finance MCQs – Page 3

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 Review each marked answer and report any item that may be outdated or unclear.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
41. Nominal interest rates and nominal cash flows are usually reflected the____________?
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A. Equity effects

B. Debt effects

C. Opportunity effects

D. Inflation effects
42. Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?
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A. None of the given options

B. Partnership

C. Corporation

D. Sole-proprietorship

43. Which of the following form of business organization is least regulated?
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A. General Partnership

B. Limited Partnership

C. Corporation

D. Sole-proprietorship
44. Which of the following statement is TRUE regarding debt?
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A. Debt is an ownership interest in the firm.

B. Unpaid debt can result in bankruptcy or financial failure.

C. Debt provides the voting rights to the bondholders.

D. Corporations payment of interest on debt is fully taxable.

45. Which of the following statement is considered as the accountants snapshot of firms accounting value as of a particular date?
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A. Income Statement

B. Cash Flow Statement

C. Balance Sheet

D. Retained Earning Statement

46. A market interest rate for specific type of bond is classified as bonds_____________?
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A. Required rate of return

B. Required rate of earning

C. Required rate of redemption

D. Required option

47. Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as____________?
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A. Economic relationship

B. Inverse relationship

C. Direct relationship

D. Valued relationship

48. Price per share is $30 and an earnings per share is $3.5 then price for earnings ratio would be___________?
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A. 0.11 times

B. 11%

C. 8.57%

D. 8.57 times
49. Reinvestment risk of bonds is higher on__________?
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A. High maturity bonds

B. High inflated bonds

C. High premium bonds

D. Short maturity bonds
50. Price of stock that companies observe in financial markets is called____________?
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A. Fundamental price

B. Intrinsic price

C. Extrinsic price

D. Market price
51. Life that maximizes net present value of an asset is classified as__________?
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A. Economic life

B. Minimum life

C. Present value life

D. Transaction life

52. Set of rules consisting of behavior towards its directors, creditors, shareholders, competitors and community is considered as____________?
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A. Hiring governance

B. Corporate governance

C. Agency governance

D. External governance

53. An inflation rate includes in bonds interest rates is one which is inflation rate________?
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A. Expected at deferred call

B. Expected in future

C. Expected at time of maturity

D. At bond issuance

54. Method uses for an estimation of cost of equity is classified as___________?
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A. Future cash flow method

B. Discounted cash flow method

C. Market cash flow

D. Present cash flow method

55. A project whose cash flows are more than capital invested for rate of return then net present value will be___________?
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A. Zero

B. Positive

C. Independent

D. Negative

56. If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
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A. Rs. 1,000

B. Rs. 1,464

C. Rs. 1,244

D. Rs. 1,331

57. Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?
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A. Fluctuations Risk

B. Interest Rate Risk

C. Inflation Risk

D. Real-Time Risk

58. Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?
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A. Negative

B. Zero

C. Independent

D. Positive

59. Cash outflows are costs of project and are represented by___________?
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A. Hurdle number

B. Relative number

C. Positive numbers

D. Negative numbers
60. Which of the following set of ratios relates the market price of the firms common stock to selected financial statement items?
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A. Liquidity Ratios

B. Market Value Ratios

C. Profitability Ratios

D. Leverage Ratios