MCQOPTIONS
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MCQOPTIONS
This section includes 2436 Mcqs, each offering curated multiple-choice questions to sharpen your Commerce knowledge and support exam preparation. Choose a topic below to get started.
| 301. |
Capital budgeting is ------------------------ |
| A. | Related to long time |
| B. | Related to short time |
| C. | A profit |
| D. | A sales |
| Answer» B. Related to short time | |
| 302. |
The return after the pay off period is not considered in case of |
| A. | Pay back method |
| B. | NPV |
| C. | Present value index |
| D. | IRR |
| Answer» B. NPV | |
| 303. |
According to ------------------ the degree of leverage is irrelevant in determining the value of a firm |
| A. | MM theory |
| B. | Walter’s model |
| C. | Baumol’s model |
| D. | None of these |
| Answer» B. Walter’s model | |
| 304. |
Capital budgeting is the process of making investment decisions in the ---------- |
| A. | Sales |
| B. | Sales planning |
| C. | Cash |
| D. | Capital expenditure |
| Answer» E. | |
| 305. |
The proposal is rejected in case the profitability index is ------------ |
| A. | Less than one |
| B. | Less than zero |
| C. | Less than two |
| D. | Less than five |
| Answer» B. Less than zero | |
| 306. |
The following is not a Discounted Cash Flow Technique: |
| A. | NPV |
| B. | PI |
| C. | Accounting of Average rate of return |
| D. | IRR |
| Answer» D. IRR | |
| 307. |
.Earnings yield method is applied when the dividend pay out ratio is |
| A. | Zero per cent |
| B. | 100 per cent |
| C. | 50 per cent |
| D. | 20 percent |
| Answer» C. 50 per cent | |
| 308. |
Current Assets Rs. 20,00,000; Current Liabilities Rs. 10,00,000 and Stock Rs. 2,00,000,then what is liquid ratio? |
| A. | 2 times |
| B. | 1.8 times |
| C. | 1.4 times |
| D. | None of these |
| Answer» C. 1.4 times | |
| 309. |
In India ,preference shares must be redeemed within a period |
| A. | 3 year of issue |
| B. | 6 years of issue |
| C. | 10 years of issue |
| D. | 20 years of issue |
| Answer» D. 20 years of issue | |
| 310. |
The possibility that a company will have lower than anticipated profits is called --------------------- |
| A. | Financial risk |
| B. | Operational risk |
| C. | Business risk |
| D. | Technological risk |
| Answer» D. Technological risk | |
| 311. |
XLtd has taken a term loan of Rs12 lakhs at an interest rate of 15% p.a. If the tax rate applicable to the company is 40%, the cost of term loan is |
| A. | 4.8% |
| B. | 6% |
| C. | 7.2% |
| D. | 9% |
| Answer» E. | |
| 312. |
Which ratio explains that how much portion of earning is distributed in the form of dividend |
| A. | Dividend per Share Ratio |
| B. | Pay Out Ratio |
| C. | Earning yield Ratio |
| D. | Equity Capital Ratio |
| Answer» C. Earning yield Ratio | |
| 313. |
The cost of capital is -------------- |
| A. | The maximum rate of return |
| B. | The minimum rate of return |
| C. | A profit |
| D. | A product |
| Answer» C. A profit | |
| 314. |
1,00,000; 10% Debentures of Rs. 100 each of company, the interest payable forquarter is: |
| A. | Rs. 10,00,000 |
| B. | Rs. 2,50,000 |
| C. | Rs. 5,00,000 |
| D. | None of these |
| Answer» C. Rs. 5,00,000 | |
| 315. |
Following method is also known as ‘Benefit Cost Ratio.’ |
| A. | NPV |
| B. | IRR |
| C. | ARR |
| D. | PI |
| Answer» E. | |
| 316. |
According to rate or return is the ratio of average values of |
| A. | Profit before tax to book value o the investment |
| B. | Profit after tax to salvage value of the investment |
| C. | Profit before tax to present value of the investment |
| D. | Profit after tax to the book value of the investment |
| Answer» E. | |
| 317. |
Which of the following is true regarding the measurement of cash inflows and out flows ofa project? |
| A. | Depreciation amount should be added to PBT |
| B. | Depreciation amount should be added to PAT |
| C. | Depreciation should neither be added nor be subtracted from PAT |
| D. | Both a and b above |
| Answer» C. Depreciation should neither be added nor be subtracted from PAT | |
| 318. |
Cost of goods sold is Rs. 8000 and gross margin is Rs. 5000 then revenue will be |
| A. | Rs. 3,000 |
