Business Finance MCQs

Question 1

Which of the following are the main benefits to originators in the context of asset-based securitization?
(i) Securitization improves returns on capital.
(ii) Securitization lowers the borrowing costs.
(iii) Securitization releases additional capital for expansion.
(iv) Securitization improves asset or liability.
(v) Securitization improves credit risk management.

Accepted Answer

All of the above

Answer

(i), (ii) and (iii)

Answer

(i), (ii) and (iv)

Answer

(i), (ii), (iii) and (iv)

Question 2

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 3

Assertion (A): The risk condition exists when decision-makers have absolutely no idea of what the results of an implemented alternative would be. Reason (R): When operating under complete uncertainty condition, decision-makers usually find that sound decisions are a matter of chance. In the context of the two statements, which one of the following is correct?

Accepted Answer

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

Answer

Both (A) and (R) are correct

Answer

Both (A) and (R) are incorrect

Answer

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

Question 4

Match the following. List-I List-II a. Fixed capital 1. . . . . . . . . refers to make-up of a firm's capitalisation b. Normal rate of return 2. . . . . . . . . is the cause of over-capitalisation c. Liberal dividend policy 3. Earnings per share ÷ Market price per share = . . . . . . . . d. Capital structure 4. . . . . . . . . is the funds required for a acquisition of assets that are to be used over and over a long period

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 5

Read the following statements:
1. The rate of return on investment increases with the shortage of working capital.
2. Net working capital is the excess of current assets over current liabilities.
3. Greater the size of the business unit, larger will be the requirement of working capital.
4. Working capital is also known as circulating capital.
Which one of the following consists of the correct statements?

Accepted Answer

2, 3 and 4

Answer

1, 2 and 3

Answer

3, 4 and 1

Answer

1, 2 and 4

Question 6

Match the following. List-I List-II a. Urgency method 1. It avoids in calculable risk and uncertainty in the long run b. Payback method 2. Also known as net gain method c. Unadjusted rate of return method 3. It is simple for the project with too large outlay d. Net present value method 4. Also known as financial statement method

Accepted Answer

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

Answer

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

Answer

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

Answer

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

Question 7

What are the main objectives of financing decision?
1. To get optimal working capital figure.
2. To get optimal capital structure.
3. To make the company exposed to high risk.
4. To keep the cost of capital lowest.
5. To make the value of share highest.

Accepted Answer

1, 2, 4 and 5

Answer

1, 2, 3, 4 and 5

Answer

2, 3, 4 and 5

Answer

2, 4 and 5

Question 8

Which of the following combination is suitably attributed to the statement that stakeholders should expect a fair return on their investment?
(i) Optimization of Profit
(ii) Social Responsibility of Business
(iii) Competition Theory of Business
(iv) Walter's Theory

Accepted Answer

Only (i) and (ii)

Answer

(i), (ii) and (iii)

Answer

(ii), (iii) and (iv)

Answer

Only (iii) and (iv)

Question 9

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

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

List-I	List-II
a. Fixed capital	1. . . . . . . . . refers to make-up of a firm's capitalisation
b. Normal rate of return	2. . . . . . . . . is the cause of over-capitalisation
c. Liberal dividend policy	3. Earnings per share ÷ Market price per share = . . . . . . . .
d. Capital structure	4. . . . . . . . . is the funds required for a acquisition of assets that are to be used over and over a long period

List-I	List-II
a. Urgency method	1. It avoids in calculable risk and uncertainty in the long run
b. Payback method	2. Also known as net gain method
c. Unadjusted rate of return method	3. It is simple for the project with too large outlay
d. Net present value method	4. Also known as financial statement method

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