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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-5

Each section contains 100 MCQs on Financial Management .
11
In weighted average capital, capital structure weights estimation does not rely on value of
Discuss
Answer & Solution
Answer: Option C
Solution:
In weighted average capital, capital structure weights estimation does not rely on value of book value of equity. Book value of equity, also known as shareholder's equity, is a firm's common equity that represents the amount available for distribution to shareholders.
12
Interest rates, tax rates and market risk premium are factors which an/a
Discuss
Answer & Solution
Answer: Option C
Solution:
Interest rates, tax rates and market risk premium are factors which a firm cannot control.
13
For each component of capital, a required rate of return is considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
For each component of capital, a required rate of return is considered as component cost. Cost components are the most granular representation of item costs.
14
If payout ratio is 0.45 then retention ratio will be
Discuss
Answer & Solution
Answer: Option A
No explanation is given for this question. Let's Discuss on Board
15
Stock selling price is Rs 35, expected dividend is Rs 5 and expected growth rate is 8% then cost of common stock would be
Discuss
Answer & Solution
Answer: Option B
No explanation is given for this question. Let's Discuss on Board
16
Retention ratio is 0.55 and return on equity is 12.5% then growth retention model would be
Discuss
Answer & Solution
Answer: Option B
Solution:
Growth retention model = Return on equity × Retention ratio
= 12.5% × 0.55 = 6.88%
17
Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate
Discuss
Answer & Solution
Answer: Option D
Solution:
Preferred dividend is divided by preferred stock price multiply by (1-floatation cost) is used to calculate component cost of preferred stock. Cost of preferred stock is the rate of return required by holders of a company's preferred stock. It is calculated by dividing the annual preferred dividend payment by the preferred stock's current market price.
18
Stock selling price is Rs 65, expected dividend is Rs 20 and cost of common stock is 42% then expected growth rate will be
Discuss
Answer & Solution
Answer: Option B
No explanation is given for this question. Let's Discuss on Board
19
In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
In retention growth model, percent of net income firms usually pay out as shareholders dividends is classified as payout ratio. The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company.
20
In weighted average cost of capital, rising in interest rate leads to
Discuss
Answer & Solution
Answer: Option A
Solution:
In weighted average cost of capital, rising in interest rate leads to increase in cost of debt. Cost of debt is one part of a company's capital structure, which also includes the cost of equity.