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Financial Management MCQ Questions and Solutions with Explanations | Commerce

Financial Management 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. Financial Management 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-10 section-4

Each section contains 100 MCQs on Financial Management .
91
In uneven cash flow, 'IRR' is an abbreviation of an
Discuss
Answer & Solution
Answer: Option A
Solution:
In uneven cash flow, 'IRR' is an abbreviation of an internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
92
A company who issues bonds or stocks in result raised funds which finally
Discuss
Answer & Solution
Answer: Option C
Solution:
A company who issues bonds or stocks in result raised funds which finally increases cash.
93
During planning period, a marginal cost for raising a new debt is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
During planning period, a marginal cost for raising a new debt is classified as relevant cost. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred when making business decisions. The concept of relevant cost is used to eliminate unnecessary data that could complicate the decision-making process.
94
Cost of common stock is 14% and bond risk premium is 9% then bond yield will be
Discuss
Answer & Solution
Answer: Option B
Solution:
Bond yield = Cost of common stock - Bond risk premium
= 14% - 9% = 5.00%
95
In weighted average cost of capital, a company can affect its capital cost through
Discuss
Answer & Solution
Answer: Option D
Solution:
In weighted average cost of capital, a company can affect its capital cost through policy of capital structure, policy of dividends and policy of investment
96
A risk associated with project and way considered by well diversified stockholder is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
A risk associated with project and way considered by well diversified stockholder is classified as beta risk. Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta risk is the probability that a false null hypothesis will be accepted by a statistical test.
97
Cost of common stock is 13% and bond risk premium is 5% then bond yield would be
Discuss
Answer & Solution
Answer: Option C
Solution:
Bond Yeild = Cost of common stock - Bond risk premium
= 13% - 5% = 8%.
98
Variability for expected returns for projects is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Variability for expected returns for projects is classified as stand-alone risk. Standalone risk measures the dangers associated with a single facet of a company's operations or by holding a specific asset, such as a closely-held corporations. In portfolio management, standalone risk measures the undiversified risk of an individual asset.
99
Cost of common stock is 16% and bond yield is 9% then bond risk premium would be
Discuss
Answer & Solution
Answer: Option A
Solution:
Bond risk premium = Cost of common stock - Bond Yeild
= 16% - 9% = 7%.
100
If future return on common stock is 14% and rate on T-bonds is 5% then current market risk premium will be
Discuss
Answer & Solution
Answer: Option B
Solution:
Current Market Risk Premium = Future return on common stock - T-Bond
= 14% - 5% = 9%.