Business Finance MCQ Questions and Solutions with Explanations

21

Working capital(s) is/are also called

A) revolving capital B) circulating capital C) Both A and B D) None of these

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Answer & Solution

Answer: Option C

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22

Which of the following statement is incorrect?

A) If the company allows liberal credit to its customers, high amount would be invested in debtors B) The needs of working capital for a large business is less than these of a small business C) Working capital requirement will be high only in seasons D) None of the above

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Answer & Solution

Answer: Option B

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23

Match the items of the following two lists and suggest the correct answer:

List-I	List-II
a. Realized Yield Method	1. Cost of equity share capital
b. Taxation	2. Cost of equity capital
c. Cost of total capital employed	3. Cost of debt capital
d. Dividend growth is a consideration	4. Weighted cost of capital

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

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Answer & Solution

Answer: Option C

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24

The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as . . . . . . . .

A) Probability distribution B) Expected return C) Standard deviation D) Coefficient of variation

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Answer & Solution

Answer: Option B

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25

The cost of capital of a firm is

A) The dividend paid on the equity capital B) The weighted average of the cost of various longterm and short-term sources of finance C) The average rate of return it must earn on investments to satisfy the investors D) The minimum rate of return it must earn on investments to keep its investors satisfied

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Answer & Solution

Answer: Option D

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26

Which of the following is the variability of return on stocks or portfolios associated with changes in return on the market as a whole?

A) Systematic risk B) Standard deviation C) Unsystematic risk D) Coefficient of variation

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Answer & Solution

Answer: Option A

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27

The modern approach to financial management is
(i) The total fund requirement of the firm.
(ii) The asset to be acquired.
(iii) The payment of dividend to the shareholders.

A) (i) only B) (ii) only C) (ii) and (iii) D) (i), (ii) and (iii)

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Answer & Solution

Answer: Option D

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28

A Crawling Peg System means

A) Fixed Exchange Rate System B) Floating Exchange Rate System C) Hybrid of Fixedand Floating Exchange System D) None of the above

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Answer & Solution

Answer: Option C

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29

The time value of money supports the comparison of cash flows recorded at different time period by

A) Discounting all cash flows to a common point of time B) Compounding all cash flows to a common point of time C) Using either A or B D) None of the above

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Answer & Solution

Answer: Option C

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30

Which one of the following is the main objective of IFCI?

A) To offer small and large investors the means of acquiring shares in the widening prosperity resulting from the steady industrial growth of the country B) To upgrade technology modernization and promote the marketing of products of the small-scale sector C) To serve as the apex institution for term finance for the industry with coordination, regulation, and supervision of the working of other financial institution D) To provide medium and long-term financial assistance to industrial undertakings, particularly in those circumstances in which banking accommodation is inappropriate or resource to the capital market is impracticable

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Answer & Solution

Answer: Option D

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Business Finance MCQ Questions and Solutions with Explanations | Commerce