MCQS
1) The mix of debt and equity in a firm is referred to as the firm's .
a. Primary capital.
b. Capital composition.
c. Cost of capital.
d. Capital structure.
2) The main focus of finance for the last 40 years has been .
a. Mergers and acquisitions.
b. Conglomerate firms.
c. Inflation.
d. Risk-return relationships.
3) A main benefit to the corporate form of organization is .
a. Double taxation of corporate income.
b. Simplicity of decision making and low organizational complexity.
c. Limited liability for the corporate shareholders.
d. A major management role exists for the firm's owners.
4) A method of budgeting that estimates todays value of money to be received in the future;
It is discounted due to the uncertainty of its true value in the future and for the cost of
the capital is .
a.Cash inflow.
b. Cash outflow.
c. Discounted cas h
flow.
d. Payback period
5) When capital market is booming, firms can take market route to .
a. Raise capital.
b. Decrease capital.
c. Stop growing.
d. Stagnate.
6) refers the period between commencement of project construction and first
commercial operation of the project.
a. Maturity period.
b. Initial period.
c. Gestation
period.
d. Growth period.
7) Financial leverage refers to the rate of change in earnings per share for a given change
in earnings
.
a. Before tax.
b. Before interest.
c. Before interest and tax.
d. After interest and tax.
8) is the minimum required rate of earnings or the cut off rate of capital
expenditure.
Cost.
a. Cost of capital
b. Working capital
c. Equity Capital
d. None of the above
9) Land at prime locations, modern buildings, machinery in good condition, etc are
accepted as
.
a. Funds.
b. Security .
c. Liquid cash.
d. Debt.
10) The long-run objective of financial management is to .
a. Maximising Earnings
b. Maximising Shares
c. Maximising Investment
d. Firms growth
11) The mix of debt and equity in a firm is referred to as the firm's.
a. Equity Capital
b. Cost of Capital
c. Supervision of Capital
d. Capital Structure
12) The most important and common form of dividend is
a. Stock Dividend
b. Bond Dividend
c. Cash Dividend
d. None of the Above
13) Which form of market efficiency states that current prices fully reflect the
historical sequence of prices?
a. Weak
b. Strong
c. Semi Strong
d. Semi Weak
14) Which of the following are not among the daily activities of financial management?
a. Credit Management
b. Inventory Control
c. Dividing Shares and bonds
d. Expenses
15) Long term finance is required for ______________.
a. Current Asset
b. Fixed Asset
c. Intangible Asset
d. None of these.
16) Maintains sufficient cash flow to meet its short-term operating costs and short-term debt
a. Working Capital
b. Cash budget
c. Fixed Deposit
d. Daily expenses
17) Financial risk perception is an influencing factor of .
a. Equity Shares
b. Preferrence Shares
c. Investment of funds
d. Debentures
Fill in the blanks
1) ____________ is important for individuals and businesses because cash is the primary
asset used to invest and pay liabilities.
2) are the percentage of a company's earnings that is paid to its
shareholders as their share of the profits.
3) hold rights over common shareholders when it comes to sharing profits.
4) Full form of IRR
5) is the particular combination of debt and equity a company uses to
fund its ongoing operations and growth.
6) All constituencies with a stake in the fortunes of the company are known as __________.
7) refer to the choices made by organizations regarding the
acquisition, allocation, and management of financial resources.
8) are long-term loans and generally have a maturity date of five to ten
years.
9) ___________________ refers to make a firm's capitalization.
10) decision can be long-term or short-term.
11) The time it takes for an investment to pay back its initial cost is called the __________
period.
12) The __________ is used to calculate the present value of an investment's future cash flows.
13) The __________ ratio measures a company's ability to meet its short-term obligations using
its most liquid assets.
14) The primary goal of financial management in a for-profit organisation is to maximise the
__________ of shareholders.
15) The __________ is used to calculate the present value of an investment's future cash flows.
16) __________ is the process of evaluating and selecting long-term investments that are in line
with the goal of maximising shareholders’ wealth.
ANSWERS
1. Liquidity
2. Dividends
3. Preferred shareholders
4. Internal Rate of Return.
5. Capital structure
6. stakeholders.
7. Term loans
8. Capitalisation
9. Investment
10. Payback
11. discount rate
12. current ratio
13. wealth
14. discount rate
15. capital budgeting
16. Wealth Maximisation
One Mark Question
1. Define payback period
2. Define working capital management
3. Define Inventory management
4. Define cost of capital
5. Define cash budget.
6. Define Equity shares
7. Define dividend policy
8. Define capital structure
9. Two characteristics of Preference shares
10. Full form of WACC
