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-1 section-3

Which one of the following is not a method of calculating the cost of equity capital?

A) Dividend Yield Method B) Dividend Yieldplus Growth Method C) Yield to Maturity Method D) Earnings Yield Method

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Answer & Solution

Answer: Option C

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The process of allocation or distribution of available capital funds over various capital projects according to their ranks and profitability is called

A) capital rationing B) capital budgeting C) capital planning D) None of these

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Answer & Solution

Answer: Option A

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Share capital is

A) money given to a company by shareholders in return for a stake in the business B) business borrowing capital from a financial institution C) capital shared amongst owners D) capital shared with shareholders

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Answer & Solution

Answer: Option A

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Match the items given in the two lists.

List-I	List-II
a. Debt securities	1. Floating Rate Bonds without any explicit interest rate
b. Company issuing such bonds experiences less financial distress	2. Zero-Coupon Bonds
c. Coupon rate quoted as a mark-up on the given rate	3. Income Bonds

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

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Answer & Solution

Answer: Option C

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Assertion (A): The risk condition exists when decision-makers have absolutely no idea of what the results of an implemented alternative would be.
Reason (R): When operating under complete uncertainty condition, decision-makers usually find that sound decisions are a matter of chance. In the context of the two statements, which one of the following is correct?

A) Both (A) and (R) are correct B) Both (A) and (R) are incorrect C) (A) is correct, but (R) is incorrect D) (A) is incorrect, but (R) is correct

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Answer & Solution

Answer: Option D

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When there is acceleration of payment of strengthening currencies, and speeding up the receipt of weakening currencies, then there is

A) Lagging B) Leading C) Leading or lagging D) Matching

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Answer & Solution

Answer: Option B

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Which is the following is not a method of issuing ordinary shares?

A) Issue by tender B) Auction C) Intermediary offer D) Placing

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Answer & Solution

Answer: Option B

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The forms of discounted cash flow technique for the appraisal of capital investments include

A) TAR B) NPV C) Both A and B D) None of these

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Answer & Solution

Answer: Option C

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Who gave the concept of monetarism?

A) Milton Friedman B) J. M. Keynes C) Harry Dexter White D) Raghuram Rajan

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Answer & Solution

Answer: Option A

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Which of the following is not true with reference to capital budgeting?

A) Capital budgeting is related to asset replacement decisions B) Cost of capital is equal to the minimum required rate of return C) Timing of cash flows is relevant D) Existing investment in a project is not treated as a sunk cost

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Answer & Solution

Answer: Option D

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