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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-4 section-1

Each section contains 100 MCQs on Financial Management .
31
The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________.
Discuss
Answer & Solution
Answer: Option D
Solution:
The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called capital budgeting. Capital budgeting is the process a business undertakes to evaluate potential major projects or investments.
32
Treasury bills are traded in the __________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Treasury bills are traded in the money market. The money market is the trade in short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders.
33
The cost of capital of a long term debt is generally.
Discuss
Answer & Solution
Answer: Option D
Solution:
The cost of capital of a long term debt is generally Higher than that of owned funds. 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.
34
Which of the following would not be considered as capital market security?
Discuss
Answer & Solution
Answer: Option C
Solution:
A 6-month Treasury bill would not be considered as capital market security. A Treasury Bill (T-Bill) is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less.
35
Net working capital is the excess of current asset over ____________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Net working capital is a liquidity calculation that measures a company’s ability to pay off its current liabilities with current assets.
36
The coupon rate is another name for the__________.
Discuss
Answer & Solution
Answer: Option C
Solution:
Coupon rate is the rate of interest paid by bond issuers on the bond's face value. It is the periodic rate of interest paid by bond issuers to its purchasers.
37
Dividends are paid________________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Dividends are paid yearly. A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.
38
Long term fund sources are ___________.
Discuss
Answer & Solution
Answer: Option D
Solution:
Long term fund sources are Retained earnings, Debentures and Share capital. A long/short fund is a type of mutual fund that takes long and short positions in investments typically from a specific market segment.
39
If an investor states that Intel is overvalued at 65 times, he is referring to___________.
Discuss
Answer & Solution
Answer: Option D
Solution:
If an investor states that Intel is overvalued at 65 times, he is referring to P/E ratio. The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
40
When a company uses increased fixed cost for production, this is an example of what type of leverage.
Discuss
Answer & Solution
Answer: Option A
Solution:
When a company uses increased fixed cost for production, this is an example of operating leverage. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. A business that generates sales with a high gross margin and low variable costs has high operating leverage.