Finance MCQs

Option A: Return ratios

Option B: Market value ratios

Option C: Marginal ratios

Option D: Equity ratios

Correct Answer: Market value ratios ✔

Option A: Discounted payback period

Option B: Discounted rate of return

Option C: Discounted cash flows

Option D: Discounted project cost

Correct Answer: Discounted payback period ✔

Option A: Return on turnover

Option B: Return on stock

Option C: Return on assets

Option D: Return on equity

Correct Answer: Return on equity ✔

Option A: Costs

Option B: Cash flows

Option C: Internal rate of return

Option D: External rate of return

Correct Answer: Internal rate of return ✔

Option A: External return method

Option B: Net present value of method

Option C: Net future value method

Option D: Internal return method

Correct Answer: Net present value of method ✔

Option A: High return on equity

Option B: High return on assets

Option C: Low return on assets

Option D: Low return on equity

Correct Answer: High return on assets ✔

Option A: Cash flow decision

Option B: Cost decision

Option C: Same decisions

Option D: Different decisions

Correct Answer: Same decisions ✔

Option A: Price earnings ratio

Option B: Earning price ratio

Option C: Pricing ratio

Option D: Earning ratio

Correct Answer: Price earnings ratio ✔

Option A: Equity multiplier

Option B: Graphical multiplier

Option C: Turnover multiplier

Option D: Stock multiplier

Correct Answer: Equity multiplier ✔

Option A: competitive companies

Option B: Benchmark companies

Option C: Analytical companies

Option D: Return companies

Correct Answer: Benchmark companies ✔

Option A: Common size analysis

Option B: Percent change analysis

Option C: Returning ratios analysis

Option D: Both A and B

Correct Answer: Both A and B ✔

Option A: Dividend to stock ratio

Option B: Sales to growth ratio

Option C: Cash flow to price ratio

Option D: Price to cash flow ratio

Correct Answer: Price to cash flow ratio ✔

Option A: Return on total assets

Option B: Return on total equity

Option C: Return on debt

Option D: Return on sales

Correct Answer: Return on total assets ✔

Option A: 8.57 times

Option B: 8.57%

Option C: 0.11 times

Option D: 11%

Correct Answer: 8.57 times ✔

Option A: 0.11%

Option B: 11.40%

Option C: 0.12 times

Option D: 12%

Correct Answer: 11.40% ✔

Option A: Graphical analysis

Option B: Preference analysis

Option C: Common size analysis

Option D: Returning analysis

Correct Answer: Common size analysis ✔

Option A: Risk

Option B: Risk and Return

Option C: Return

Option D: None of the above

Correct Answer: Risk ✔

Option A: Bank of Commerce and Cooperation International

Option B: Bank of Central Cooperation International

Option C: Bank of Credit and Commerce International

Option D: None of These

Correct Answer: Bank of Credit and Commerce International ✔

Option A: 72 divided by the annual interest rate

Option B: Annual interest rate dividend by 72

Option C: 72 divided by (annual interest rate multiplied by discount factor)

Option D: None of these

Correct Answer: 72 divided by the annual interest rate ✔

Option A: Dividing the square root of the number of items in the sample by the mean

Option B: Dividing standard deviation by number of items in the sample

Option C: Dividing the standard deviation by the square root of the number of items in the sample

Option D: We cannot calculate standard error on account of inadequacy of information

Correct Answer: We cannot calculate standard error on account of inadequacy of information ✔

Option A: Improve if assets are revalued upward

Option B: Remain unaffected

Option C: Improve if assets are revalued downwards

Option D: Undergo change only if liabilities are remaining constant

Correct Answer: Remain unaffected ✔

Option A: Sources of funds

Option B: Use of funds

Option C: Inflow of funds

Option D: None of these

Correct Answer: Use of funds ✔

Option A: It increases the real value of cash flows received in the future

Option B: It reduces the real value of cash flows received in the future

Option C: It has no effect on real value of cash flow received in the future

Option D: None of these

Correct Answer: It reduces the real value of cash flows received in the future ✔

Option A: CF1 / (1+r)n

Option B: C2 / (1+r)

