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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-5 section-9

Each section contains 100 MCQs on Financial Management .
41
Stock market theory which states that stocks are in equilibrium and impossible for investors to beat market is classified as an
Discuss
Answer & Solution
Answer: Option B
Solution:
Stock market theory which states that stocks are in equilibrium and impossible for investors to beat market is classified as an efficient market hypothesis. The Efficient Market Hypothesis, or EMH, is an investment theory whereby share prices reflect all information and consistent alpha generation is impossible.
42
Growth in earnings per share is primarily resultant of growth in
Discuss
Answer & Solution
Answer: Option A
Solution:
Growth in earnings per share is primarily resultant of growth in dividends. Earnings per share growth is defined as the percentage change in normalised earnings per share over the previous 12 month period to the latest year end. It gives a good picture of the rate at which a company has grown its profitability.
43
In expected rate of return for constant growth, capital gains is divided by capital gains yield to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
In expected rate of return for constant growth, capital gains is divided by capital gains yield to calculate beginning price. Beginning market value (BMV) is the valuation at which a property or investment should exchange at the date of origination, and then at the beginning of each subsequent period.
44
Stock which has fixed payments and failure of payments which do not lead to bankruptcy is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Stock which has fixed payments and failure of payments which do not lead to bankruptcy is classified as preferred stock. Preferred stock refers to a class of ownership that has a higher claim on assets and earnings than common stock has.
45
An efficient market hypothesis states all public information which is reflected in current market prices is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
An efficient market hypothesis states all public information which is reflected in current market prices is classified as semi strong efficiency. The semi-strong form efficiency is a type of efficient market hypothesis (EMH), which holds that security prices adjust quickly to newly available information, thus eliminating the use of fundamental or technical analysis to achieving a higher return.
46
In expected rate of return for constant growth, an expected dividend yield must be
Discuss
Answer & Solution
Answer: Option B
Solution:
In expected rate of return for constant growth, an expected dividend yield must be constant. The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR).
47
Value of stock as concluded with help of analysis by particular investor is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Value of stock as concluded with help of analysis by particular investor is classified as intrinsic value and fundamental value.
48
In expected rate of return for constant growth, an expected yield on capital must be
Discuss
Answer & Solution
Answer: Option D
Solution:
In expected rate of return for constant growth, an expected yield on capital must be equal to expected growth rate. Growth rates typically represent the compounded annualized rate of growth of a company's revenues, earnings, dividends or even macro concepts, such as gross domestic product (GDP) and retail sales. Expected forward-looking or trailing growth rates are two common kinds of growth rates used for analysis.
49
Capital gain is Rs 2 and beginning price is Rs 24 then capital gains yield will be
Discuss
Answer & Solution
Answer: Option D
Solution:
Capital gains yeild = Beginning price / Capital gain
= 24 / 2 = 12.00%.
50
A formula such as an original investment plus an expected capital gain is used to calculate
Discuss
Answer & Solution
Answer: Option C
Solution:
A formula such as an original investment plus an expected capital gain is used to calculate expected final stock price.