Top 550+ Solved Financial Management MCQ Questions Answer
Q. Risk of a Capital budgeting can be incorporated
a. Adjusting the Cash flows
b. Adjusting the Discount Rate
c. Adjusting the life
d. All of the above
Q. Which element of the basic NPV equation is adjusted by the RADR?
a. Denominator
b. Numerator
c. Both
d. None
Q. Cost of Capital refers to:
a. Flotation Cost
b. Dividend
c. Required Rate of Return
d. None of the above.
Q. Which of the following sources of funds has an Implicit Cost of Capital?
a. Equity Share Capital
b. Preference Share Capital
c. Debentures
d. Retained earnings
Q. Which of the following has the highest cost of capital?
a. Equity shares
b. Loans
c. Bonds
d. Preference shares
Q. Cost of Capital for Government securities is also known as:
a. Risk-free Rate of Interest
b. Maximum Rate of Return
c. Rate of Interest on Fixed Deposits
d. None of the above
Q. Cost of Capital for Bonds and Debentures is calculated on:
a. Before Tax basis
b. After Tax basis
c. Risk-free Rate of Interest basis
d. None of the above.
Q. Which of the following cost of capital require tax adjustment?
a. Cost of Equity Shares
b. Cost of Preference Shares
c. Cost of Debentures
d. Cost of Retained Earnings.
Q. Which is the most expensive source of funds?
a. New Equity Shares
b. New Preference Shares
c. New Debts
d. Retained Earnings
Q. Marginal cost of capital is the cost of:
a. Additional Sales
b. Additional Funds
c. Additional Interests
d. None of the above.
Q. In case the firm is all-equity financed, WACC would be equal to
a. Cost of Debt
b. Cost of Equity
c. Neither (a) nor (b)
d. Both (a) and (b)
Q. In case of partially debt-financed firm, k0 is less
a. Kd
b. Ke
c. Both (a) and (b)
d. None of the above
Q. In order to calculate Weighted Average Cost of weights may be based on:
a. Market Values
b. Target Values
c. Book Values
d. All of the above
Q. Firm's Cost of Capital is the average cost of:
a. All sources
b. All borrowings
c. Share capital
d. Share Bonds & Debentures