Business Finance MCQ Questions and Solutions with Explanations

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

61.
Net working capital = . . . . . . . . - Current liabilities

A. Current assets

B. Fixed assets

C. Stock

D. Bill receivable

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62.
MM theory in perfect market suggests that dividend payment

A. has a positive impact on the value of a firm

B. has no impact on the value of a firm

C. has a negative impact on the value of a firm

D. has negligible impact on the firm

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63.
Shareholders demand higher returns in compensation for increased levels of risk. It should be called

A. Excess return

B. Risk-free rate

C. Risk-averse

D. Diversification

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64.
The presence of fixed costs in the total cost structure of firm results in

A. Financial leverage

B. Operating leverage

C. Super leverage

D. None of the above

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65.
A firm operating in India cannot hedge its foreign currency exposure through

A. forwards

B. options

C. futures

D. None of these

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66.
'That personal leverage can replace corporate leverage' is assumed by

A. Traditional Approach

B. MM Model

C. Net Income Approach

D. Net Operating Income Approach

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67.
Which of the following statements regarding covariance is correct?

A. Covariance always lies in the range -1 to +1

B. Covariance, because it involves a squared value, must always be a positive number (or zero)

C. Low covariance among returns for different securities leads to high portfolio risk

D. Covariance can take on positive, negative, or zero values

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68.
. . . . . . . . is considered as a creative capital performing economic functions different from other investment vehicles, primarily serving as the expansion capital.

A. Equity Capital

B. Fixed Capital

C. Venture Capital

D. Share Capital

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69.
In a certainty-equivalent approach, risk-adjusted cash flows are discounted at

A. Accounting Rate of Return

B. Internal Rate of Return

C. Hurdle Rate

D. Risk-free Rate

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70.
While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?

A. The degree of risk involved

B. The current rate of interest on gilt-edged securities

C. The weighted average cost of capital

D. All of the above

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Business Finance MCQ Questions and Solutions with Explanations | Commerce

61. Net working capital = . . . . . . . . - Current liabilities

Answer & Solution

62. MM theory in perfect market suggests that dividend payment

Answer & Solution

63. Shareholders demand higher returns in compensation for increased levels of risk. It should be called

Answer & Solution

64. The presence of fixed costs in the total cost structure of firm results in

Answer & Solution

65. A firm operating in India cannot hedge its foreign currency exposure through

Answer & Solution

66. 'That personal leverage can replace corporate leverage' is assumed by

Answer & Solution

67. Which of the following statements regarding covariance is correct?

Answer & Solution

68. . . . . . . . . is considered as a creative capital performing economic functions different from other investment vehicles, primarily serving as the expansion capital.

Answer & Solution

69. In a certainty-equivalent approach, risk-adjusted cash flows are discounted at

Answer & Solution

70. While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?

Answer & Solution

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61.
Net working capital = . . . . . . . . - Current liabilities

62.
MM theory in perfect market suggests that dividend payment

63.
Shareholders demand higher returns in compensation for increased levels of risk. It should be called

64.
The presence of fixed costs in the total cost structure of firm results in

65.
A firm operating in India cannot hedge its foreign currency exposure through

66.
'That personal leverage can replace corporate leverage' is assumed by

67.
Which of the following statements regarding covariance is correct?

68.
. . . . . . . . is considered as a creative capital performing economic functions different from other investment vehicles, primarily serving as the expansion capital.

69.
In a certainty-equivalent approach, risk-adjusted cash flows are discounted at

70.
While determining the normal rate of return for the valuation of shares in Market Value Method, which of the following should be taken into consideration?