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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-1

Each section contains 100 MCQs on Financial Management .
81
Which of the following has helped to eliminate the use of stock certificates by placing stock transactions on computers?
Discuss
Answer & Solution
Answer: Option A
Solution:
Demat account has helped to eliminate the use of stock certificates by placing stock transactions on computers. Demat Account is an account that is used to hold shares and securities in electronic format. The full form of Demat account is a dematerialised account.
82
The expansion of EAR is?
Discuss
Answer & Solution
Answer: Option A
Solution:
The expansion of EAR is equivalent annual rate. The Effective Annual Rate (EAR) is the interest rate that is adjusted for compounding over a given period. Simply put, the effective annual interest rate is the rate of interest that an investor can earn (or pay) in a year after taking into consideration compounding.
83
The formula for cost of debt is __________.
Discuss
Answer & Solution
Answer: Option A
Solution:
The formula for cost of debt is I x ( 1 - t).
84
Total return is equal to________.
Discuss
Answer & Solution
Answer: Option A
Solution:
Total return is equal to capital gain and yield. Total return is the amount of value an investor earns from a security over a specific period, typically one year, when all distributions are reinvested.
85
Traditional theorists believe that.
Discuss
Answer & Solution
Answer: Option A
Solution:
Traditional theorists believe that there exists an optimal capital structure. An optimal capital structure is the objectively best mix of debt, preferred stock, and common stock that maximizes a company's market value while minimizing its cost of capital.
86
Which of the following is / are assumption(s) underlying the Miller and Modigliani analysis?
Discuss
Answer & Solution
Answer: Option D
Solution:
Capital markets are perfect, Investors are assumed to be rational and behave accordingly and there is no corporate or personal income tax are the assumptions underlying the Miller and Modigliani analysis.
87
The return component that gives periodic cash flows to the investor is known as the______________.
Discuss
Answer & Solution
Answer: Option C
Solution:
The return component that gives periodic cash flows to the investor is known as the yield. Yield is the periodic cash flow (or return on investment in the form of interest or dividends).
88
The dividend-payout ratio is equal to __________.
Discuss
Answer & Solution
Answer: Option B
Solution:
The dividend-payout ratio is equal to dividends per share divided by earnings per share.
89
Altering the leverage ratio does not influence the market value of the firm. This is the basic premise of _______.
Discuss
Answer & Solution
Answer: Option D
Solution:
Net Operating Income Approach was also suggested by Durand. This approach is of the opposite view of Net Income approach. This approach suggests that the capital structure decision of a firm is irrelevant and that any change in the leverage or debt will not result in a change in the total value of the firm as well as the market price of its shares. This approach also says that the overall cost of capital is independent of the degree of leverage.
90
While calculating the weighted average cost of capital, market value weights are preferred because ____________.
Discuss
Answer & Solution
Answer: Option A
Solution:
While calculating the weighted average cost of capital, market value weights are preferred because Book value weights are historical in nature.