Business Finance MCQs

Question 1

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act was enacted in which year?

Accepted Answer

2002

Answer

2000

Answer

2001

Answer

2003

Question 2

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

Accepted Answer

The cost of retained earnings is power than the cost of external equity in presence of floatation costs

Answer

The cost of retained earnings is always less than the cost of external equity

Answer

The cost of external equity is always less than the cost of retained earnings

Answer

None of the above

Question 3

Arrange the following terms of working capital cycle involves in correct sequence. 1. Acquisition of raw material 2. Finished goods 3. Receivables 4. Cash 5. Work-in-progress

Accepted Answer

4, 1, 2, 3, 5

Answer

4, 3, 1, 5, 2

Answer

1, 2, 3, 4, 5

Answer

1, 5, 2, 3, 4

Question 4

Which of the following statements is true?

Accepted Answer

The cost of work-in-progress includes raw materials, wages and factory overheads

Answer

Cost of finished goods is estimated at profit amount

Answer

Delay in payment of certain expenses provides long-term financing of working capital

Answer

None of the above

Question 5

Which of the following can be defined as the term of a finance lease?

Accepted Answer

The asset is capitalized in the balance sheet of the lessee

Answer

It is cancellable

Answer

The legal title to the asset is with the lessee

Answer

The lessor is responsible for service and maintenance of the asset

Question 6

What is the beta for averagerisk security? What is the beta for a treasury bill?

Accepted Answer

1; 0

Answer

0; 1

Answer

Greater than 1; 1

Answer

1; greater than 1

Question 7

What does 'Yield to Maturity' in the context of bonds indicate?

Accepted Answer

The effectiverate of interest

Answer

The fixed cost of the organization

Answer

The facevalue of the bond

Answer

It reflects the rating by the credit rating agency

Question 8

Our firm has a philosophy that is analogous to hedging (maturity matching) approach. Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current asset needs?

Accepted Answer

Currency notes

Answer

Trade credit

Answer

Accounts payable

Answer

Common stock equity

Question 9

A firm with high operating leverage has

Accepted Answer

High fixed cost in its production process

Answer

Low fixed cost in its production process

Answer

High variable cost in its production process

Answer

Low variable cost in its production process