| B. | Rs. 5,000 |
| C. | Rs. 8,000 |
| D. | Rs. 13,000 |
| Answer» E. | |
| 319. |
The term optimal capital structure‘ implies that combination of external equity andinternal equity at which ……… |
| A. | the overall cost of capital is minimised |
| B. | the overall cost of capital is maximised |
| C. | the market value of the firm is minimised |
| D. | the market value of firm is greater than the overall cost of capital |
| Answer» B. the overall cost of capital is maximised | |
| 320. |
If the annual cash inflows are constant, the payback period can be computed by dividing cash outlay by ---------------- |
| A. | Annual cash inflow |
| B. | Profit |
| C. | Expenses |
| D. | Annual sales flows |
| Answer» E. | |
| 321. |
Term loans are those loans which are payable after one or more ______________ |
| A. | years |
| B. | Time |
| C. | Costly |
| D. | All of these |
| Answer» B. Time | |
| 322. |
The composition of a company’s capitalization is called |
| A. | Capital Structure |
| B. | Financial structure |
| C. | Long term source |
| D. | Short term source |
| Answer» B. Financial structure | |
| 323. |
------------- rate at which discounts the cash flows to zero |
| A. | Payback period by economic order quantity |
| B. | Internal rate of return |
| C. | Cash flow |
| D. | None of these |
| Answer» D. None of these | |
| 324. |
The payment of dividend is not compulsory on ------------------ |
| A. | Equity share capital and preference share capital |
| B. | Bonds |
| C. | Debentures |
| D. | Share capital |
| Answer» E. | |
| 325. |
Which is the type of dividend? |
| A. | Cash dividend |
| B. | Interest |
| C. | Profit cum reserve |
| D. | Flexible capital |
| Answer» B. Interest | |
| 326. |
A cumulative preference share is one |
| A. | In which all the unpaid dividends are carried forward and payable. |
| B. | Which can be converted into equity shares |
| C. | Which can be redeemed |
| D. | Which entitle the preference shareholders to participate in surplus profits and assets. |
| Answer» B. Which can be converted into equity shares | |
| 327. |
Which of the following is not a disadvantage of rate of return method of capital budgeting? |
| A. | It ignores the time value of money |
| B. | It uses the earnings of a project up to the payback period only |
| C. | It does not take into consideration cash flows |
| D. | This method can not be applied to a situation where investment in a project is to be made in parts. |
| Answer» C. It does not take into consideration cash flows | |
| 328. |
Shareholder value analysis is an approach to Financial Management Development in ------------------ |
| A. | 1970 |
| B. | 1980 |
| C. | 1990 |
| D. | 1996 |
| Answer» C. 1990 | |
| 329. |
The discount rate which equates the present value of cash inflows with the present value of cash out flows is called ------- |
| A. | Opportunity cost |
| B. | Sunk cost |
| C. | explicit cost |
| D. | Direct cost |
| Answer» D. Direct cost | |
| 330. |
PAT of a company Rs. 100 lakhs and number of equity shares of Rs. 10 each with acapital of Rs. 50 lakhs, then EPS is: |
| A. | Rs. 2 |
| B. | Rs. 1 |
| C. | Rs. 10 |
| D. | None of these |
| Answer» E. | |
| 331. |
The term financial engineering is used to ---------------- |
| A. | Cost of production |
| B. | Risk management |
| C. | Capital |
| D. | Sales planning |
| Answer» C. Capital | |
| 332. |
For a project, benefit cost ratio is equal to one, then |
| A. | IRR will be greater than one |
| B. | IRR will be greater than discount rate |
| C. | IRR will be less than discount rate |
| D. | IRR will be equal to discount rate |
| Answer» E. | |
| 333. |
Which one of the following activities is outside the purview of financing decision infinancial management? |
| A. | Identification of the source of funds |
| B. | Measurement of the cost of funds |
| C. | Deciding on the time of raising the funds |
| D. | Deciding on the utilization of the funds |
| Answer» E. | |
| 334. |
Which profit is considered for calculating Average Rate of Return? |
| A. | Earnings before interest, depreciation and tax |
| B. | Average profit after tax and depreciation |
| C. | Average profit after depreciation but before tax |
