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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-1 section-3

Each section contains 100 MCQs on Financial Management .
1
The risk that arises due to change in the purchasing power is called ?
Discuss
Answer & Solution
Answer: Option D
Solution:
The risk that arises due to change in the purchasing power is called Inflation risk. Inflation risk, also called purchasing power risk, is the chance that the cash flows from an investment won't be worth as much in the future because of changes in purchasing power due to inflation.
2
_______ uses a computer program in an attempt to imitate the brain in analysing securities.
Discuss
Answer & Solution
Answer: Option D
Solution:
Neural networks uses a computer program in an attempt to imitate the brain in analysing securities. A neural network is a series of algorithms that endeavors to recognize underlying relationships in a set of data through a process that mimics the way the human brain operates.
3
The factor(s) which affect(s) P/E ratio is/are __________.
Discuss
Answer & Solution
Answer: Option D
Solution:
The factors that affects P/E ratio are Growth rate, Debt proportion and Retention ratio.
4
The difference between the cash price and the futures price on the same asset or commodity is known as the________________.
Discuss
Answer & Solution
Answer: Option A
Solution:
The difference between the cash price and the futures price on the same asset or commodity is known as the basis. It is a crucial concept for portfolio managers and traders because this relationship between cash and futures prices affects the value of the contracts used in hedging.
5
Long -term solvency is indicated by
Discuss
Answer & Solution
Answer: Option B
Solution:
Long -term solvency is indicated by Debt-equity ratio. The debt-to-equity (D/E) ratio is calculated by dividing a company's total liabilities by its shareholder equity. These numbers are available on the balance sheet of a company's financial statements.
6
Speculators in the futures markets_____________.
Discuss
Answer & Solution
Answer: Option C
Solution:
Speculators are typically sophisticated risk-taking investors with expertise in the markets in which they are trading; they usually use highly leveraged investments, such as futures and options.
7
Which of the following is/are the problem(s) encountered in financial statement analysis?
Discuss
Answer & Solution
Answer: Option D
Solution:
Development of benchmarks, Window dressing and Interpretation of results are the problems encountered in financial statement analysis.
8
A major difference between individual and institutional investors is their very different_______.
Discuss
Answer & Solution
Answer: Option C
Solution:
A major difference between individual and institutional investors is their very different time horizons.
9
Earnings Per Share (EPS) is equal to __________.
Discuss
Answer & Solution
Answer: Option B
Solution:
Earnings Per Share (EPS) is equal to Profit after tax/No of outstanding shares. It is calculated by dividing the company's net income with its total number of outstanding shares. It is a tool that market participants use frequently to gauge the profitability of a company before buying its shares.
10
__________ are a way U. S. investors can invest in foreign companies.
Discuss
Answer & Solution
Answer: Option A
Solution:
ADRs are a way U. S. investors can invest in foreign companies. American depositary receipts (ADRs) can simplify the access of U.S. investors to foreign markets. Listed on the New York Stock Exchange and Nasdaq, they can be traded, settled and held as if they were ordinary shares of U.S.-based companies.