Option C: C0 + C (1+r)n

Option D: None of these

Correct Answer: CF1 / (1+r)n ✔

Option A: Cash shortage

Option B: Low inventory turnover ratio

Option C: Low current ratio

Option D: High inventory turnover ratiO

Correct Answer: Low inventory turnover ratio ✔

Option A: The present value of the bond

Option B: The bonds internal rate of return

Option C: The future value of the bond

Option D: None of these

Correct Answer: The bonds internal rate of return ✔

Option A: Accountants

Option B: Financial Analysts

Option C: Auditors

Option D: Marketers

Correct Answer: Financial Analysts ✔

Option A: Net loss

Option B: Net worth

Option C: Markup

Option D: Markdown

Correct Answer: Markup ✔

Option A: Role of foreign exchange

Option B: Balance of payments

Option C: Attitude of Governments

Option D: All of the given options

Correct Answer: All of the given options ✔

Option A: Rs. 1,000

Option B: Rs. 1,244

Option C: Rs. 1,331

Option D: Rs. 1,464

Correct Answer: Rs. 1,244 ✔

Option A: Profit Margin

Option B: Return on Assets

Option C: Return on Equity

Option D: Debt-Equity Ratio

Correct Answer: Return on Equity ✔

Option A: Rs. 300,000

Option B: Rs. 500,000

Option C: Rs. 800,000

Option D: Rs. 1100,000

Correct Answer: Rs. 800,000 ✔

Option A: Debt is an ownership interest in the firm.

Option B: Unpaid debt can result in bankruptcy or financial failure.

Option C: Debt provides the voting rights to the bondholders.

Option D: Corporation’s payment of interest on debt is fully taxable.

Correct Answer: Unpaid debt can result in bankruptcy or financial failure. ✔

Option A: Rs. 5,400

Option B: Rs. 5,900

Option C: Rs. 6,600

Option D: Rs. 6,802

Correct Answer: Rs. 6,802 ✔

Option A: Bond ratings are typically paid for by a company’s bondholders.

Option B: Bond ratings are based solely on information acquired from sources other than the bond issuer.

Option C: Bond ratings represent an independent assessment of the credit-worthiness of bonds.

Option D: None of the given options

Correct Answer: Bond ratings represent an independent assessment of the credit-worthiness of bonds. ✔

