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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-9 section-1

Each section contains 100 MCQs on Business Finance .
81
Which of the following statements are true in the context of dilution of equity shares?
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Answer & Solution
Answer: Option D
No explanation is given for this question. Let's Discuss on Board
82
Which of the following can be termed as the source of permanent working capital?
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Answer & Solution
Answer: Option D
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83
'Dividend is not relevant in determining the value of the company'. Who among the following held this opinion?
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Answer & Solution
Answer: Option C
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84
Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to
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Answer & Solution
Answer: Option C
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85
In case, cost of capital is 10%, EPS Rs. 10, IRR 8% and retention ratio is 60%, then the value of equity share as per Gordon's Model will be
Discuss
Answer & Solution
Answer: Option D
Solution:
Gordon’s Dividend Capitalization Model is used to calculate the value of an equity share using the formula:

P = E(1 – b) / (k – br)

Where:

P = Price of the share (Value of equity share)

E = Earnings per share = Rs. 10

b = Retention ratio = 60% = 0.6

k = Cost of capital = 10% = 0.10

r = Internal rate of return = 8% = 0.08

Substitute the values into the formula:

P = 10(1 – 0.6) / (0.10 – 0.6 × 0.08)

P = 10(0.4) / (0.10 – 0.048)

P = 4 / 0.052

P ≈ Rs. 76.92 ≈ Rs. 77 (rounded)

Therefore, the correct value of the equity share as per Gordon's Model is Rs. 77.
86
Which of the following variables is not known in internal rate of return method of capital budgeting?
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Answer & Solution
Answer: Option D
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87
The euro zone is remarkably comparable to the United States in terms of
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Answer & Solution
Answer: Option A
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88
Which of the following is included in international liquidity?
1. Foreigner exchange reserve.
2. Borrowing capacity of the various countries.
3. Gold reserves.
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Answer & Solution
Answer: Option D
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89
Which of the following statement is not correct?
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Answer & Solution
Answer: Option C
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90
Statement I: In payback period method, the risk of the project is adjusted by lessening the target payback period.
Statement II: Sensitivity analysis helps in calculation of net present value of the proposal.
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Answer & Solution
Answer: Option A
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