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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-9 section-2

Each section contains 100 MCQs on Financial Management .
81
The amount of current assets that varies with seasonal requirements is referred to as __________ working capital.
Discuss
Answer & Solution
Answer: Option C
Solution:
The amount of current assets that varies with seasonal requirements is referred to as Temporary working capital. Temporary working capital (TWC) is the temporary fluctuation of networking capital over and above the permanent working capital.
82
The last step in fundamental analysis is__________.
Discuss
Answer & Solution
Answer: Option D
Solution:
The last step in fundamental analysis is technical analysis. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
83
Excess working capital results in ________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Excess working capital results in Block of cash. Excess working capital overall, though, is bad because it means that the amount of money available within the company is much more than what it needs for its operations.
84
The value of a derivative security _______.
Discuss
Answer & Solution
Answer: Option A
Solution:
The value of a derivative security depends on the value of the related primitive security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps.
85
The market value of the firm is the result of __________.
Discuss
Answer & Solution
Answer: Option D
Solution:
The market value of the firm is the result of trade-off between cost and risk. Market value is the price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization of a publicly traded company, and is obtained by multiplying the number of its outstanding shares by the current share price.
86
Money market funds were a financial innovation partly inspired to circumvent __________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Money market funds were a financial innovation partly inspired to circumvent Regulation Q, which is no longer in existence. A money market fund is a kind of mutual fund that invests only in highly liquid instruments such as cash, cash equivalent securities, and high credit rating debt-based securities with a short-term, maturity less than 13 months. As a result, these funds offer high liquidity with a very low level of risk.
87
Insufficient working capital results in __________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Insufficient working capital results in Lack of smooth flow of production. Inadequate amount of working capital may create a lot of financial problems in business. Due to shortage of working capital, raw materials can not be purchased on time and payment of labor and other expenses can not be made on time.
88
Effective cost of debentures is _________ as compared to shares.
Discuss
Answer & Solution
Answer: Option B
Solution:
Effective cost of debentures is lower as compared to shares. Cost of debt refers to the effective rate a company pays on its current debt.
89
Risk lover's utility curves have __________.
Discuss
Answer & Solution
Answer: Option C
Solution:
Risk lover's utility curves have Convex to the origin. Most individuals seek to minimise risk and are called risk averter or risk averse. However, some individuals prefer risk and are therefore called risk-seekers or risk lovers.
90
Cost of capital is the ______ rate of return expected by the investor.
Discuss
Answer & Solution
Answer: Option C
Solution:
Cost of capital is the expected rate of return expected by the investor. Cost of capital refers to the opportunity cost of making a specific investment. It is the rate of return that could have been earned by putting the same money into a different investment with equal risk.