Option A: Inventory Turnover Ratio

Option B: Receivable Turnover

Option C: Capital Intensity Ratio

Option D: Return on Assets

Correct Answer: Capital Intensity Ratio ✔

Option A: 12%

Option B: 25%

Option C: 40%

Option D: 60%

Correct Answer: 40% ✔

Option A: Net Working Capital

Option B: Cash Flow

Option C: Net Present Value

Option D: None of the given options

Correct Answer: Cash Flow ✔

Option A: Income Statement

Option B: Balance Sheet

Option C: Cash Flow Statement

Option D: Retained Earning Statement

Correct Answer: Balance Sheet ✔

Option A: Premium

Option B: Discount

Option C: Par

Option D: Cannot be determined without more information

Correct Answer: Premium ✔

Option A: Sole-proprietorship

Option B: Partnership

Option C: Corporation

Option D: None of the given options

Correct Answer: Partnership ✔

Option A: Liquidity Ratios

Option B: Long-term Solvency Ratios

Option C: Profitability Ratios

Option D: Market Value Ratios

Correct Answer: Liquidity Ratios ✔

Option A: Operating activity

Option B: Investing activity

Option C: Financing activity

Option D: None of the given options

Correct Answer: Investing activity ✔

Option A: Increase

Option B: Decrease

Option C: Remain unaffected

Option D: Become zero

Correct Answer: Decrease ✔

Option A: Liquidity Ratios

Option B: Leverage Ratios

Option C: Profitability Ratios

Option D: Market Value Ratios

Correct Answer: Market Value Ratios ✔

Option A: Fluctuations Risk

Option B: Interest Rate Risk

Option C: Real-Time Risk

Option D: Inflation Risk

Correct Answer: Interest Rate Risk ✔

Option A: 6 years

Option B: 12 years

Option C: 24 years

Option D: 48 years

Correct Answer: 12 years ✔

Option A: Operating efficiency

Option B: Asset use efficiency

Option C: Financial policy

Option D: Dividend policy

Correct Answer: Dividend policy ✔

Option A: Sole-proprietorship

Option B: General Partnership

Option C: Limited Partnerhsip

Option D: Corporation

Correct Answer: General Partnership ✔

Option A: Capital budgeting

Option B: Capital structure

Option C: Working capital management

Option D: All of the given options

Correct Answer: All of the given options ✔

Option A: Positive

Option B: Negative

Option C: zero

Option D: None of the given options

Correct Answer: zero ✔

Option A: Financing

Option B: Investing

Option C: Managing day today expenses

Option D: None of the given options

Correct Answer: None of the given options ✔

Option A: long-term; short-term

Option B: short-term; long-term

Option C: lower-coupon; higher-coupon

Option D: None of the given options

Correct Answer: short-term; long-term ✔

Option A: Ordinary annuity

Option B: Annuity due

Option C: Perpetuity

Option D: None of the given options

Correct Answer: Annuity due ✔

Option A: 8.42 years

Option B: 10.51 years

Option C: 15.75 years

Option D: 18.78 years

Correct Answer: 10.51 years ✔

Option A: Discounting

Option B: Compounding

Option C: Factorization

Option D: None of the given options

Correct Answer: Discounting ✔

Option A: Inventory

Option B: Supplies

Option C: Machinery

Option D: Depreciation

Correct Answer: Depreciation ✔

Option A: sole proprietorship

Option B: partnership

Option C: joint stock company

Option D: none of the above

Correct Answer: joint stock company ✔

Option A: Liquidity Ratios

Option B: Long-term Solvency Ratios

Option C: Profitability Ratios

Option D: Market Value Ratios

Correct Answer: Liquidity Ratios ✔

Option A: Rs. 1,000 because it has the higher future value

Option B: Rs. 1,000 because you receive it sooner

Option C: Rs. 1,050 because it is more money

Option D: Either because both options are of equal value

Correct Answer: Either because both options are of equal value ✔

Option A: Ordinary Annuity

Option B: Special Annuity

Option C: Annuity Due

Option D: Perpetuity

Correct Answer: Perpetuity ✔

Option A: Current Ratio

Option B: Acid-test Ratio

Option C: Cash Ratio

Option D: None of the given options

Correct Answer: Acid-test Ratio ✔

Option A: Assets = Liabilities – Stockholder’s equity

Option B: Assets + Liabilities = Stockholder’s equity

Option C: Assets + Stockholder’s equity = Liabilities

Option D: Assets = Liabilities + Stockholder’s equity

Correct Answer: Assets = Liabilities + Stockholder’s equity ✔

Option A: Liquidity Ratios

Option B: Long-term Solvency Ratios

Option C: Asset Management Ratios

Option D: Profitability Ratios

Correct Answer: Long-term Solvency Ratios ✔

Option A: Sole-proprietorship

Option B: General Partnership

Option C: Limited Partnership

Option D: Corporation

Correct Answer: Sole-proprietorship ✔

Option A: Agency problem

Option B: Interest conflict

Option C: Management conflict

Option D: Agency cost

Correct Answer: Agency problem ✔

Option A: Rs. 33,000

Option B: Rs. 25,000

Option C: Rs. 17,000

Option D: Rs. 8,000

Correct Answer: Rs. 17,000 ✔

Option A: Ordinary annuity

Option B: Annuity due

Option C: Perpetuity

Option D: None of the given options

Correct Answer: Ordinary annuity ✔

Option A: Most widely used

Option B: Ideal to rank the mutually exclusive investments

Option C: Easily communicated and understood

Option D: Can be estimated even without knowing the discount rate

Correct Answer: Ideal to rank the mutually exclusive investments ✔

Option A: Dividend Price Model

Option B: Dividend Growth Model

Option C: Dividend Policy Model

Option D: All of the given options

Correct Answer: Dividend Growth Model ✔

Option A: Sunk cost

Option B: Opportunity cost

Option C: Financing cost

Option D: All of the given options

Correct Answer: Opportunity cost ✔

Option A: Homemade leverage

Option B: Financial leverage

Option C: Operating leverage

Option D: None of the given option

Correct Answer: Homemade leverage ✔

Option A: Financial risk

Option B: Portfolio risk

Option C: Operating risk

Option D: Market risk

Correct Answer: Financial risk ✔

Option A: Bank loan

Option B: Commercial papers

Option C: Trade credit

Option D: None of the given options.

Correct Answer: Trade credit ✔

Option A: Book value

Option B: Intrinsic value

Option C: Cost

Option D: Market value

Correct Answer: Book value ✔

Option A: -1

Option B: 0

Option C: 1

Option D: 2

Correct Answer: 1 ✔

Option A: Higher

Option B: Lower

Option C: Constant

Option D: None of These

Correct Answer: Higher ✔

Option A: It is the most basic form of calculating interest.

Option B: It earns profit not only on principal but also on interest.

