ExamVeda
Login
Home

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-5

Each section contains 100 MCQs on Financial Management .
21
Bond risk premium is 3% and bond yield is 10.2% then cost of common stock will be
Discuss
Answer & Solution
Answer: Option B
Solution:
Common Stock = Bond yeild + Bond risk premium
10.2% + 3% = 13.20%.
22
Cost of new debt or marginal debt is also classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Cost of new debt or marginal debt is also classified as historical rate and embedded rate.
23
Bond yield is 12% and bond risk premium is 4.5% then cost of common stock would be
Discuss
Answer & Solution
Answer: Option C
Solution:
Common Stock = Bond yeild + Bond risk premium 12% + 4.5% = 16.50%.
24
Forecast by analysts, retention growth model and historical growth rates are methods used for an
Discuss
Answer & Solution
Answer: Option A
Solution:
Forecast by analysts, retention growth model and historical growth rates are methods used for an estimate future growth.
25
Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called
Discuss
Answer & Solution
Answer: Option A
Solution:
Premium which is considered as difference of expected return on common stock and current yield on Treasury bonds is called current risk premium. A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield; an asset's risk premium is a form of compensation for investors who tolerate the extra risk, compared to that of a risk-free asset, in a given investment.
26
An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax
Discuss
Answer & Solution
Answer: Option D
Solution:
An interest rate which is paid by firm as soon as it issues debt is classified as pre-tax cost of debt. In most cases, this phrase refers to after-tax cost of debt, but it also means the company's cost of debt before taking taxes into account.
27
Beta which is estimated as regression slope coefficient is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Beta which is estimated as regression slope coefficient is classified as historical beta. A beta coefficient is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market. In statistical terms, beta represents the slope of the line through a regression of data points from an individual stock's returns against those of the market.
28
In weighted average cost of capital, capital components are funds that usually offer by
Discuss
Answer & Solution
Answer: Option B
Solution:
In weighted average cost of capital, capital components are funds that usually offer by investors. The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.
29
Cost which is used to calculate weighted average cost of capital is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Cost which is used to calculate weighted average cost of capital is classified as component cost of preferred stock. Cost of preferred stock is the rate of return required by holders of a company's preferred stock.
30
Special situation in which large projects are financed by with and securities claims on project's cash flow is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Special situation in which large projects are financed by with and securities claims on project's cash flow is classified as project financing. Project financing is a loan structure that relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance sheet.