Top 150+ Solved Strategic Financial Management MCQ Questions Answer
Q. In …… approach says that capital structure decision is relevant to the valuation of the firm.
a. Traditional
b. Net income
c. Modiglani and Millers
d. Net operating income
Q. ______ is defined as the length of time required to recover the initial cash outlay.
a. Payback period
b. Discounted cash back
c. IRR
d. NPV
Q. The term capital structure refers to…………..
a. Shareholders equity
b. Current asset and current liabilities
c. Total asset minus liabilities
d. Composition of debt and equity
Q. In Walter model alphabet ‘D’ in the formula stands for……..
a. Dividend per share
b. Dividend earning
c. Direct dividend
d. None of these
Q. A critical assumption of NOI (Net operating income approach) to valuation is that…
a. Debt and equity levels remain unchanged.
b. Dividends increase at constant rate
c. Overall cost of capital is independent of the degree of leverage
d. Interest expenses and taxes are included in calculation
Q. According to …. principle the ideal pattern of capital structure is one that tends to minimize the costof financing.
a. Control principle
b. Cost principle
c. Risk principle
d. Flexibility principle
Q. ….principle says that issue of debt and preference shares do not affect the interest of equity shareholders.
a. Cost principle
b. Risk principle
c. Control principle
d. Timing principle
Q. One of the important assumptions of NI approach is…...
a. Cost of debt > cost of equity
b. Cost of debt < cost of equity
c. Cost of debt = Cost of equity
d. None of the above
Q. Traditional approach of capital structure is also known as….
a. Neutral approach
b. Mixed approach
c. Intermediate approach
d. Parallel
Q. ……… is not a financing method for merger and acquisition.
a. Cash
b. Vendor placing
c. Convertible bond
d. Factoring
Q. Convertible bonds are not ……
a. Straight bonds
b. Converted to ordinary shares
c. Two stage financial instrument
d. Hybrid securities
Q. A lease agreement grants lessee the right to….
a. Own the asset
b. Use the asset
c. Own and use the asset
d. Sell the asset
Q. Operating lease is favoured by the lessee in respect of assets which depreciate in value on accountof …..
a. Obsolescence
b. Wear and tear
c. Exhaustion
d. Fire
Q. A “sale and lease back” arrangement is suitable for a lessee having…..
a. Liquidity crisis
b. Surplus fund
c. High profit
d. Loss