Financial Management MCQs (Chapterwise Multiple Choice Questions)

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

Cost of capital or required rate of return (k)

Capital budgeting

Capital structure

None of these

Answer & Explanation

Correct Answer: Cost of capital or required rate of return (k)

Note: This Question is unanswered, help us to find answer for this one

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

Retain

Distribute

Both a & b

None of these

Answer & Explanation

Correct Answer: Retain

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The company’s’ average cost of capital is

The average cost of equity, shares and debentures

The average cost of equity, preference shares and debentures

The average cost of all sources of long-term funds

None of these

Answer & Explanation

Correct Answer: The average cost of all sources of long-term funds

Note: This Question is unanswered, help us to find answer for this one

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

All investment to be made by the company with similar risk

All projects to be carried out in the future

Any assets to be bought by the company

None of these

Answer & Explanation

Correct Answer: All investment to be made by the company with similar risk

Note: This Question is unanswered, help us to find answer for this one

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

Lower than the owned funds

Equal to that of owned funds

Higher than that of owned funds

None of these.

Answer & Explanation

Correct Answer: Lower than the owned funds

Note: This Question is unanswered, help us to find answer for this one

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

Online brokers

Cash management accounts

Underwriting corporate debt and equity offers

Venture capital funds

Answer & Explanation

Correct Answer: Cash management accounts

Note: This Question is unanswered, help us to find answer for this one

________ 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.

Gross working capital

Net working capital

Fixed capital

None of these

Answer & Explanation

Correct Answer: Gross working capital

Note: This Question is unanswered, help us to find answer for this one

The decision to issue various securities in different proportions is called

The capital structure decision

Portfolio analysis decision

Investment statement policy

None of these

Answer & Explanation

Correct Answer: The capital structure decision

Note: This Question is unanswered, help us to find answer for this one

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

Net operating income

Net income

Both a & b

None of these

Answer & Explanation

Correct Answer: Net operating income

Note: This Question is unanswered, help us to find answer for this one

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

Net income approach

Net operating income approach

Both a and b

None of these

Answer & Explanation

Correct Answer: Net operating income approach

Note: This Question is unanswered, help us to find answer for this one

Financial Management Quick Quiz

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