Business Finance MCQ Questions and Solutions with Explanations

Business Finance MCQ Questions and Solutions with Explanations | Commerce

Business Finance MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Business Finance MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-10 section-7

Which of the following methods does not consider the profitability of the whole life of the project?

A) Payback period method B) Internal rate of return method C) Present value index method D) Net present value method

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Answer & Solution

Answer: Option A

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Which of the following is not an indication a lease is a finance lease?

A) The lease transfers ownership ofthe asset to the lessee at the end of the lease B) The lease term is for a short part of the economic life of the asset C) The leased assets are specialised in nature D) The present value of minimum lease payment amounts to substantially all of the fair value of the asset

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Answer & Solution

Answer: Option B

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Dividends are earnings for shareholders and they expect reasonable earnings from their

A) profit B) investments C) property D) All of these

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Answer & Solution

Answer: Option B

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Which of the following combination is suitably attributed to the statement that stakeholders should expect a fair return on their investment?
(i) Optimization of Profit
(ii) Social Responsibility of Business
(iii) Competition Theory of Business
(iv) Walter's Theory

A) (i), (ii) and (iii) B) (ii), (iii) and (iv) C) Only (i) and (ii) D) Only (iii) and (iv)

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Answer & Solution

Answer: Option C

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Which of the following statements is not correct?

A) The cost of capital is the required rate of return to ascertain the value of the firm B) Different sources of funds have a specific cost of capital related to that source only C) Cost of capital does not comprise any risk premium D) Cost of capital is basic data for NPV technique

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Answer & Solution

Answer: Option C

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Match the following.

List-I	List-II
a. Net income approach	1. Also known as 'Intermediate Approach'
b. Net operating income approach	2. Change in the capital structure of a company does not affect the market value of the company and overall cost of capital
c. Traditional approach	3. It provide analytical sound and logically consistent behavioural justification for their hypothesis
d. Modigliani Miller approach	4. A firm can minimise the overall cost of capital by using debt financing to the maximum extent

A) a-4, b-2, c-1, d-3 B) a-2, b-1, c-4, d-3 C) a-3, b-4, c-1, d-2 D) a-2, b-1, c-3, d-4

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Answer & Solution

Answer: Option A

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Dividend policy of a company mainly concerns with
1. Dividend payout and/or
2. Stability of dividend
Select the correct answer using the options given below

A) Only 1 B) Only 2 C) Both 1 and 2 D) None of the above

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Answer & Solution

Answer: Option C

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The risks that cannot be eliminated by diversification are

A) Relevant B) Irrelevant C) Both A and B D) Both A and B do not apply in the answers

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Answer & Solution

Answer: Option A

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If NPV is positive, the IRR will be

A) positive B) K = R C) K < R D) None of these

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Answer & Solution

Answer: Option C

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100

Efficient portfolios can be defined as those portfolios which for a given level of risk provides

A) maximum return B) minimum return C) average return D) None of these

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Answer & Solution

Answer: Option A

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