| D. | Average profit after depreciation but before tax |
| Answer» C. Average profit after depreciation but before tax | |
| 335. |
The interest rate on commercial paper is determined by ------------- |
| A. | RBI |
| B. | SEBI and Market Force |
| C. | SBI |
| D. | Market Force |
| Answer» E. | |
| 336. |
Which of the following is not associated with cash management of a firm? |
| A. | Stretching accounts payable without affecting the credit of the firm |
| B. | Speedy collection of receivables |
| C. | Investing surplus funds in long term securities |
| D. | Maintaining liquidity |
| Answer» D. Maintaining liquidity | |
| 337. |
Which of the following is not a motive for holding cash? |
| A. | Transaction purpose |
| B. | Precaution against unexpected expenses |
| C. | Extending loans to group companies |
| D. | Speculation purpose |
| Answer» D. Speculation purpose | |
| 338. |
SGR is stands for -------------- |
| A. | Sustainable Growth rate |
| B. | Sales Growth rate |
| C. | Sales Goodwill rate |
| D. | Super Goodwill ratio |
| Answer» B. Sales Growth rate | |
| 339. |
According to net operating income approach |
| A. | The equity capitalization rate remains constant with any increase or decrease in the degree of leverage |
| B. | The overall capitalization rate of the firm remains constant |
| C. | The cost of debt remains constant |
| D. | Both b and c |
| Answer» E. | |
| 340. |
Which of the following does not help to increase Current Ratio? |
| A. | Issue of Debentures to buy Stock |
| B. | Issue of Debentures to pay Creditors |
| C. | Sale of Investment to pay Creditors |
| D. | Avail Bank Overdraft to buy Machine |
| Answer» E. | |
| 341. |
Debt Financing is a cheaper source of finance because of |
| A. | Time Value of Money |
| B. | Rate of Interest |
| C. | Tax-deductibility of Interest |
| D. | Dividends not Payable to lenders |
| Answer» D. Dividends not Payable to lenders | |
| 342. |
If the company announces dividend then it is necessary to pay if |
| A. | Within a certain time |
| B. | Within five years |
| C. | Within six years |
| D. | Within seven years |
| Answer» B. Within five years | |
| 343. |
The redemption means |
| A. | The payment of amount |
| B. | The depreciation of the amount |
| C. | The allocation of cost |
| D. | All of these |
| Answer» B. The depreciation of the amount | |
| 344. |
----- is the rate of return that the company must earn on the net funds raised, in order to satisfy the equity shareholders’ demand for return |
| A. | Cost of retained earnings |
| B. | Cost of external equity |
| C. | Weighted average cost of capital |
| D. | Marginal cost of capital |
| Answer» C. Weighted average cost of capital | |
| 345. |
The use of long term fixed interest bearing debt and preference share capital along with equity shares is called |
| A. | Operating leverage |
| B. | Financial leverage |
| C. | Trading on equity |
| D. | Both b and c |
| Answer» E. | |
| 346. |
Working Capital Management refers to a Trade-off between _____________andProfitability. |
| A. | Liquidity |
| B. | Risk |
| C. | Both of the above |
| D. | None of the above |
| Answer» D. None of the above | |
| 347. |
A firm determines the shareholders’ wealth by taking |
| A. | the number of people employed in the firm |
| B. | the book value of the firm’s assets less the book value of its liabilities |
| C. | the amount of salary paid to its employees |
| D. | the market price per share of the firm |
| Answer» C. the amount of salary paid to its employees | |
| 348. |
Debt- equity Ratio is an example of ________________. |
| A. | Short term solvency Ratio |
| B. | Long term solvency Ratio |
| C. | Profitability Ratio |
| D. | None of the above |
| Answer» C. Profitability Ratio | |
| 349. |
In IRR , the cash inflows are assumed to be reinvested in the project at |
| A. | Internal rate of return |
| B. | Cost of capital |
| C. | Risk free rate |
| D. | Risk adjusted rate |
| Answer» B. Cost of capital | |
| 350. |
The appropriate objective of an enterprise is : |
| A. | Maximization of sales |
| B. | Maximization of owners wealth |
| C. | Maximization of profits |
| D. | None of these |
| Answer» C. Maximization of profits | |