Financial Management MCQ Questions and Solutions with Explanations

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-6 section-13

If the Money Discount Rate is 19% and Inflation Rate is 12%, then the Real Discount Rate is:

A) 7% B) 5% C) 5.70% D) 6.25%

Discuss

Answer & Solution

Answer: Option D

Solution:

The formula to calculate the Real Discount Rate is:

Real Rate = [(1 + Money Rate) / (1 + Inflation Rate)] - 1

Substitute the given values:

Real Rate = [(1 + 0.19) / (1 + 0.12)] - 1

Real Rate = (1.19 / 1.12) - 1

Real Rate = 1.0625 - 1 = 0.0625 or 6.25%

Conclusion: The Real Discount Rate is 6.25%, so the correct answer is Option D.

Gross Profit Ratio for a firm remains same but the Net Profit Ratio is decreasing. The reason for such behaviour could be:

A) Increase in Costs of Goods Sold B) If Increase in Expense C) Increase in Dividend D) Decrease in Sales

Discuss

Answer & Solution

Answer: Option B

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Which of the following is correct?

A) CL = OL + FL B) CL = OL - FL C) OL = OL × FL D) OL = OL ÷ FL

Discuss

Answer & Solution

Answer: Option C

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Which of the following is not true of cash budget?

A) Cash budget indicates timings of short-term borrowing B) Cash budget is based on accrual concept C) Cash budget is based on cash flow concept D) Repayment of principal amount of law is shown in cash budget

Discuss

Answer & Solution

Answer: Option B

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Which of the following is not true for a Lease decision for the lessee?

A) Helps in project selection B) Helps in project financing C) Helps in project location D) All of the above

Discuss

Answer & Solution

Answer: Option B

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If a firm has a DOL of 2.8, it means:

A) If sales increase by 2.8%, the EBIT will increase by 1% B) If EBIT increase by 2.896, the EPS will increase by 1% C) If sales rise by 1%, EBIT will rise by 2.8% D) None of the above

Discuss

Answer & Solution

Answer: Option C

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Firm's Cost of Capital is the average cost of:

A) All sources B) All borrowings C) Share capital D) Share Bonds & Debentures

Discuss

Answer & Solution

Answer: Option A

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Tax-rate is relevant and important for calculation of specific cost of capital of:

A) Equity Share Capital B) Preference Share Capital C) Debentures D) Both A and B

Discuss

Answer & Solution

Answer: Option C

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Which of the following is not applicable to commercial paper:

A) Face Value B) Issue Price C) Coupon Rate D) None of the above

Discuss

Answer & Solution

Answer: Option D

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NPV of a proposal, as calculated by RADR real CE Approach will be:

A) Same B) Unequal C) Both A and B D) None of A and B

Discuss

Answer & Solution

Answer: Option B

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