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-5 section-6

Which of the following factor is not directly responsible for slowing down the growth of infrastructure?

A) High level of perceived political risk B) High level of sunk cost C) High probability of time and cost over-run D) Introduction of competition in all sectors

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Answer & Solution

Answer: Option D

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Which of the following is a basic principle of finance as it relates to the management of working capital?

A) Profitability varies inversely with risk B) Liquidity moves together with risk C) Profitability moves together with risk D) Profitability moves together with liquidity

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Answer & Solution

Answer: Option C

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Statement-I: Working capital leverage measures the responsiveness of return on equity for changes in current assets.
Statement-II: When the annual demand for an item is 3,200 units, the unit cost is Rs. 6, inventory carrying charges is 25% p.a., and the cost of one procurementis Rs. 50, the economic ordering quantity would be 700 units.

A) Both statements are correct B) Both statements are incorrect C) Statement-I is correct, but Statement-II is incorrect D) Statement-I is incorrect, but Statement-II is correct

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Answer & Solution

Answer: Option B

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Which form of market efficiency states that current prices fully reflect all publicly available information?

A) Weak B) Semi-strong C) Strong D) None of the above

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Answer & Solution

Answer: Option B

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Concessions, mainly multinational in character, come under the principle of

A) Non-discrimination B) Reciprocity C) Market Access D) Fair Competition

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Answer & Solution

Answer: Option B

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If the risk-free return (Rf) is 6%, the beta value is 1.5, and the market rate of return (Km) is 10%, the expected rate of return would be

A) 15% B) 12% C) 17.5% D) 16%

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Answer & Solution

Answer: Option B

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Hedging in finance refers to protecting investments. What are the areas where hedging is applied?
(i) Securities market
(ii) Commodities market
(iii) Interest Rates
(iv) Currencies

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

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Answer & Solution

Answer: Option A

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Match the following.

List-I (Concepts)	List-II (Disadvantages)
a. Undercapitalisation	1. Ignores time patterns of returns
b. Overcapitalisation	2. Increase in speculative activities
c. Profit maximisation	3. Decline in value of securities

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

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Answer & Solution

Answer: Option D

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Which of the following equates the present value of cash outflows and the present value of expected cash inflows from a project?

A) Net Present Value B) Internal Rate of Return C) Payback Period D) Accounting Rate of Return

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Answer & Solution

Answer: Option B

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According to the APT, the value of the firm-specificfactor is expected to be, on average

A) Positive B) Greater than the value of the common factors C) Zero D) More important than the value of the common factors

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Answer & Solution

Answer: Option B

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