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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-3 section-2

Each section contains 100 MCQs on Financial Management .
21
The gross working capital is a _____ concern concept.
Discuss
Answer & Solution
Answer: Option A
Solution:
Gross working capital is also known as going concern concept since finance manager is highly concerned with the management of these assets with a view of bringing about productivity from other assets
22
_____________is concerned with the interrelationships between security returns.
Discuss
Answer & Solution
Answer: Option D
Solution:
Markowitz diversification is concerned with the interrelationships between security returns. A strategy that seeks to combine in a portfolio assets with returns that are less than perfectly positively correlated, in an effort to lower portfolio risk (variance) without sacrificing return.
23
The rate of return on investment ____ with the shortage of working capital.
Discuss
Answer & Solution
Answer: Option A
Solution:
The rate of return on investment falls with the shortage of working capital. Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
24
Portfolio weights are found by_________________.
Discuss
Answer & Solution
Answer: Option B
Solution:
Portfolio weights are found by calculating the percentage each asset is to the total portfolio value. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.
25
Greater the size of a business unit ________ will be the requirements of working capital.
Discuss
Answer & Solution
Answer: Option A
Solution:
Greater the size of a business unit larger will be the requirements of working capital. Working capital, also known as net working capital (NWC), is the difference between a company's current assets, such as cash, accounts receivable (customers' unpaid bills) and inventories of raw materials and finished goods, and its current liabilities, such as accounts payable.
26
In order to determine the expected return of a portfolio, all of the following must be known except______________.
Discuss
Answer & Solution
Answer: Option D
Solution:
In order to determine the expected return of a portfolio, all of the following must be known except all of the above must be known in order to determine the expected return of a portfolio. The expected return for an investment portfolio is the weighted average of the expected return of each of its components.
27
The fixed proportion of working capital should be generally financed from the ____ capital sources.
Discuss
Answer & Solution
Answer: Option D
Solution:
The fixed proportion of working capital should be generally financed from the borrowed capital sources. Borrowed capital consists of money that is borrowed and used to make an investment. It differs from equity capital, which is owned by the company and shareholders. Borrowed capital is also referred to as "loan capital."
28
Which of the following is true regarding the expected return of a portfolio?
Discuss
Answer & Solution
Answer: Option C
Solution:
It can never be above the highest individual return is true regarding the expected return of a portfolio. The expected return for an investment portfolio is the weighted average of the expected return of each of its components.
29
The volume of sales is influenced by ____ of a firm.
Discuss
Answer & Solution
Answer: Option B
Solution:
The volume of sales is influenced by credit policy of a firm. Credit policy is an important part of the overall strategy of a firm to market its products. It refers to those decision variables that influence the amount of trade credit i.e investment in receivables.
30
Company specific risk is also known as ________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Idiosyncratic risk, also known as unsystematic risk or residual risk or diversifiable risk, is risk that is not correlated to overall market risk – it is the risk of price change caused by the unique circumstances of a particular security, or the risk that is sector-specific or company-specific.