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-8 section-2

"The cost of capital is the minimum rate of return which a firm requires as a condition for undertaking an investment." This definition is given by

A) Soloman Ezra B) Milton H. Spencer C) R. M. Lynch D) None of these

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Answer: Option B

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Arrange the following steps of operation cycle in correct order
1. Conversion of a accounts receivables into cash.
2. Conversion of work-in-progress into finished goods.
3. Conversion of raw-material into work-in-progress.
4. Conversion of finished goods into accounts receivable.

A) 2, 1, 4, 3 B) 4, 3, 2, 1 C) 3, 2, 4, 1 D) 1, 4, 3, 2

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Answer: Option C

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Which of the following is not a disclosure requirement for finance leases?

A) Carrying amount of asset B) Market value of asset C) General description of significant leasing arrangements D) Reconciliation between total minimum lease payments and their present value

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Answer: Option B

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Which of the following options are a part of preference shares?

A) They are not allowable for corporation tax B) They receive dividends C) They have no voting rights D) They are not a part of a company's share capital

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Answer: Option B

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Under dividend reinvestment plan (DRIP):

A) The dividends are not passed on to investors in the form of money B) It allows shareholders to automatically reinvest dividend payments in some scheme or additional shares of the firm's stock C) Both A and B D) It is a mandatory plan where shareholders are automatically reinvesting dividend payments in additional shares of the firm's stock at a reduced price

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Answer: Option C

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A company may raise the financial capital in the primary market through

A) Public issue B) Rights issue C) Bough tout deals D) All of the above

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Answer: Option D

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Which of the following is concerned with the maximization of a firm's stock price?

A) Shareholder wealth maximization B) Profit maximization C) Stakeholder welfare maximization D) EPS maximization

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Answer: Option A

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If the going rate of interest is above the coupon rate, the bond will sell

A) At a premium B) At par C) At a discount D) None of the above

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Answer: Option B

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

A) Undercapitalisation leads to overcapitalisation B) Capital' and 'Capitalisation' are synonymous terms C) Both A and B D) None of the above

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Answer: Option A

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Monetary policy for the countries using the euro as a currency is now conducted by

A) The Federal Reserve B) The Bundes Bank C) European Central Bank D) RBI

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Answer: Option C

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