Business Finance MCQ Questions and Solutions with Explanations

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

41.
Which of the following statements are true? Indicate the correct answer.
1. Tax shield on depreciation and interest is an important valuable both for lessor and lessee.
2. A lessee may evaluate the lease options as against the buying option.
3. Sale and lease back and leveraged lease are types of financial lease.
4. Lease or financing is a type of capital budgeting decision from the point of view of the lessee.
Select the correct answer

A. 1, 2 and 4

B. 2, 3 and 4

C. 1, 3 and 4

D. 1, 2 and 3

Answer & Solution Discuss in Board Save for Later

42.
Under the Capital Asset Pricing Model, the return required from security is related to

A. Systematic risk

B. Unsystematic risk

C. Total risk

D. Equity risk

Answer & Solution Discuss in Board Save for Later

43.
Which of the following are the main features of a 'bought out deal' in the context of corporate funding?
(i) It is a method of offering securities to the public through a sponsor or underwriter.
(ii) A bank, financial institution, or an individual can never not be a sponsor.
(iii) The securines are listed in one or more stock exchanges within a time-frame mutually agreed upon by the company and the sponsor.
(iv) The bought out deals facilitate better investor protection.
(v) As the sponsor may occupy a large number of shares, it may trouble the company.

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

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

C. (ii), (iii), (iv) and (v)

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

Answer & Solution Discuss in Board Save for Later

44.
Objectives of management of working capital include

A. maintenance of satisfactory level of working capital

B. availability of ample funds at the times of need

C. Both A and B

D. None of the above

Answer & Solution Discuss in Board Save for Later

45.
Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy?

A. The firm uses long-term financing to finance all fixed and current assets

B. The firm willsee an increase in its expected profits

C. The firm willsee an increase in its risk profile

D. The firm will increase its dividends per share (DPS) in this period

Answer & Solution Discuss in Board Save for Later

46.
Spy stands for

A. Securities Pool Vehicle

B. Special Pool Vehicle

C. Securities Purpose Vehicle

D. Special Purpose Vehicle

Answer & Solution Discuss in Board Save for Later

47.
Which is not a form of short-term spontaneous credit?

A. Commercial paper

B. Accrued wages

C. Trade credit

D. Accrued taxes

Answer & Solution Discuss in Board Save for Later

48.
Which of the following statement is correct?

A. For small companies, long-term debt is the principle source of external financing

B. Current assets of the manufacturing firm account for over a half of its total assets

C. Strict adherence to the maturity matching approach for financing would call for all current assets to be financed solely with current liabilities

D. Similar to the capital structure management, working capital management requires the financial manager to make a decision and not address the issue again for several months

Answer & Solution Discuss in Board Save for Later

49.
Cost of capital from all the sources of funds is called

A. specific cost

B. composite cost

C. implicit cost

D. simple average cost

Answer & Solution Discuss in Board Save for Later

50.
A portfolio comprises two securities and the expected return on them is 12% and 16% respectively. Determine return of portfolio if first security constitutes 40% of total portfolio.

A. 12.4%

B. 13.4%

C. 14.4%

D. 15.4%

Answer & Solution Discuss in Board Save for Later

1 2 3 4 5 6 7 8 9 10

Business Finance MCQ Questions and Solutions with Explanations | Commerce

Answer & Solution

42. Under the Capital Asset Pricing Model, the return required from security is related to

Answer & Solution

Answer & Solution

44. Objectives of management of working capital include

Answer & Solution

45. Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy?

Answer & Solution

46. Spy stands for

Answer & Solution

47. Which is not a form of short-term spontaneous credit?

Answer & Solution

48. Which of the following statement is correct?

Answer & Solution

49. Cost of capital from all the sources of funds is called

Answer & Solution

50. A portfolio comprises two securities and the expected return on them is 12% and 16% respectively. Determine return of portfolio if first security constitutes 40% of total portfolio.

Answer & Solution

Read More Section(Business Finance)

42.
Under the Capital Asset Pricing Model, the return required from security is related to

44.
Objectives of management of working capital include

45.
Which of the following statements is correct for a conservative financing policy for a firm relative to a former aggressive policy?

46.
Spy stands for

47.
Which is not a form of short-term spontaneous credit?

48.
Which of the following statement is correct?

49.
Cost of capital from all the sources of funds is called

50.
A portfolio comprises two securities and the expected return on them is 12% and 16% respectively. Determine return of portfolio if first security constitutes 40% of total portfolio.