Business Finance MCQ Questions and Solutions with Explanations

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

71.
Which of the following statement is incorrect?

A. Capital budgeting is the process of making investment decisions in the capital expenditure

B. Capital budgeting is the process of making investment decisions in fixed assets

C. Both A and B

D. None of the above

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72.
Which of the following dividend promises to pay the shareholders at a future date?

A. Interest

B. SCRIP

C. Cash flow

D. Property

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73.
The repurchase of stock is considered . . . . . . . . decision rather than . . . . . . . . decision.

A. An investment; a financing

B. A financing; an investment

C. An investment; a dividend

D. A dividend; a financing

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74.
Which of the following is an internal source of finance?

A. Factoring

B. Trade credit

C. Retained earnings

D. Debentures

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75.
Which of the following portfolio statistics statements is correct?

A. A portfolio's expected return is a simple weighted average of expected returns of the individual securities comprising the portfolio

B. A portfolio's standard deviation of return is a simple weighted average of individual security return standard deviations

C. The square root of a portfolio's standard deviation of return equalsits variance

D. The square root of a portfolio's standard deviation of return equalsits coefficient of variation

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76.
The cost of equity share capital is more than the cost of debt because

A. Equity shares are not easily saleable

B. Equity shares do not provide a fixed dividend rate

C. Generally, the face value of equity shares is less than the face value of debentures

D. Equity shares havehigh risk than debts

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77.
A lease is likely to be most beneficial to both parties when

A. the lessor's tax rate is lower than the lessee's

B. the lessor's tax rate is higher than the lessee's

C. the lessor's tax rate is equal to the lessee's

D. a lease can not be beneficial to both parties

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78.
Consider the following statements.
In case of overcapitalisation,
1. market value of shares come down from its face value.
2. organisation failed to earn sufficient profit.
Which of the statement(s) given above is/are correct?

A. Only 1

B. Both 1 and 2

C. Only 2

D. None of the above

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79.
International liquidity comprises which of the following?
(i) Gold held by central banks
(ii) Gold held by families
(iii) Forex reserve held by commercial banks
(iv) Mineral wealth
(v) SDRs
(vi) Borrowing facilities
(vii) NRIs and FDRs
(viii) Credit facilities available under SWAP

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

B. (ii), (iii), (iv), (viii)

C. (i), (iii), (v), (viii)

D. (iii), (iv), (vii), (viii)

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80.
XYZ Co earns Rs. 10 per share, capitalised at 10% and has a return on investment of 12%. What is the optimum dividend payout ratio as per Walter's dividend policy model?

A. 0%

B. 2%

C. 10%

D. 12%

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Business Finance MCQ Questions and Solutions with Explanations | Commerce

71. Which of the following statement is incorrect?

Answer & Solution

72. Which of the following dividend promises to pay the shareholders at a future date?

Answer & Solution

73. The repurchase of stock is considered . . . . . . . . decision rather than . . . . . . . . decision.

Answer & Solution

74. Which of the following is an internal source of finance?

Answer & Solution

75. Which of the following portfolio statistics statements is correct?

Answer & Solution

76. The cost of equity share capital is more than the cost of debt because

Answer & Solution

77. A lease is likely to be most beneficial to both parties when

Answer & Solution

78. Consider the following statements. In case of overcapitalisation, 1. market value of shares come down from its face value. 2. organisation failed to earn sufficient profit. Which of the statement(s) given above is/are correct?

Answer & Solution

79. International liquidity comprises which of the following? (i) Gold held by central banks (ii) Gold held by families (iii) Forex reserve held by commercial banks (iv) Mineral wealth (v) SDRs (vi) Borrowing facilities (vii) NRIs and FDRs (viii) Credit facilities available under SWAP

Answer & Solution

80. XYZ Co earns Rs. 10 per share, capitalised at 10% and has a return on investment of 12%. What is the optimum dividend payout ratio as per Walter's dividend policy model?

Answer & Solution

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71.
Which of the following statement is incorrect?

72.
Which of the following dividend promises to pay the shareholders at a future date?

73.
The repurchase of stock is considered . . . . . . . . decision rather than . . . . . . . . decision.

74.
Which of the following is an internal source of finance?

75.
Which of the following portfolio statistics statements is correct?

76.
The cost of equity share capital is more than the cost of debt because

77.
A lease is likely to be most beneficial to both parties when

78.
Consider the following statements.
In case of overcapitalisation,
1. market value of shares come down from its face value.
2. organisation failed to earn sufficient profit.
Which of the statement(s) given above is/are correct?

79.
International liquidity comprises which of the following?
(i) Gold held by central banks
(ii) Gold held by families
(iii) Forex reserve held by commercial banks
(iv) Mineral wealth
(v) SDRs
(vi) Borrowing facilities
(vii) NRIs and FDRs
(viii) Credit facilities available under SWAP

80.
XYZ Co earns Rs. 10 per share, capitalised at 10% and has a return on investment of 12%. What is the optimum dividend payout ratio as per Walter's dividend policy model?