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-6

Which of the following statement is incorrect?

A) Capital budgeting is the process of making investment decisions in the capital expenditure B) Capital budgeting is the process of making investment decisions in fixed assets C) Both A and B D) None of the above

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Answer & Solution

Answer: Option C

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Which of the following dividend promises to pay the shareholders at a future date?

A) Interest B) SCRIP C) Cash flow D) Property

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Answer & Solution

Answer: Option B

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The repurchase of stock is considered . . . . . . . . decision rather than . . . . . . . . decision.

A) An investment; a financing B) A financing; an investment C) An investment; a dividend D) A dividend; a financing

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Answer & Solution

Answer: Option B

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Which of the following is an internal source of finance?

A) Factoring B) Trade credit C) Retained earnings D) Debentures

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Answer & Solution

Answer: Option C

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Which of the following portfolio statistics statements is correct?

A) A portfolio's expected return is a simple weighted average of expected returns of the individual securities comprising the portfolio B) A portfolio's standard deviation of return is a simple weighted average of individual security return standard deviations C) The square root of a portfolio's standard deviation of return equalsits variance D) The square root of a portfolio's standard deviation of return equalsits coefficient of variation

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Answer & Solution

Answer: Option A

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The cost of equity share capital is more than the cost of debt because

A) Equity shares are not easily saleable B) Equity shares do not provide a fixed dividend rate C) Generally, the face value of equity shares is less than the face value of debentures D) Equity shares havehigh risk than debts

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Answer & Solution

Answer: Option D

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A lease is likely to be most beneficial to both parties when

A) the lessor's tax rate is lower than the lessee's B) the lessor's tax rate is higher than the lessee's C) the lessor's tax rate is equal to the lessee's D) a lease can not be beneficial to both parties

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Answer & Solution

Answer: Option B

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Consider the following statements.
In case of overcapitalisation,
1. market value of shares come down from its face value.
2. organisation failed to earn sufficient profit.
Which of the statement(s) given above is/are correct?

A) Only 1 B) Both 1 and 2 C) Only 2 D) None of the above

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Answer & Solution

Answer: Option D

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International liquidity comprises which of the following?
(i) Gold held by central banks
(ii) Gold held by families
(iii) Forex reserve held by commercial banks
(iv) Mineral wealth
(v) SDRs
(vi) Borrowing facilities
(vii) NRIs and FDRs
(viii) Credit facilities available under SWAP

A) (i), (ii), (iii), (iv) B) (ii), (iii), (iv), (viii) C) (i), (iii), (v), (viii) D) (iii), (iv), (vii), (viii)

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Answer & Solution

Answer: Option C

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XYZ Co earns Rs. 10 per share, capitalised at 10% and has a return on investment of 12%. What is the optimum dividend payout ratio as per Walter's dividend policy model?

A) 0% B) 2% C) 10% D) 12%

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Answer & Solution

Answer: Option A

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