Financial Management MCQ Questions and Solutions with Explanations | Commerce

An attitude of investor towards dealing with risk determines the rate of return. A rate of return (RoR) is the net gain or loss on an investment over a specified time period, expressed as a percentage of the investment's initial cost. Gains on investments are defined as income received plus any capital gains realized on the sale of the investment.

Firm's which helps in indirect transfer such as Merrill Lynch is classified as investment banking house. Investment banking is a specific division of banking related to the creation of capital for other companies, governments, and other entities.

In Corporation characteristics, losses are subject to funds invested actually is considered as limited liability. Limited liability is a type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company. In other words, investors' and owners' private assets are not at risk if the company fails.

Government spending, if it exceeds federal government tax revenues then it is classified as budget deficit. A budget deficit is a financial loss for during a period where expenses exceed revenues. This concept is often used in business but more commonly used to refer to governmental spending in excess of revenues collected.

Financial security with low degree risk and investment held by businesses is classified as money market mutual funds. A money market mutual fund (MMF) is a type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents.

Type of financial security in which firms do not borrow money rather lease their assets is classified as leases. A lease is a contract outlining the terms under which one party agrees to rent property owned by another party.

New York Stock Exchange' is an example of capital markets. Capital markets refer to the places where savings and investments are moved between suppliers of capital and those who are in need of capital. Capital markets consist of the primary market, where new securities are issued and sold, and the secondary market, where already-issued securities are traded between investors.

Hewlett-Packard and Microsoft are examples of corporation. Microsoft (NASDAQ:MSFT) and Hewlett-Packard Enterprise (NYSE:HPE) recently unveiled Cloud Productivity and Mobility Solution Offerings (CPM), which will integrate HPE's consulting services with Microsoft services within Windows 10. HPE will integrate its consulting services into Microsoft's SaaS (software as a service) platforms, including Office 365, Skype for Business, Dynamics CRM, and Enterprise Mobility Suite.

Banks such as Bank of America serves a range of savers and borrowers are classified as commercial banks. Commercial banks make money by providing loans and earning interest income from those loans.

An inexpensive and easy business formation and few government regulations are advantages of proprietorship. Sole proprietorships have several advantages over other business entities. They are easy to form, and the owners enjoy sole control of the business profits.