Business Finance MCQs

Question 1

Operating cycle can be shortened by increasing

Accepted Answer

duration of credit available

Answer

manufacturing time

Answer

stock held in stores shares

Answer

credit period to the customers

Question 2

Match the following. List-I List-II a. Capital budgeting 1. Time adjusted rate of return b. Profitability index 2. Irreversible c. Internal rate of return 3. Benefit/cost d. Capital investment decisions 4. Planning capital expenditure

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 3

Which of the following is not the major objectives of the International Monetary Fund?

Accepted Answer

Giving loans to countries for the purpose of economic development

Answer

Promoting co-operation among countries on international monetary issues

Answer

Promoting stability in the exchange rates

Answer

Promoting free mobility of capital across countries

Question 4

Which of the following assumptions is not covered in Walter's Model of the dividend policy?

Accepted Answer

The key variables like EPS and DPS keep on changing

Answer

All financing is through retained earnings

Answer

The firm's business risk does not change due to additional investments

Answer

The firm has an infinite life

Question 5

To say that the forward market lacks liquidity means that

Accepted Answer

it may be difficult to make the transaction

Answer

forward contracts usually result in losses

Answer

forward contracts cannot be turned into cash

Answer

forward contracts cannot be sold for cash

Question 6

The immediate (two days) exchange of one currency for another is a

Accepted Answer

spot transaction

Answer

forward transaction

Answer

money transaction

Answer

exchange transaction

Question 7

Which of the following methods does not consider the profitability of the whole life of the project?

Accepted Answer

Payback period method

Answer

Internal rate of return method

Answer

Present value index method

Answer

Net present value method

Question 8

Which of the following is not an indication a lease is a finance lease?

Accepted Answer

The lease term is for a short part of the economic life of the asset

Answer

The lease transfers ownership ofthe asset to the lessee at the end of the lease

Answer

The leased assets are specialised in nature

Answer

The present value of minimum lease payment amounts to substantially all of the fair value of the asset

Question 9

Dividends are earnings for shareholders and they expect reasonable earnings from their

Accepted Answer

investments

Answer

profit

Answer

property

Answer

All of these