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-7 section-1

Which of the following risk is termed as foreign exchange risk?

A) Transaction risk B) Translation risk C) Economic risk D) All of the above

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Answer & Solution

Answer: Option D

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Assertion (A): A company should pay dividend to its shareholders.
Reason (R): Dividends are heavilly taxed than capital gains.

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

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Answer & Solution

Answer: Option A

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Permanent working capital is generally financed through

A) Long-term capital funds B) Goverment assistance C) Internal financing D) Short-term loans from banks

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Answer & Solution

Answer: Option A

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We adopt the philosophy analogous to hedging (maturity matching). Which of the following is the most appropriate form for financing a new capital investment in plant and equipment?

A) Trade credit B) Banknotes C) Accounts payable D) Common stock equity

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Answer & Solution

Answer: Option D

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Which among the following is the correct full form of SIDO set up in 1973?

A) Standards Industries Development Organization B) Small Industries Development Organization C) State Industrial Development Organization D) None of these

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Answer & Solution

Answer: Option B

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Debentures are long-term Borrowings of a Company. In debenture, interest payable is

A) Transferred to general reserve B) Transferred to falling fund investment account C) Charged against the firm's profits D) Appropriation of the company's profits

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Answer & Solution

Answer: Option C

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Which of the following sections of the Companies Act, 2013, defines shares?

A) Section 2(84) B) Section 2(80) C) Section 2(48) D) Section 2(45)

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Answer & Solution

Answer: Option A

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Which one of the following statement is false?

A) Effective dividend policy is an important tool to achieve the goal of wealth maximisation B) According to Walter, the optimal payout ratio for a growth firm is 100% C) MM model asserts that the value of the firm is not affected whether the firm pays dividend or not D) Bird-in-the-hand theory' in reference to dividend decision has been developed by Myron Gordon

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Answer & Solution

Answer: Option B

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Which one the following assumptions is not covered in the Walter's model of the Dividend Policy?

A) All financing is done through ratained earnings B) Firm's business risk does not change due to additional investments C) The firm has an infinte life D) The key vanables like EPS and DPS keep on changing

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Answer & Solution

Answer: Option D

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Dividend capitalisation model was developed by

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

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Answer & Solution

Answer: Option B

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