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

31.
Dividend changes are perceived important than the absolute level of dividends because.

A. management change dividends to protect their seats

B. dividend changes are thought to signal future expectations

C. MM state that absolute level of dividends is irrelevant

D. changes determine the level of borrowing

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32.
Investment bankers perform the following role ___________.

A. market new stock and bond issues for firms

B. provide advice to the firms as to market conditions, price, etc

C. design securities with desirable properties

D. all of the above

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33.
Which of the following is the assumption of the MM model on dividend policy?

A. The firm is an all-equity firm

B. The investments of the firm are financed solely by retained earnings

C. The firm has an infinite life

D. None of the above

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34.
Investors seeking to avoid actively managing their portfolios will prefer which of the following assets?

A. Common stock

B. Commercial bank deposits

C. Financial futures

D. Real estate

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35.
Which of the following short term securities is inappropriate for an individual, desiring funds for financial emergencies?

A. treasury bills

B. certificates of deposit

C. financial futures

D. savings accounts

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36.
Which of the following methods does a firm resort to avoid dividend payments?

A. Share splitting

B. Declaring bonus shares

C. Rights issue

D. New issue

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37.
Asset allocation affects the investor's return by______________.

A. altering the returns on individual assets

B. weighting the portfolio return by the allocation

C. assuring diversification

D. increasing the investor's use of mutual funds

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38.
Which of the following characteristics are true, with reference to preference capital?

A. Preference dividend is not tax deductible

B. The claim of preference shareholders is prior to the claim of equity shareholders

C. Preference shareholders are not the owners of the concern

D. All of the above

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39.
Diversification reduces _________.

A. Interest rate risk

B. Market risk

C. Unique risk

D. Inflation risk

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40.
What are the factors which make debentures attractive to investors?

A. They enjoy a high order of priority in the event of liquidation

B. Stable rate of return

C. No risk

D. All of the above

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Financial Management MCQ Questions and Solutions with Explanations | Commerce

31. Dividend changes are perceived important than the absolute level of dividends because.

Answer & Solution

32. Investment bankers perform the following role ___________.

Answer & Solution

33. Which of the following is the assumption of the MM model on dividend policy?

Answer & Solution

34. Investors seeking to avoid actively managing their portfolios will prefer which of the following assets?

Answer & Solution

35. Which of the following short term securities is inappropriate for an individual, desiring funds for financial emergencies?

Answer & Solution

36. Which of the following methods does a firm resort to avoid dividend payments?

Answer & Solution

37. Asset allocation affects the investor's return by______________.

Answer & Solution

38. Which of the following characteristics are true, with reference to preference capital?

Answer & Solution

39. Diversification reduces _________.

Answer & Solution

40. What are the factors which make debentures attractive to investors?

Answer & Solution

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31.
Dividend changes are perceived important than the absolute level of dividends because.

32.
Investment bankers perform the following role ___________.

33.
Which of the following is the assumption of the MM model on dividend policy?

34.
Investors seeking to avoid actively managing their portfolios will prefer which of the following assets?

35.
Which of the following short term securities is inappropriate for an individual, desiring funds for financial emergencies?

36.
Which of the following methods does a firm resort to avoid dividend payments?

37.
Asset allocation affects the investor's return by______________.

38.
Which of the following characteristics are true, with reference to preference capital?

39.
Diversification reduces _________.

40.
What are the factors which make debentures attractive to investors?