Business Finance MCQs

Question 1

Which of the following option has a predominant share in the debt market in India?

Accepted Answer

Government Securities

Answer

Corporate Deposits

Answer

Corporate Equities

Answer

Global Depository Receipts

Question 2

Which of the following statements is correct for an aggressive financing policy for a firm relative to a former conservative policy?

Accepted Answer

The firm will see an increase in its expected profits

Answer

The firm will use long-term financing to finance all fixed and current assets

Answer

The firm will see a decline in its risk profile

Answer

The firm will need to issue additional common stock in this period to finance the assets

Question 3

Venture capital financing at the starting stage is generally not done through

Accepted Answer

Deep discount bonds

Answer

Debt instruments

Answer

Equity shares

Answer

Conditional loans

Question 4

Insufficient working capital in any enterprise may also result into 1. Failure to adapt to changes 2. Overcapitalisation 3. Reduced availability of trade and cash discounts 4. Reduced volume of production and sales Select the correct answer:

Accepted Answer

1, 3 and 4

Answer

1, 2 and 3

Answer

Both 2 and 3

Answer

Both 1 and 4

Question 5

In case, the projects are divided under capital rationing an appropriate project appraisal method is

Accepted Answer

Profitability index method

Answer

Net present value method

Answer

Internal rate of return method

Answer

Payback period method

Question 6

Insufficient working capital may result into which combination of the following? 1. Failures to adapt to changes. 2. Enhancement in credit-worthiness of the firm. 3. Reduced availability of trade and cash discounts. 4. Reduced volume of sales.

Accepted Answer

1, 3 and 4

Answer

1, 2 and 3

Answer

1, 2 and 4

Answer

All of the above

Question 7

Which of the following risk is termed as foreign exchange risk?

Accepted Answer

All of the above

Answer

Transaction risk

Answer

Translation risk

Answer

Economic risk

Question 8

Assertion (A): A company should pay dividend to its shareholders. Reason (R): Dividends are heavilly taxed than capital gains.

Accepted Answer

Both (A) and (R) are true

Answer

Both (A) and (R) are false

Answer

(A) is false, but (R) is true

Answer

(A) is true, but (R) is false

Question 9

Permanent working capital is generally financed through

Accepted Answer

Long-term capital funds

Answer

Goverment assistance

Answer

Internal financing

Answer

Short-term loans from banks