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-8 section-8

Range of probability distribution with 99.74% lies within

A) (+ 3σ and -3σ) B) (+ 4σ and -4σ) C) (+ 1σ and -1σ) D) (+ 2σ and -2σ)

Discuss

Answer & Solution

Answer: Option A

Solution:

Range of probability distribution with 99.74% lies within (+ 3σ and -3σ).

Risk per unit of return or stand alone risk is represented by

A) coefficient of standard B) coefficient of return C) coefficient of variation D) coefficient of deviation

Discuss

Answer & Solution

Answer: Option C

Solution:

Risk per unit of return or stand alone risk is represented by coefficient of variation. The coefficient of variation (CV) is a statistical measure of the dispersion of data points in a data series around the mean.

Risk on a stock portfolio which can be reduced by placing it in diversified portfolio is classified as

A) stock risk B) portfolio risk C) diversifiable risk D) market risk

Discuss

Answer & Solution

Answer: Option C

Solution:

Risk on a stock portfolio which can be reduced by placing it in diversified portfolio 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.

An amount invested is Rs 4000 and return is Rs 300 then rate of return will be

A) 4.30% B) 3.70% C) 7.50% D) 0.08%

Discuss

Answer & Solution

Answer: Option C

Solution:

Rate of return = Return / Amount invested
= 300 / 4000 = 7.50%

In capital asset pricing model, stock with high standard deviation tend to have

A) low variation B) low beta C) high beta D) high variation

Discuss

Answer & Solution

Answer: Option B

Solution:

In capital asset pricing model, stock with high standard deviation tend to have low beta. the market. If a stock moves less than the market, the stock's beta is less than 1.0.

In asset portfolio, number of stocks are increased to

A) reduce return B) reduce average C) reduce risk D) increase prices

Discuss

Answer & Solution

Answer: Option C

Solution:

In asset portfolio, number of stocks are increased to reduce risk. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.

Standard deviation is 18% and expected return is 15.5% then coefficient of variation would be

A) 0.86% B) 1.16% C) 2.50% D) -2.50%

Discuss

Answer & Solution

Answer: Option B

No explanation is given for this question. Let's Discuss on Board

Standard deviation is divided by expected rate of return is used to calculate

A) coefficient of variation B) coefficient of deviation C) coefficient of standard D) coefficient of return

Discuss

Answer & Solution

Answer: Option A

Solution:

Standard deviation is divided by expected rate of return is used to calculate coefficient of variation. The coefficient of variation (CV) is a statistical measure of the dispersion of data points in a data series around the mean.

If stock has a great risk related to it than a required return is

A) higher B) lower C) zero D) all of above

Discuss

Answer & Solution

Answer: Option A

Solution:

If stock has a great risk related to it than a required return is higher.

An amount invested is Rs 2000 and return is Rs 200 then rate of return would be

A) 0.10% B) 10.00% C) Rs 1,800.00 D) Rs 2,200.00

Discuss

Answer & Solution

Answer: Option B

Solution:

Rate of return = Return / Amount invested
= 200 / 2000 = 10.00%