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-3

Hedging is used by companies to

A) Decrease the variability of expected cash flows B) Decrease the spread between spot and forward market quotes C) Increase the variability of expected cash flows D) Increase the variability of tax paid

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Answer & Solution

Answer: Option A

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Which one of the following emphasizes the qualitative aspects of working capital management?

A) Gross working capital B) Quick working capital C) Net working capital D) None of the above

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Answer & Solution

Answer: Option C

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Which one of the following is not a merit of net present value?

A) Considers all cash flows B) True measures of profitability C) Based on the concepts of the time value of money D) Requires estimate of cash flows which is a tedious task

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Answer & Solution

Answer: Option D

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The method by which a firm may protect itself against economic exposure is

A) Geographical diversification B) Forward contract hedges C) Money market hedges D) Futures market hedging

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Answer & Solution

Answer: Option A

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In 2002, ICICI merged with ICICI Bank through a reverse merger process. The mam objective of the merger was to make ICICI a

A) Narrow bank B) Foreign bank C) Universal bank D) The largest financial institution

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Answer & Solution

Answer: Option C

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Permanent working capital

A) varies with seasonal needs B) includes fixed assets C) is the amount of current assets D) includes accounts payable

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Answer & Solution

Answer: Option C

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A(n) . . . . . . . . is the expected cash dividend that is normally paid to shareholders.

A) Stock split B) Stock dividend C) Extra dividend D) Regular dividend

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Answer & Solution

Answer: Option D

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Which of the following are the main features of an operating lease?
(i) Operating lease is off-balance-sheet financing.
(ii) The lease period is shorter than the useful life of the leased asset.
(iii) The lease agreement will never have a cancellation clause.
(iv) The operating lease is also called service lease.

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

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Answer & Solution

Answer: Option C

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The main advantages of hedging are
(i) Limiting losses
(ii) Increases liquidity
(iii) Lowers margin outlay
(iv) Exchange rate fluctuations
(v) Application of different tax rates
(vi) Covering political risk in foreign investments

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

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Answer & Solution

Answer: Option D

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"Dividend is not relevant in determining the value of the company". Who held this opinion?

A) J. E. Walter B) Ezra Solomon C) Modigliani-Miller D) M. J. Gordon

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Answer & Solution

Answer: Option C

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