finance MCQs – Page 12

Practise multiple-choice questions from finance for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

finance Mcqs

221. Bonds issued by small companies tend to have_____________?
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A. High liquidity premium

B. High inflation premium

C. High default premium

D. High yield premium

222. Quick Ratio is also known as_________?
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A. None of the given options

B. Current Ratio

C. Acid-test Ratio

D. Cash Ratio

223. _________ refers to the most valuable alternative that is given up if a particular investment is undertaken?
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A. Opportunity cost

B. All of the given options

C. Financing cost

D. Sunk cost

224. The difference between current assets and current liabilities is known as____________?
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A. Current Ratio

B. Working Capital

C. Short-term Ratio

D. Surplus Asset

225. Type of bonds that pays no coupon payment but provides little appreciation are classified as______________?
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A. Interest bond

B. Appreciation bond

C. Zero coupon bond

D. Depreciated bond

226. An Asset is __________?
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A. None of these

B. Use of funds

C. Sources of funds

D. Inflow of funds

227. Total assets divided common equity is a formula uses for calculating___________?
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A. Stock multiplier

B. Equity multiplier

C. Turnover multiplier

D. Graphical multiplier

228. The use of Personal borrowing to alter the degree of financial leverage is called__________?
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A. Homemade leverage

B. None of the given option

C. Operating leverage

D. Financial leverage

229. Cash flows that could be generated from an owned asset by company but not use in project are classified as_________________?
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A. Weighted cost

B. Mean cost

C. Occurred cost

D. Opportunity costs

230. In cash flow estimation and risk analysis, real rate will be equal to nominal rate if there is__________?
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A. No inflation

B. High inflation

C. No acceleration

D. No transactions

231. Projects which are mutually exclusive but different on scale of production or time of completion then the__________________?
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A. Net future value method

B. External return method

C. Net present value of method

D. Internal return method

232. Price of an outstanding bond increases when market rate___________?
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A. Never changes

B. Decreases

C. Increases

D. Earned

233. Which of the following ratios are particularly interesting to shortterm creditors?
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A. Liquidity Ratios

B. Profitability Ratios

C. Market Value Ratios

D. Long-term Solvency Ratios

234. Price per ratio is divided by cash flow per share ratio which is used for calculating___________?
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A. Price to cash flow ratio

B. Dividend to stock ratio

C. Sales to growth ratio

D. Cash flow to price ratio

235. Double declining balance method and sum of years digits are included in__________?
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A. Double methods

B. Yearly method

C. Single methods

D. Accelerated methods

236. Who of the following make a broader use of accounting information?
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A. Accountants

B. Auditors

C. Financial Analysts

D. Marketers

237. An effect of interest rate risk and investment risk on a bonds yield is classified as_________?
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A. Maturity risk premium

B. Defaulters premium

C. Reinvestment premium

D. Investment risk premium

238. In weighted average cost of capital, capital components are funds that usually offer by____________?
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A. Stock market

B. Capitalist

C. Exchange index

D. Investors

239. The DuPont Identity tells us that Return on Equity is affected by:
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A. The DuPont Identity tells us that Return on Equity is affected by:

B. asset use efficiency (as measured by total assets turnover)

C. financial Leverage (as measured by equity multiplier)

D. all of the given options (a, b and c)

240. Which of the following is the cheapest source of financing available to a firm?
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A. Bank loan

B. Trade credit

C. Commercial papers

D. None of the given options.

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