Financial Management MCQ Questions Answers

1. All of the following are parts of the foundation of financial management except ________.

2. In recent years, _____ has received more foreign direct investment than any other country.

3. _____________ are examples of investment bankers offering traditional commercial banking services.

4. Due to ____, market forces should realign the spot rate of a currency among banks.

5. A _____ budget allocates resources on the basis of a single estimate of costs.

6. In _______, you can use the _____ market to cover your exposure to potential currency depreciation.

7. _____ are also called debentures and are not backed by specific collateral.

8. The primary goal of a financial manager is ________.

9. One major expense associated with issuing new shares of common stock is ________.

10. In a business formula such as return on investment, ""on"" means ________.

11. Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs is known as _______

12. Decision relating to working capital and short term financing are referred to as ____________

13. Accounts receivables are also known as __________

14. __________ motive refers to the need to hold cash to satisfy normal disbursement collection activities associated with firm’s ongoing operation.

15. The amount owned to a company resulting from the company providing goods and services on credit is known as __________

16. The minimum amount of working capital which even required during the dullest season of year is known as ___________

17. The surplus of current assets over current liabilities is known as ______

18. . The difference between current assets and current liabilities of the business concern is termed as ____________

19. ________ refers to the amount of funds invested in various components of current assets. It consists of raw materials, work in progress, debtors, finished goods, etc.

20. . Difference between inflow and outflow of funds is known as ___________

21. Pay-out ratio denotes that

22. If the firm is r>k means the earnings must be

23. If the firms earns a higher rate of return on its investments than the required rate of return (r>k) it is called

24. Walter model is based on the relationship between the firms return on investment (r) and ____

25. Myron Gordon, Jone Linter, James Walter and Richardson supports

26. The Walter’s approach and Gordon’s approach come under

27. The residual approach and MM approach come under

28. In which theory dividend decision materially affects the shareholders wealth and also the valuation of the firm

29. In which theory dividend decision does not affect the share holders wealth and valuation of the firm

30. ____ refers to that part of profits of a company which is distributed by the company among its shareholders

31. In _____ theory, the value of the firm can be increased initially or the cost of capital can be decreased by using more debt is a cheaper source of funds than equity

32. _____ approach is a compromise between the two extremes of net income approach and net operating income approach.

33. In which approach there is nothing as an optimal capital structure and every capital structure is the optimum capital structure

34. In _____ approach the value of the firm and overall cost of capital remains constant irrespective of method of financing. (Debt-equity)

35. In _____ approach, the change in the capital structure of company does not affect the market value of the firm

36. Net operating income theory is suggested by

37. n _____ approach a firm can minimize the weighted average cost of capital and increase the value of a firm and market price of equity share by using debt to the maximum

38. _____ approach is based upon certain unrealistic assumptions such a perfect market, or the expected earnings of all the firms have identical risk etc.,

39. In_____ approach the debt-equity mix is irrelevant in determination of cost of capital and the value of a firm.

40. _____ approach prove that the cost of capital is not affected by changes in the capital structure

41. The required rate of return for an investment project should

42. The overall cost of capital is used as the minimum acceptable return on

43. Interest on debt-capital provides a _______ to the equity holders

44. The cost of capital of a long-term debt is generally

45. The company’s’ average cost of capital is

46. The expansion of CAPM is

47. Cost of retained earnings is equal to

48. Market value of the cost of capital is decided by

49. The company’s cost of capital is called

50. The decision to issue various securities in different proportions is called

51. v

52. _____ means the entire liabilities side of the balance sheet (long term and short term) (debt and equity)

53. ____ is quantitative aspect of the financial planning of an enterprise, if denotes total amount of securities issued by a company.

54. The decision to issue various securities in different proportions is called

55. . Working capital management is managing

56. Capital budgeting is related to

57. The primary goal of the financial management is

58. Financial accounting is designed

59. In his traditional role the finance manager is responsible for

60. Financial Management is mainly concerned with