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-9 section-7

Three forms of trade credit include

A) purchase on open account B) purchasing on furnishing a promote for specified period C) purchase on trade acceptance D) All of the above

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Answer & Solution

Answer: Option D

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What are the main benefits given to participating preference shareholders?

A) They are first paid a variable rate of dividend B) They may be paid surplus profits C) Their mode of payment of a dividend is never mentioned in the Articles of Association D) All of the above

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Answer & Solution

Answer: Option B

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. . . . . . . . varies inversely with profitability.

A) Liquidity B) Risk C) Return D) Loss

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Answer & Solution

Answer: Option B

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Assertion (A): When two or more investment proposals are mutually exclusive, ranking the proposals on the basis of IRR, NPV, and PI methods may give contradictory results.
Reason (R): The contradictory results in the ranking are due to differing dimensions relating to the scale of investments, cash flow patterns, and project lives.
Indicate the correct answer.

A) Both (A) and (R) are true B) (A) is true, (R) is a necessary condition, but not a sufficient condition C) Both (A) and (R) are false D) Both (A) and (R) are true, and (R) explains the reason sufficiently

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Answer & Solution

Answer: Option B

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Operating cycle can be shortened by increasing

A) manufacturing time B) duration of credit available C) stock held in stores shares D) credit period to the customers

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Answer & Solution

Answer: Option B

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Match the following.

List-I	List-II
a. Capital budgeting	1. Time adjusted rate of return
b. Profitability index	2. Irreversible
c. Internal rate of return	3. Benefit/cost
d. Capital investment decisions	4. Planning capital expenditure

A) a-4, b-3, c-2, d-1 B) a-1, b-4, c-2, d-3 C) a-4, b-3, c-1, d-2 D) a-2, b-1, c-3, d-4

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Answer & Solution

Answer: Option C

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Which of the following is not the major objectives of the International Monetary Fund?

A) Promoting co-operation among countries on international monetary issues B) Giving loans to countries for the purpose of economic development C) Promoting stability in the exchange rates D) Promoting free mobility of capital across countries

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Answer & Solution

Answer: Option B

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Which of the following assumptions is not covered in Walter's Model of the dividend policy?

A) All financing is through retained earnings B) The firm's business risk does not change due to additional investments C) The firm has an infinite life D) The key variables like EPS and DPS keep on changing

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Answer & Solution

Answer: Option D

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To say that the forward market lacks liquidity means that

A) forward contracts usually result in losses B) forward contracts cannot be turned into cash C) it may be difficult to make the transaction D) forward contracts cannot be sold for cash

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Answer & Solution

Answer: Option C

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The immediate (two days) exchange of one currency for another is a

A) forward transaction B) spot transaction C) money transaction D) exchange transaction

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Answer & Solution

Answer: Option B

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