Business Finance MCQ Questions and Solutions with Explanations

Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8

21.
The concept of cost of capital can also be explained in terms of . . . . . . . . cost.

A. opportunity

B. variable

C. fixed

D. capital

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22.
Beta factors based on historical data may be a poor basis for future decision making. It is on the basis of evidence that suggests

A. Beta values seldom change over a period of time

B. Beta values fluctuate over time

C. Beta values are always constant

D. Beta values are kept fixed for short periods of time

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23.
Transaction costs include

A. brokerage

B. commission

C. printing

D. All of these

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24.
Match the following.

List-I List-II

a. Gross working capital 1. Difference of current assets and current liabilities

b. Net working capital 2. It is referred to as "hardcore working capital"

c. Permanent working capital 3. It is the excess of working capital over permanent working capital

d. Variable working capital 4. Total current assets

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

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

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

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

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25.
Which of the following statements are true on wealth maximization?
(i) It takes into account the long-term approach.
(ii) It recognizesthe risk of uncertainty.
(iii) It takes into account the time value of money.
(iv) It takes into account the returns.
(v) It ignores stock market prices.

A. (i), (ii) and (iii)

B. (i), (iii) and (iv)

C. (i), (ii) and (v)

D. (i), (ii), (iii) and (iv)

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26.
If a firm moves from a 'conservative' working capital policy to an 'aggressive' policy, it should expect

A. Liquidity to decrease, whereas expected profitability would increase

B. Expected profitability to increase, whereas risk would decrease

C. Liquidity would increase, whereas risk would also increase

D. Risk and profitability to decrease

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27.
A multinational company that is faced with mild interference upto complete confiscation of all assets is encountering

A. translation risk exposure

B. transaction risk exposure

C. political risk exposure

D. economic risk exposure

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28.
External source of finance do not include

A. debentures

B. leasing

C. overdrafts

D. retained earnings

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29.
A company has issued 10% perpetual debt of Rs. 1 lac at 5% premium. If the tax rate is 30%, then the cost of debt will be

A. 10%

B. 15%

C. 6.66%

D. 8.21%

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30.
Under a flexible exchange rate regime, governments can retain monetary policy independence because the external balance will be achieved by

A. the exchange rate adjustments

B. the price-specie flow mechanism

C. the triffin paradox

D. None of the above

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1 2 3 4 5 6 7 8 9 10

List-I	List-II
a. Gross working capital	1. Difference of current assets and current liabilities
b. Net working capital	2. It is referred to as "hardcore working capital"
c. Permanent working capital	3. It is the excess of working capital over permanent working capital
d. Variable working capital	4. Total current assets

Business Finance MCQ Questions and Solutions with Explanations | Commerce

21. The concept of cost of capital can also be explained in terms of . . . . . . . . cost.

Answer & Solution

22. Beta factors based on historical data may be a poor basis for future decision making. It is on the basis of evidence that suggests

Answer & Solution

23. Transaction costs include

Answer & Solution

Answer & Solution

25. Which of the following statements are true on wealth maximization? (i) It takes into account the long-term approach. (ii) It recognizesthe risk of uncertainty. (iii) It takes into account the time value of money. (iv) It takes into account the returns. (v) It ignores stock market prices.

Answer & Solution

26. If a firm moves from a 'conservative' working capital policy to an 'aggressive' policy, it should expect

Answer & Solution

27. A multinational company that is faced with mild interference upto complete confiscation of all assets is encountering

Answer & Solution

28. External source of finance do not include

Answer & Solution

29. A company has issued 10% perpetual debt of Rs. 1 lac at 5% premium. If the tax rate is 30%, then the cost of debt will be

Answer & Solution

30. Under a flexible exchange rate regime, governments can retain monetary policy independence because the external balance will be achieved by

Answer & Solution

Read More Section(Business Finance)

21.
The concept of cost of capital can also be explained in terms of . . . . . . . . cost.

22.
Beta factors based on historical data may be a poor basis for future decision making. It is on the basis of evidence that suggests

23.
Transaction costs include

25.
Which of the following statements are true on wealth maximization?
(i) It takes into account the long-term approach.
(ii) It recognizesthe risk of uncertainty.
(iii) It takes into account the time value of money.
(iv) It takes into account the returns.
(v) It ignores stock market prices.

26.
If a firm moves from a 'conservative' working capital policy to an 'aggressive' policy, it should expect

27.
A multinational company that is faced with mild interference upto complete confiscation of all assets is encountering

28.
External source of finance do not include

29.
A company has issued 10% perpetual debt of Rs. 1 lac at 5% premium. If the tax rate is 30%, then the cost of debt will be

30.
Under a flexible exchange rate regime, governments can retain monetary policy independence because the external balance will be achieved by