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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-7 section-1

Each section contains 100 MCQs on Financial Management .
61
If NAV > market price of a fund, then the fund ________
Discuss
Answer & Solution
Answer: Option A
Solution:
If the fund is traded at a price lower than the NAV, it is called “discount”. Similarly if the fund is traded at a price higher than the NAV it is called “premium”.
62
The objective of financial management is to ______________.
Discuss
Answer & Solution
Answer: Option C
Solution:
The objective of financial management is to generate the maximum wealth for its shareholders. Financial Management is the application of general principles of management to the financial possessions of an enterprise. Proper management of an organization's finance provides quality fuel and regular service to ensure efficient functioning.
63
Mutual funds may be affiliated with an underwriter. This means____________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Mutual funds may be affiliated with an underwriter. This means the underwriter has an exclusive right to distribute shares. A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. These investors may be retail or institutional in nature.
64
Operating leverage = ______.
Discuss
Answer & Solution
Answer: Option A
Solution:
Operating leverage = contribution / EBIT. A firm's operating leverage is defined as the percentage change in the firm's operating earnings (EBIT less any non-operating income), that accompanies a percentage change in the contribution margin. That is, the operating income elasticity with respect to the contribution margin.
65
The ___________ is a window through which the investor can see the company.
Discuss
Answer & Solution
Answer: Option C
Solution:
The Prospectus is a window through which the investor can see the company. A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public.
66
According to the traditional approach cost of capital affected by?
Discuss
Answer & Solution
Answer: Option A
Solution:
The traditional approach to capital structure advocates that there is a right combination of equity and debt in the capital structure, at which the market value of a firm is maximum. As per this approach, debt should exist in the capital structure only up to a specific point, beyond which, any increase in leverage would result in the reduction in value of the firm.
67
For which of the following factors are the debentures more attractive to the investors?
Discuss
Answer & Solution
Answer: Option D
Solution:
The principal is redeemable at maturity, A debenture-holder enjoys prior claim on the assets of the company over its shareholders in the event of liquidation and trustee is appointed to preserve the interest of the debenture holders are the factors why the debentures more attractive to the investors.
68
The formula of EBIT = ________
Discuss
Answer & Solution
Answer: Option B
Solution:
The formula of EBIT = Contribution - Fixed cost.
69
Investment bankers operate in the______________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Investment bankers operate in the primary market. An investment banker is an individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments, or other entities.
70
Shares having no face value are known as
Discuss
Answer & Solution
Answer: Option A
Solution:
No par stock means shares having no face value. this is issued in USA, UK and Canada.