finance MCQs – Page 21

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 Review each marked answer and report any item that may be outdated or unclear.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

401. In capital asset pricing model, characteristic line is classified as____________?
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A. Regression line

B. Scattered points

C. Probability line

D. Weighted line

402. Bonds issue by corporations which are more riskier than preferred stocks are classified as_____________?
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A. Common stocks

B. Corporate stocks

C. Preferred stocks

D. Leases

403. Weighted average of probabilities is classified as____________?
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A. Past rate of return

B. Average rate of return

C. Weighted rate of return

D. Expected rate of return

404. Two alternative expected returns are compared with help of__________?
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A. Coefficient of deviation

B. Coefficient of standard

C. Coefficient of return

D. Coefficient of variation

405. The profitability index in capital budgeting is used for __________?
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A. evaluate projects

B. relative projects

C. earned projects

D. negative projects

406. A companys low earnings power and high interest cost cause financial changes, which have ___________?
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A. low return on assets

B. high return on assets

C. low return on equity

D. high return on equity

407. In the mutually exclusive projects, the project which is selected for comparison with others must have _________?
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A. all of the above

B. zero net present value

C. higher net present value

D. lower net present value

408. Cost of common stock is 16% and bond yield is 9% then bond risk premium would be_________?
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A. 8%

B. 1.78%

C. 25%

D. 7%

409. In financial markets, period of maturity within one to five years of financial instruments is classified as_________________?
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A. Long-term

B. Capital term

C. Intermediate term

D. Short-term

410. A formula of after-tax component cost of debt is___________?
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A. Borrowing cost + embedded cost

B. Interest rate + tax savings

C. Marginal tax-required return

D. Interest rate-tax savings

411. Future value of interest if it is calculated two times a year can be a classified as__________________?
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A. Annual discounting

B. Semiannual discounting

C. Annual compounding

D. Semiannual compounding

412. Stock issued by company have higher rate of return because of______________?
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A. Low book to market ratio

B. High book to market ratio

C. Low market to book ratio

D. High market to book ratio

413. The process in which the managers of the company identify projects to add value is classified as __________?
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A. capital budgeting

B. cost budgeting

C. equity budgeting

D. book value budgeting

414. Project which is started by firm for increasing sales is classified as______________?
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A. Old expanded project

B. Firm borrowing project

C. Product line selection

D. New expansion project

415. Firms promise to pay and is backed or guaranteed by bank is classified as____________?
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A. Federal acceptance

B. Customers acceptance

C. Treasury acceptance

D. Bankers acceptance

416. According to market risk premium, an amount of risk premium depends upon investor______________?
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A. Market aversion

B. Risk aversion

C. Portfolio aversion

D. Risk taking

417. In capital market line, risk of efficient portfolio is measured by its____________?
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A. Variance

B. Ineffective risk

C. Standard deviation

D. Aggregate risk

418. An information uses by investors for expecting future earnings is all recorded in__________?
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A. Exchange report

B. Annual report

C. Stock report

D. Five years report

419. Income that is saved and not invested is known as____________?
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A. Capital

B. Deposit

C. Hoarding

D. None

420. Method of matching orders by posting orders of buying and selling is classified as______________?
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A. Electronic stock network

B. Electronic order network

C. Electronic dealer network

D. Electronic communication network

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