Financial Management MCQ: Multiple Choice Questions and Answers | Full chapter wise MCQ

 

 Financial Management MCQ 

Multiple Choice Questions and Answers

financial management mcq

 

This Financial Management MCQ is for B.COM,BBA,CA,CS,MBA,CMA and More 

Financial Management MCQ also useful for NTA NET EXAM (Commerce 08)


Financial Management MCQ

Table of content

A. Choose the appropriate answer

B. Fill in the blanks

C. True and False

All the Answers of financial management mcq are given

 

Definition of Financial Management

Financial management refers to the strategic planning, organizing, directing and controlling of financial undertakings in an organization or an institution. It also involves applying management principles to an organization's financial assets, while also playing an important role in financial management.

 

Given below are the financial management MCQ question and answer so you can understand the topic without any difficulty.

 

A. Choose the appropriate answer from the given alternatives on Financial Management MCQ:

1. Financial decisions involve with:

a) Investment, financing and dividend decisions

b) Investment, financing and sales decisions

c) Financing, dividend and cash decisions

Ans. Investment, financing and dividend decisions

2. Factoring is a method of raising:

a) Long term finance

b) Medium term finance

c) Short term finance

Ans. Short term finance

3. Financing leverage =

a) Contribution/Earnings before interest and tax

b) Earnings before interest and tax/Earnings before tax

c) Earning after interest and tax/Earnings after tax

Ans. Earning after interest and tax/Earnings after tax

4. Debenture securities carry:

a) Voting rights and dividend

b) Interest and voting rights

c) Interest and dividend

d) Interest only

Ans. Interest only

5. The prime objective of an enterprise is:

a) Maximization of sales

b) Maximization of owner’s equity

c) Maximization of profit

Ans. Maximization of owner’s equity

6. Non-members can trade in securities at stock exchanges with the help of

a) Jobbers

b) Brokers

c) Authorized clerk

Ans. Brokers

7. Financial Leverage is intended to:

a) Increase return on capital employed

b) Increase net equity return

c) Decrease volatility in return

d) Increase return on capital employed and net equity

Ans. Increase return on capital employed and net equity

8. The extent to which an organization uses fixed cost on its cost structure is called:

a) Overall leverage

b) Financial leverage

c) Fixed Leverage

d) Operating leverage

Ans. Financial leverage

9. Use of fixed interest securities in the capital structure is called:

a) Operating leverage

b) Financial leverage

c) Overall leverage

d) None of the above

Ans. Financial leverage

10. What are the considerations in designing capital structure of a corporate?

a) Trading on Equity

b) Cost of capital

c) Profitability

d) All of the above

Ans. All of the above

11. Capital structure designing has nothing to do with:

a) Profitability

b) Solvency

c) Flexibility

d) Transferability

Ans. Transferability

12. Capital structure represents:

a) Ratio between different forms of capital

b) All liabilities

c) All assets

d) Assets and liabilities

Ans. Ratio between different forms of capital 

13. Cost of capital does not mean:

a) Cut off rate decided by management

b) Rate of interest

c) Expectations of investors for dividend

d) Money paid to SEBI for permission to acquire capital

Ans. cut off rate decided by management

14.  In dividend decision, which of the following is not very much relevant?

a) Capital market conditions

b) Industry practice 

c) Availability of disposable profit

d)  Investor’s expectations for dividend

Ans. Capital market conditions

15. M – M Theory in perfect market suggests that dividend payment –

a) Has a positive impact on the value of firm

b) Has no impact on the value of a firm

c) Has a negative impact on the value of firm

d) Has negligible impact on the firm

Ans. Has no impact on the value of a firm

16. According to Walter, firm should pay 100% dividend if –

a) r > k

b) r = k

c) r < k

d) None of these

Ans. r > k

17. The rate of discount at which NPV of a project becomes zero is also known as

a) Average Rate of Return

b) Internal Rate of Return

c) Alternative Rate of Return

d) None of the above

Ans. Internal Rate of Return

18. Who propounded the dividend irrelevance theorem to share valuation  –

a) Myron Gordon 

b) Modigliani and Miller 

c) James E. Walter 

d) None of the above

Ans. Modigliani and Miller

19. Approximately, IRR is inverse of:

a) Payback period

b) NPV

c) Adjusted Accounting Rate of Return

d) None of the above

Ans. Adjusted Accounting Rate of Return

20. If NPV is positive, the IRR will be:

a) Positive

b) K = K

c) K < R

d) None of these

Ans. K < R

21. Consider the following steps in the process of Capital Budgeting:

1) Identification of investment proposals.

2) Fixing priorities.

3) Evaluation of various proposals.

4) Selection and preparation of Capital Budgets.

5) Implementation.

6) Performance Review.

Which of the sequence of these steps is correct?

A. 1, 2, 3, 4, 5, 6

B. 2, 1, 3, 4, 5, 6

C. 1, 3, 2, 4, 5, 6

D. 1, 4, 3, 2, 5, 6

Ans. 1, 2, 3, 4, 5, 6

 

For more financial management MCQ you can here:-

Leverage Multiple Choice Questions MCQ

Capital Budgeting MCQ 

Working Capital Management MCQ 

Capital Structure MCQ 

Cost of Capital MCQ 


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