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-6 section-5

Which of the following combinations of rules stands true while preparing a schedule of changes in working capital?

A) Increase in current assets increases working capital B) Increase in current assets decreases working capital C) Increase in current liabilities decreases working capital D) Increase in current liabilities mcreases working capital

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Answer & Solution

Answer: Option B

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Need for budgeting arise due to

A) relatively high cost B) permanent commitment C) long-run effect D) All of these

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Answer & Solution

Answer: Option D

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Under which of the following exchange rate systems, exchange rates are either held constant or allowed to fluctuate only within very narrow boundaries?

A) Fixed exchange rate system B) Freely floating exchange rate system C) Managed float exchange rate system D) Pegged exchange rate system

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Answer & Solution

Answer: Option A

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When a company gives an option to its shareholders to receive dividend either in cash or kind, then it is called

A) option dividend B) option currency C) option shareholders D) None of these

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Answer & Solution

Answer: Option A

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Efficient frontier comprises of

A) inefficient portfolios B) efficient portfolios C) portfolios that have negatively correlated securities D) portfolios that have positively correlated securities

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Answer & Solution

Answer: Option B

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Which method does not consider the time value of money?

A) Net Present Value B) Internal Rate of Return C) Average Rate of Return D) Profitability Index

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Answer & Solution

Answer: Option C

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In 2 years, I am set to receive Rs. 1,00,000. If the interest rate were to suddenly decrease, the present value of that future amount to me would

A) Fall B) Rise C) Remain unchanged D) The answer needs more information

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Answer & Solution

Answer: Option B

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A firm's cost of capital is the

A) overall cost of financing to the firm B) cost of bonds C) cost of issuing stock D) None of the above

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Answer & Solution

Answer: Option A

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There are important differences between translation, transaction and economic exposure. Which of the following statements regarding these differences is true?

A) Translation and economic exposure look to the future impact of an exchange rate change which has occurred or may occur B) Translation and transaction exposure involve actual or potential cash flow changes C) Economic exposure is essentially objective because it depends on outstanding obligations which existed before changes in exchange rates D) Economic exposure is essentially subjective because it depends on estimated future cash flows for an arbitrary

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Answer & Solution

Answer: Option D

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The working capital ratio is

A) Working capital + Sales B) Working capital + Total assets C) Current assets + Sales D) Current assets + Current liabilities

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Answer & Solution

Answer: Option D

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