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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-2 section-2

Each section contains 100 MCQs on Financial Management .
11
This type of risk is avoidable through proper diversification.
Discuss
Answer & Solution
Answer: Option C
Solution:
Unsystematic type of risk is avoidable through proper diversification. Unsystematic risk, also known as specific risk or idiosyncratic risk, is a category of risk that only affects an industry or a particular company. Unsystematic risk is the risk of losing an investment due to company or industry-specific hazard.
12
Financial analysts, working capital means the same thing as __________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Financial analysts, working capital means the same thing as current assets minus current Liabilities. Financial analyst is one of the most coveted roles in the financial services industry.
13
Which of the following is a basic principle of finance as it relates to the management of working capital?
Discuss
Answer & Solution
Answer: Option C
Solution:
Profitability moves together with risk is a basic principle of finance as it relates to the management of working capital. Profitability is ability of a company to use its resources to generate revenues in excess of its expenses.
14
The return relative solves the problem of______________.
Discuss
Answer & Solution
Answer: Option B
Solution:
The return relative solves the problem of negative returns. A negative return occurs when a company or business has a financial loss or lackluster returns on an investment during a specific period of time.
15
If the Dow Jones Industrials had a price appreciation of 6 percent one year and yet Total return for the year was 11 percent; the difference would be due to___________.
Discuss
Answer & Solution
Answer: Option C
Solution:
If the Dow Jones Industrials had a price appreciation of 6 percent one year and yet Total return for the year was 11 percent; the difference would be due to dividends. A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.
16
Shareholder wealth in a firm is represented by___________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Shareholder wealth in a firm is represented by the market price per share of the firms common stock. Shareholder wealth is defined as the present value of the expected future returns to the owners (that is, shareholders) of the firm.
17
In order to determine the compound growth rate of an investment over some period, an investor would calculate the_____________.
Discuss
Answer & Solution
Answer: Option B
Solution:
In order to determine the compound growth rate of an investment over some period, an investor would calculate the geometric mean. The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.
18
Net present value is a popular method which falls
Discuss
Answer & Solution
Answer: Option B
Solution:
Net present value is a popular method which falls with in discount cash flow method. Discounted cash flow (DCF) is a valuation method used to estimate the value of an investment based on its future cash flows.
19
A major difference between real and nominal returns is that_______________.
Discuss
Answer & Solution
Answer: Option A
Solution:
A major difference between real and nominal returns is that real returns adjust for inflation and nominal returns do not.
20
When most people refer to the mean, they are referring to the______________.
Discuss
Answer & Solution
Answer: Option B
Solution:
When most people refer to the mean, they are referring to the arithmetic mean. The arithmetic mean is the simplest and most widely used measure of a mean, or average.