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-6

Economic exposure does not deal with

A) change in real exchange rates B) future cash flow of the firm C) expected exchange rate changes D) None of the above

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Answer & Solution

Answer: Option C

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"Capital budgeting is long-term planning for making and financing proposed capital outlays." This definition is given by

A) Milton H. Spencer B) R. M. Lynch C) Charles T. Horngreen D) Joel Dean

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Answer: Option C

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Match the items of List-I with List-II and indicate the correct answer:

List-I	List-II
a. Net Income Approach	1. Working Capital Management
b. Profitability Index	2. Over Capitalization
c. Concentration Planning	3. Capital Structure Banking
d. Lower Rate of Decision	4. Capital Budgeting Return

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

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Answer: Option A

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The full details for the issue of ADRs by a company must be furnished within 30 days from the date of its closure to

A) Securities and Exchange Commission (SEC) B) Reserve Bank of India (RBI) C) Securities and Exchange Board of India (SEBI) D) Company Law Board (CLB)

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Answer: Option B

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The Lintner Model shows that the current dividend depends

A) Partly on current earnings and partly on the previous year's dividend B) Partly on the market rate of return and partly on the expected rate of return C) Partly on current earnings and partly on the expected rate of return D) Partly on the previous year's dividend and partly on the market rate of return

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Answer & Solution

Answer: Option A

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Financial derivatives include

A) Stocks B) Forward contracts C) Futures D) Both B and C

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Answer & Solution

Answer: Option D

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In finance, working capital means the same thing as

A) total assets B) fixed assets C) current assets D) None of these

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Answer & Solution

Answer: Option C

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Which of the following statement(s) is/are incorrect?

A) According to MM theory, the value of a firm is affected by the debt equity mix B) According to MM theory, 'the total value of the firm is static' C) Both A and B D) None of the above

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Answer: Option A

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Match the correct combination for Assertion and Reason as argued by Shapiro and Titman:
Assertion (A): Management decisions to insure or hedge asset appear at best neutral mutation.
Reason (R): The price of systematic risk is identical for all the participants in the financial market.

A) (A) is correct, but (R) is incorrect B) (A) is incorrect, but (R) is correct C) Both (A) and (R) is incorrect D) Both (A) and (R) is correct

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Answer & Solution

Answer: Option D

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Combined leverage is calculated as A.

A) Operating Leverage + Financial Leverage B) Operating Leverage - Financial Leverage C) Operating Leverage × Financial Leverage D) Operating Leverage ÷ Financial Leverage

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Answer & Solution

Answer: Option C

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