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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-6

Each section contains 100 MCQs on Financial Management .
81
Real risk-free interest rate in addition with an inflation premium is equal to
Discuss
Answer & Solution
Answer: Option B
Solution:
Real risk-free interest rate in addition with an inflation premium is equal to quoted risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.
82
An increasing in interest rate leads to decline in value of
Discuss
Answer & Solution
Answer: Option B
Solution:
An increasing in interest rate leads to decline in value of outstanding bonds. Outstanding Bonds means all Previously Issued Bonds, which remain outstanding as of the first interest and/or principal payment date following the current Fiscal Year excluding Bonds to be redeemed at a later date with proceeds of prior prepayments of Maximum Special Taxes.
83
Bonds issued by government and backed by U.S government are classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Bonds issued by government and backed by U.S government are classified as treasury bonds. A Treasury bond (T-bond) is a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years.
84
Legal document in which rights of issuing corporation and bondholder's state is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Legal document in which rights of issuing corporation and bondholder's state is classified as indenture. An indenture is a legal and binding contract between a bond issuer and the bondholders.
85
Price of an outstanding bond decreases when market rate is
Discuss
Answer & Solution
Answer: Option A
Solution:
Price of an outstanding bond decreases when market rate is increased.
86
Rate of interest which is usually discussed by investors whenever rate of return is discussed is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Rate of interest which is usually discussed by investors whenever rate of return is discussed is classified as yield to maturity. Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until it matures. Yield to maturity is considered a long-term bond yield but it is expressed as an annual rate.
87
Tax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Tax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as development bonds and pollution control bonds.
88
Value generally promises to pay at maturity date and a firm borrows is considered as bonds
Discuss
Answer & Solution
Answer: Option D
Solution:
Value generally promises to pay at maturity date and a firm borrows is considered as bonds par value. The par value of a bond also called the face amount or face value is the value written on the front of the bond.
89
Maturity date decides at time of issuance of bond and legally permissible is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Maturity date decides at time of issuance of bond and legally permissible is classified as original maturity. The "original maturity" is the time between the issue date and the maturity date. This date is included in a bond’s indenture at the time of issuance. An investor that purchases a bond on its issuance date will be quoted the original maturity.
90
Bonds with deferred call have protection which is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Bonds with deferred call have protection which is classified as call protection. A call protection is a protective provision of a callable security prohibiting the issuer from calling back the security for a specified period of time.