Financial Management MCQ Questions and Solutions with Explanations

Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Section 9 Section 10 Section 11 Section 12 Section 13

21.
Most investors are risk averse which means____________.

A. they will assume more risk only if they are compensated by higher expected return

B. they will always invest in the investment with the lowest possible risk

C. they will always invest in the investment with the lowest possible risk

D. they avoid the stock market due to the high degree of risk

Answer & Solution Discuss in Board Save for Later

22.
The company's cost of capital is called ________.

A. Leverage

B. Hurdle rate

C. Risk rate

D. Return rate

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23.
Which of the following would be considered a risk-free investment?

A. Gold

B. Equity in a house

C. High-grade corporate bonds

D. Treasury bills

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24.
Cost of retained earnings is equal to _______.

A. Cost of equity

B. Cost of debt

C. Cost of bank loan

D. Cost of term loans

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25.
Beta measures the ________.

A. Investment risk rate

B. Financial risk

C. Market risk

D. Market and finance risk

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26.
Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.

A. Dependence hypothesis

B. Traditional view

C. Modern view

D. Independence hypothesis

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27.
The largest single institutional owner of common stocks is________.

A. mutual funds

B. insurance companies

C. pension funds

D. commercial banks

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28.
EBIT is usually the same thing as.

A. funds provided by operations

B. earnings before taxes

C. net income

D. operating profit

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29.
The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.

A. working capital decision

B. an investment decision

C. a production decision

D. a sales decision

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30.
Savings accounts are_ but are not.

A. negotiable; liquid

B. marketable; liquid

C. liquid; personal

D. liquid; marketable

Answer & Solution Discuss in Board Save for Later

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Financial Management MCQ Questions and Solutions with Explanations | Commerce

21. Most investors are risk averse which means____________.

Answer & Solution

22. The company's cost of capital is called ________.

Answer & Solution

23. Which of the following would be considered a risk-free investment?

Answer & Solution

24. Cost of retained earnings is equal to _______.

Answer & Solution

25. Beta measures the ________.

Answer & Solution

26. Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.

Answer & Solution

27. The largest single institutional owner of common stocks is________.

Answer & Solution

28. EBIT is usually the same thing as.

Answer & Solution

29. The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.

Answer & Solution

30. Savings accounts are___________ but are not__________.

Answer & Solution

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21.
Most investors are risk averse which means____________.

22.
The company's cost of capital is called ________.

23.
Which of the following would be considered a risk-free investment?

24.
Cost of retained earnings is equal to _______.

25.
Beta measures the ________.

26.
Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.

27.
The largest single institutional owner of common stocks is________.

28.
EBIT is usually the same thing as.

29.
The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.

30.
Savings accounts are_ but are not.