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-3 section-3

The conservative approach is a risk-free strategy of working capital financing that helps in maintaining a higher level of current assets and higher working capital. Which of the following is consistent with a conservative approach to financing working capital?

A) Financing short-term needs with short-term funds B) Financing short-term needs with long-term debt C) Financing seasonal needs with short-term funds D) Financing some long-term needs with short-term funds

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Funds required for purchasing current assets is an example of

A) fixed capital requirement B) lease financing C) working capital requirement D) ploughing back of profits

Discuss

Answer & Solution

Answer: Option C

No explanation is given for this question. Let's Discuss on Board

Which of the followingis not a clear difference between debenture holders and shareholders of a company?

A) Voting rights in the company B) Ownership of the company C) Interest and dividends as a form of financial return D) Impact on the company's working capital

Discuss

Answer & Solution

Answer: Option C

No explanation is given for this question. Let's Discuss on Board

Which of the following is not used to estimate cost of equity capital?

A) External yield criterion B) Dividend plus growth rate C) Equity capitalisation approach D) Capital asset pricing model

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board

Dividend capitalization model was developed by

A) Ezra Solomon B) Myron J. Gordon C) James E. Walter D) Merton H. Miller and Franco Modigliani

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Finance leases are accounted for in a similar manner to

A) credit transactions B) cash transactions C) sale and leaseback agreements D) loan forgiveness

Discuss

Answer & Solution

Answer: Option A

No explanation is given for this question. Let's Discuss on Board

Assertion (A): Weighted average cost of capital should be used as a hurdle rate for accepting or rejecting a capital budgeting proposal.
Reason (R): It is because by financing in the proportions specified and accepting the project, yielding more than the weighted average required return, the firm is able to increase the market price of its stock.

A) Both (A) and (R) are false B) Both (A) and (R) are true C) (A) is true, while (R) is false D) (A) is false, while (R) is true

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Which of the following can be defined as the example of direct finance?

A) Debenture and equity B) Term finance C) Short-term financing D) Any debt instrument

Discuss

Answer & Solution

Answer: Option A

No explanation is given for this question. Let's Discuss on Board

Which of the following is a long-term lease that is not cancelable and its life often matches the useful life of the asset?

A) Financial lease B) Operating lease C) Net lease D) None of the above

Discuss

Answer & Solution

Answer: Option A

No explanation is given for this question. Let's Discuss on Board

Which capital investors are long-term investors who are prepared to take the risk that the entrepreneurial projectcan fail?

A) Mega B) Progress C) Multiple D) Venture

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board