Business Finance MCQ Questions and Solutions with Explanations

91.
The portion of eamings which is distributed among shareholders in the form of dividend is called

A. Proprietary ratio

B. Earnings-yield ratio

C. Payout ratio

D. Retention ratio

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92.
Which one of the following methods of capital budgeting assumes that cash inflows are reinvested at the project's rate of return?

A. Net Present Value

B. Accounting Rate of Return

C. Internal Rate of Return

D. Discounted Payback Period

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93.
Match List-I with List-II and select the correct answer:

List I List II

a. Extended Fund Facility 1. 1986

b. Compensatory Financing Facility 2. 1963

c. Compensatory and Contingency Facility 3. 1988

d. Structural Adjustment Facility 4. 1974

A. a-4, b-3, c-2, d-1

B. a-1, b-2, c-3, d-4

C. a-4, b-2, c-3, d-1

D. a-4, b-3, c-1, d-2

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94.
The elimination of riskless profit opportunities in the futures market is

A. Hedging

B. Arbitrage

C. Speculation

D. Diversification

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95.
From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques.
1. Profitability index
2. Net present value
3. Accounting rate of return
4. Internal rate of return

A. 1, 2, 3

B. 2, 3, 4

C. 1, 2, 4

D. 1, 3, 4

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96.
Which of the following techniques for appraisal of investment proposals are based on time value of money?
1. Accounting rate of return
2. Internal rate of return
3. Profitability index method
4. Earnings per share
Select the correct answer:

A. Both 1 and 2

B. Both 2 and 3

C. Both 1 and 4

D. 1, 2 and 4

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97.
In a traditional approach, which of the following statement is true in the context of the average cost of capital?

A. It remains constant up to a degree of leverage and rises sharply thereafter with every increase in leverage

B. It rises constantly with an increase in leverage

C. It decreases up to a certain point, remains unchanged for a moderate increase in leverage, and rises beyond a certain point

D. It decreases at an increasing rate with an increase in leverage

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98.
Match List-I with List-II and select the correct answer:

List-I List-II

a. Payback rate of return 1. Discounted cash flow technique

b. Internal rate of return 2. Cornpounded values of investments and returns

c. Benefit cost ratio 3. Crude method for project evaluation

d. Net terminal value method 4. Varying sized projects evaluation

A. a-2, b-3, c-1, d-4

B. a-3, b-1, c-4, d-2

C. a-1, b-4, c-2, d-3

D. a-4, b-2, c-3, d-1

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99.
Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure.
Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.

A. (A) and (R) both are true and (R) is the correct explanation of (A)

B. (A) and (R) both are true, but (R) is not the correct explanation of (A)

C. (A) is true, but (R) is false

D. (A) is not true, but (R) is true

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100.
Cash flow management involves
1. Lock-box system
2. Marketable securities
3. Playing the float
4. Concentration bank account
Select the correct answer:

A. 1, 2 and 3

B. 2, 3 and 4

C. 1, 3 and 4

D. 1, 2 and 4

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List I	List II
a. Extended Fund Facility	1. 1986
b. Compensatory Financing Facility	2. 1963
c. Compensatory and Contingency Facility	3. 1988
d. Structural Adjustment Facility	4. 1974

List-I	List-II
a. Payback rate of return	1. Discounted cash flow technique
b. Internal rate of return	2. Cornpounded values of investments and returns
c. Benefit cost ratio	3. Crude method for project evaluation
d. Net terminal value method	4. Varying sized projects evaluation

Business Finance MCQ Questions and Solutions with Explanations | Commerce

91. The portion of eamings which is distributed among shareholders in the form of dividend is called

Answer & Solution

92. Which one of the following methods of capital budgeting assumes that cash inflows are reinvested at the project's rate of return?

Answer & Solution

93. Match List-I with List-II and select the correct answer: List I List II a. Extended Fund Facility 1. 1986 b. Compensatory Financing Facility 2. 1963 c. Compensatory and Contingency Facility 3. 1988 d. Structural Adjustment Facility 4. 1974

Answer & Solution

94. The elimination of riskless profit opportunities in the futures market is

Answer & Solution

95. From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques. 1. Profitability index 2. Net present value 3. Accounting rate of return 4. Internal rate of return

Answer & Solution

96. Which of the following techniques for appraisal of investment proposals are based on time value of money? 1. Accounting rate of return 2. Internal rate of return 3. Profitability index method 4. Earnings per share Select the correct answer:

Answer & Solution

97. In a traditional approach, which of the following statement is true in the context of the average cost of capital?

Answer & Solution

Answer & Solution

99. Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure. Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.

Answer & Solution

100. Cash flow management involves 1. Lock-box system 2. Marketable securities 3. Playing the float 4. Concentration bank account Select the correct answer:

Answer & Solution

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91.
The portion of eamings which is distributed among shareholders in the form of dividend is called

92.
Which one of the following methods of capital budgeting assumes that cash inflows are reinvested at the project's rate of return?

93.
Match List-I with List-II and select the correct answer:

List I List II

a. Extended Fund Facility 1. 1986

b. Compensatory Financing Facility 2. 1963

c. Compensatory and Contingency Facility 3. 1988

d. Structural Adjustment Facility 4. 1974

94.
The elimination of riskless profit opportunities in the futures market is

95.
From the following techniques of capital budgeting decision, indicate the correct combination of discounting techniques.
1. Profitability index
2. Net present value
3. Accounting rate of return
4. Internal rate of return

96.
Which of the following techniques for appraisal of investment proposals are based on time value of money?
1. Accounting rate of return
2. Internal rate of return
3. Profitability index method
4. Earnings per share
Select the correct answer:

97.
In a traditional approach, which of the following statement is true in the context of the average cost of capital?

99.
Assertion (A): Arbitrage keeps the cost of capital constant despite change in the capital structure.
Reason (R): It ensures compensating inverse change in cost of equity capital with a change in the cost of debt capital.

100.
Cash flow management involves
1. Lock-box system
2. Marketable securities
3. Playing the float
4. Concentration bank account
Select the correct answer: