Business Finance MCQ Questions and Solutions with Explanations

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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-3

Each section contains 100 MCQs on Business Finance .

Net working capital = . . . . . . . . - Current liabilities

A) Current assets B) Fixed assets C) Stock D) Bill receivable

Discuss

Answer & Solution

Answer: Option A

No explanation is given for this question. Let's Discuss on Board

MM theory in perfect market suggests that dividend payment

A) has a positive impact on the value of a firm B) has no impact on the value of a firm C) has a negative impact on the value of a firm D) has negligible impact on the firm

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Shareholders demand higher returns in compensation for increased levels of risk. It should be called

A) Excess return B) Risk-free rate C) Risk-averse D) Diversification

Discuss

Answer & Solution

Answer: Option C

No explanation is given for this question. Let's Discuss on Board

The presence of fixed costs in the total cost structure of firm results in

A) Financial leverage B) Operating leverage C) Super leverage D) None of the above

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

A firm operating in India cannot hedge its foreign currency exposure through

A) forwards B) options C) futures D) None of these

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

'That personal leverage can replace corporate leverage' is assumed by

A) Traditional Approach B) MM Model C) Net Income Approach D) Net Operating Income Approach

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Which of the following statements regarding covariance is correct?

A) Covariance always lies in the range -1 to +1 B) Covariance, because it involves a squared value, must always be a positive number (or zero) C) Low covariance among returns for different securities leads to high portfolio risk D) Covariance can take on positive, negative, or zero values

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board

. . . . . . . . is considered as a creative capital performing economic functions different from other investment vehicles, primarily serving as the expansion capital.

A) Equity Capital B) Fixed Capital C) Venture Capital D) Share Capital

Discuss

Answer & Solution

Answer: Option C

No explanation is given for this question. Let's Discuss on Board

In a certainty-equivalent approach, risk-adjusted cash flows are discounted at

A) Accounting Rate of Return B) Internal Rate of Return C) Hurdle Rate D) Risk-free Rate

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board

While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?

A) The degree of risk involved B) The current rate of interest on gilt-edged securities C) The weighted average cost of capital D) All of the above

Discuss

Answer & Solution

Answer: Option D

No explanation is given for this question. Let's Discuss on Board

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Business Finance MCQ Questions and Solutions with Explanations | Commerce