Top 550+ Solved Financial Management MCQ Questions Answer
Q. Which of the following quantitative aspect of financial planning?
a. Capitalization
b. Capital structure
c. Organization structure
d. None of these
Q. Which of the following qualitative aspect of financial planning?
a. Capitalization
b. Capital structure
c. Organization structure
d. None of these
Q. Which of the following is/ are the assumptions of net income approach?
a. The cost of debt is less than the cost of equity
b. There are no taxes
c. The risk perception of investors is not changes by the use of the debt.
d. All of these
Q. The overall cost of capital, according to which theory, decreases up to a certain point,remains more or less unchanged for moderate increase in debt thereafter and increases a certain point
a. Net income approach
b. Net operating income approach
c. Traditional theory
d. MM approach
Q. According to which theory two identical firms in all respect except their capital structure can not have different market value or cost of capital because of arbitrage process
a. Net income approach
b. Net operating income approach
c. Traditional theory
d. MM approach
Q. Agency cost arises due to
a. Cost over run in implementing new projects
b. Failure of budget cost
c. Restrictions imposed by the supplier of debt capital
d. Rise in the cost of production
Q. What do you mean by NPV?
a. Excess of cash inflows over cash outflows
b. Excess of cash outflows over cash inflows
c. Excess of the present value of cash out flows over the present value of cash inflows
d. Excess of the present value of cash inflows over the present value of cash outflows
Q. Under NPV method, cash flows are assured to be reinvested at
a. Risk free rate of return
b. Cost of debt
c. IRR
d. Discount rate at which NPV is computed
Q. The pay back period shows
a. Recovery period of original investment outlay
b. The time value of money
c. The cash inflows
d. None of the above
Q. Capital rationing is applied in a situation where
a. It is difficult to bring in required amount of capital
b. Financial institutions are doubtful or not sure of the validity of the project
c. A large number of investment proposals compete for limited funds
d. The dividend is converted into capital for completion of a new project
Q. Net salvage value of a fixed asset is
a. Excess of salvage value over book value
b. Excess of book value over salvage value
c. Scrape value
d. Salvage value of fixed assets less any income tax payable on the excess of salvage value over book value
Q. The discount rate which equates the present value of cash inflows with the present value of cash out flows is called -------
a. Opportunity cost
b. Sunk cost
c. explicit cost
d. Direct cost
Q. A company can increase its value and reduce the overall cost of capital by increasing theproportion of debt in its capital structure according to ----- approach
a. Net income approach
b. Net operating income approach
c. Traditional approach
d. None of these