted Answer

current assets

Answer

total assets

Answer

fixed assets

Answer

None of these

Question 6

Which of the following statement(s) is/are incorrect?

Accepted Answer

According to MM theory, the value of a firm is affected by the debt equity mix

Answer

According to MM theory, 'the total value of the firm is static'

Answer

Both A and B

Answer

None of the above

Question 7

Match the correct combination for Assertion and Reason as argued by Shapiro and Titman: Assertion (A): Management decisions to insure or hedge asset appear at best neutral mutation. Reason (R): The price of systematic risk is identical for all the participants in the financial market.

Accepted Answer

Both (A) and (R) is correct

Answer

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

Answer

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

Answer

Both (A) and (R) is incorrect

Question 8

Combined leverage is calculated as A.

Accepted Answer

Operating Leverage × Financial Leverage

Answer

Operating Leverage + Financial Leverage

Answer

Operating Leverage - Financial Leverage

Answer

Operating Leverage ÷ Financial Leverage

Question 9

The following situation may occur when there is an increase in the number of shares outstanding by reducing the par value of the stock.

Accepted Answer

Stock split

Answer

Stock dividend

Answer

Extra dividend

Answer

Regular dividend