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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-6 section-2

Each section contains 100 MCQs on Financial Management .
51
A portfolio which lies below the efficient frontier is described as________________.
Discuss
Answer & Solution
Answer: Option D
Solution:
A portfolio which lies below the efficient frontier is described as dominated. A portfolio is a compilation of materials that exemplifies your beliefs, skills, qualifications, education, training and experiences.
52
Offering cash discount to customers result in _______.
Discuss
Answer & Solution
Answer: Option A
Solution:
Offering cash discount to customers result in reducing the average collection period. A cash discount is a deduction allowed by some sellers of goods or by some providers of services in order to motivate customers to pay within a specified time. The cash discount is also referred to as an early payment discount.
53
The optimal portfolio is the efficient portfolio with the______________.
Discuss
Answer & Solution
Answer: Option C
Solution:
The optimal portfolio is the efficient portfolio with the highest utility. Portfolio optimization is the process of selecting the best portfolio, out of the set of all portfolios being considered, according to some objective.
54
A higher accounts receivable turnover ratio means__________.
Discuss
Answer & Solution
Answer: Option A
Solution:
A higher accounts receivable turnover ratio mean lower debt collection period. Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency.
55
Market risk is best measured by the____________.
Discuss
Answer & Solution
Answer: Option B
Solution:
Market risk is best measured by the beta. Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.
56
Good inventory management is good ________ management.
Discuss
Answer & Solution
Answer: Option D
Solution:
Good inventory management is good purchasing management. Proper inventory management helps you figure out exactly how much inventory you need to have on-hand. This will help prevent product shortages and allow you to keep just enough inventory without having too much in the warehouse. A good inventory management strategy leads to a more organized warehouse.
57
Non-systematic risk is also known as_____________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Non-systematic risk is also known as company-specific risk. Specific risk is a risk that affects a minimal number of assets. Specific risk, as its name implies, relates to risks that are very specific to a company or small group of companies. This type of risk is the opposite of overall market risk or systematic risk. Specific risk is also referred to as “unsystematic risk” or “diversifiable risk.”
58
Setup cost is a type of __________ cost.
Discuss
Answer & Solution
Answer: Option A
Solution:
Setup cost is a type of fixed cost. Setup cost is the cost incurred to get equipment ready to process a different batch of goods. Hence, setup cost is regarded as a batch-level cost in activity based costing. Setup cost is considered to be a non-value-added cost that should be minimized.
59
Under the P/E model, stock price is a product of_____________.
Discuss
Answer & Solution
Answer: Option B
Solution:
Under the P/E model, stock price is a product of P/E ratio and EPS. The price-to-earnings ratio (P/E) is a valuation method used to compare a company's current share price to its per-share earnings.
60
The amount of the temporary working capital __________.
Discuss
Answer & Solution
Answer: Option A
Solution:
The amount of the temporary working capital keeps on fluctuating from time to time. Temporary working capital (TWC) is the temporary fluctuation of networking capital over and above the permanent working capital.