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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-7 section-8

Each section contains 100 MCQs on Financial Management .
61
An amount invested is Rs 1500 and an amount received is Rs 2000 then return would be
Discuss
Answer & Solution
Answer: Option A
Solution:
Return = Amount Recieved - Amount Invested
= Rs. 2000 - Rs. 1500 = Rs. 500.
62
External factors such as expiration of basic patents and industry competition effect
Discuss
Answer & Solution
Answer: Option C
Solution:
External factors such as expiration of basic patents and industry competition effect company's beta. A company's beta is a measure of the volatility, or systematic risk, of a security compared to the broader market.
63
Type of risk in which beta is equal to one is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Type of risk in which beta is equal to one is classified as average risk stock. An average-risk stock is defined as one that tends to move up and down in step with the general market.
64
A portfolio consists of all stocks in a market is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
A portfolio consists of all stocks in a market is classified as market portfolio. A market portfolio is a theoretical bundle of investments that includes every type of asset available in the world financial market, with each asset weighted in proportion to its total presence in the market.
65
Beta coefficient is used to measure market risk which is an index of
Discuss
Answer & Solution
Answer: Option C
Solution:
Beta coefficient is used to measure market risk which is an index of stock market volatility. In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a "volatile" market.
66
Standard deviation of tighter probability distribution is
Discuss
Answer & Solution
Answer: Option D
Solution:
Standard deviation of tighter probability distribution is smaller. The smaller the standard deviation, the tighter the probability distribution, and the lower the risk.
67
An opposite of perfect positive correlation + 1.0 is called
Discuss
Answer & Solution
Answer: Option A
Solution:
An opposite of perfect positive correlation + 1.0 is called negative correlation. Negative correlation is a relationship between two variables in which one variable increases as the other decreases, and vice versa.
68
A technique of lowering risk for multinational companies and globally designed portfolios is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
A technique of lowering risk for multinational companies and globally designed portfolios is classified as global diversification. Today, asset allocation has evolved beyond domestic stocks, bonds and cash to include global diversification across equities, fixed income and nontraditional investments. Global diversification can help in managing risk and positioning your portfolio for long-term growth.
69
Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as diversifiable risk. Diversifiable risk is the possibility that there will be a change in the price of a security because of the specific characteristics of that security. Diversification of an investor's portfolio can be used to offset and therefore eliminate this type of risk.
70
Required return is 11% and premium for risk is 8% then risk free return will be
Discuss
Answer & Solution
Answer: Option A
Solution:
Risk free return = Required return - Premium for risk
= 11% - 8% = 3%