Option C: It is calculated by multiplying principal by rate multiplied by time.

Option D: It does not take into account the accumulated interest for calculation.

Correct Answer: It earns profit not only on principal but also on interest. ✔

Option A: To maintain a high ratio of current assets to sales

Option B: To maintain a low ratio of current assets to sales

Option C: To less short-term debt and more long-term debt

Option D: To more short-term debt and less long-term debt

Correct Answer: To maintain a low ratio of current assets to sales ✔

Option A: Bond Price < Par Value and YTM > coupon rate

Option B: Bond Price > Par Value and YTM > coupon rate

Option C: Bond Price > Par Value and YTM < coupon rate

Option D: Bond Price < Par Value and YTM < coupon rate

Correct Answer: Bond Price < Par Value and YTM > coupon rate ✔

Option A: Stock Bundle

Option B: Portfolio

Option C: Capital Structure

Option D: None of These

Correct Answer: Portfolio ✔

Option A: IRR (Internal Rate of Return)

Option B: MIRR (Modified Internal Rate of Return)

Option C: WACC (Weighted Average Cost of Capital)

Option D: AAR (Average Accounting Return)

Correct Answer: WACC (Weighted Average Cost of Capital) ✔

Option A: an ordinary annuity

Option B: annuity due

Option C: multiple cash flows

Option D: perpetuity

Correct Answer: an ordinary annuity ✔

Option A: The DuPont Identity tells us that Return on Equity is affected by:

Option B: asset use efficiency (as measured by total assets turnover)

Option C: financial Leverage (as measured by equity multiplier)

Option D: all of the given options (a, b and c)

Correct Answer: all of the given options (a, b and c) ✔

Option A: a common-size statement

Option B: an income statemen

Option C: a cash flow statement

Option D: a balance sheet

Correct Answer: a common-size statement ✔

Option A: Capital Structuring

Option B: Capital Rationing

Option C: Capital Budgeting

Option D: Working Capital Management

Correct Answer: Capital Budgeting ✔

Option A: Par value

Option B: Coupon value

Option C: Present value of an annuity

Option D: Present value of a lump sum

Correct Answer: Par value ✔

Option A: Surplus Asset

Option B: Short-term Ratio

Option C: Working Capital

Option D: Current Ratio

Correct Answer: Working Capital ✔

Option A: CF from Assets = CF to Creditors – CF to Stockholder

Option B: CF from Assets = CF to Stockholders – CF to Creditors

Option C: CF to Stockholders = CF to Creditors + CF from Assets

Option D: CF from Assets = CF to Creditors + CF to Stockholder

Correct Answer: CF from Assets = CF to Creditors + CF to Stockholder ✔

Option A: Positive

Option B: Negative

Option C: zero

Option D: None of the given options

Correct Answer: zero ✔

Option A: Liquidity Ratios

Option B: Leverage Ratios

Option C: Profitability Ratios

Option D: Market Value Ratios

Correct Answer: Profitability Ratios ✔

Option A: Operating efficiency

Option B: Asset use efficiency

Option C: Financial policy

Option D: Dividend policy

Correct Answer: Operating efficiency ✔

Option A: Dividends

Option B: Retained Earnings

Option C: Capital Gain

Option D: None of the given options

Correct Answer: Retained Earnings ✔

Option A: Current Ratio

Option B: Acid-test Ratio

Option C: Cash Ratio

Option D: Solvency Ratio

Correct Answer: Acid-test Ratio ✔

Option A: Liquidity Ratios

Option B: Long-term Solvency Ratios

Option C: Profitability Ratios

Option D: Market Value Ratios

Correct Answer: Liquidity Ratios ✔

Option A: Primary market

Option B: Secondary market

Option C: Tertiary market

Option D: None of the given options

Correct Answer: Primary market ✔

Option A: Operating Leverage

Option B: Financial Leverage

Option C: Manufacturing Leverage

Option D: None of the given options

Correct Answer: Financial Leverage ✔

Option A: 5 days

Option B: 36 days

Option C: 48 days

Option D: 73 days

Correct Answer: 73 days ✔

Option A: Product cost

Option B: Period cost

Option C: Both product cost and period cost

Option D: Neither product cost nor period cost

Correct Answer: Product cost ✔

Option A: Marketing Research

Option B: Product Pricing

Option C: Design of marketing and distribution channels

Option D: All of the given options

Correct Answer: All of the given options ✔