finance MCQs – Page 4

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 Review each marked answer and report any item that may be outdated or unclear.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
61. Which of the following relationships holds TRUE if a bond sells at a discount?
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A. Bond Price > Par Value and YTM > coupon rate

B. Bond Price < Par Value and YTM > coupon rate

C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM < coupon rate

62. In capital budgeting, a negative net present value result in______________?
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A. Positive economic value added

B. Percent economic value added

C. Zero economic value added

D. Negative economic value added
63. Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is____________?
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A. Negative

B. Positive

C. Zero

D. One

64. Yield of interest rate which is below than coupon rate, this yield is classified as_________?
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A. Yield to earning

B. Yield to investors

C. Yield to call

D. Yield to maturity

65. Rate of required return by debt holders is used for estimation the__________?
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A. Cost of debt

B. Cost of internal capital

C. Cost of equity

D. Cost of reserve assets

66. A bond whose price will rise above its face value is classified as________?
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A. Premium bond

B. Premium warrants

C. Premium stock

D. Premium face value

67. How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual payment and a 5% interest rate?
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A. 6 years

B. 24 years

C. 12 years

D. 48 years

68. A model which makes an assumption about the future growth of dividends is known as:
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A. All of the given options

B. Dividend Policy Model

C. Dividend Price Model

D. Dividend Growth Model
69. Bonds that have high liquidity premium are usually have_________?
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A. Less frequently traded

B. Frequently traded

C. Inflated trading

D. Default free trading

70. Which of the following statement is CORRECT regarding compound interest?
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A. It earns profit not only on principal but also on interest.

B. It does not take into account the accumulated interest for calculation.

C. It is the most basic form of calculating interest.

D. It is calculated by multiplying principal by rate multiplied by time.

71. Capital gain expected by stockholders and dividends are included in____________?
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A. Interest rate

B. Cost of equity

C. Debt rate

D. Investment return

72. Which of the following ratios is NOT from the set of Asset Management Ratios?
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A. Receivable Turnover

B. Inventory Turnover Ratio

C. Return on Assets

D. Capital Intensity Ratio
73. Type of financial security in which firms do not borrow money rather lease their assets is classified as____________________?
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A. Corporate stocks

B. Leases

C. Preferred stocks

D. Common stocks

74. When real rate is high, all the interest rates tend to be ___________?
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A. None of the given options

B. Constant

C. Lower

D. Higher
75. Relevant cash flow which company expects when its will implement project is classified as_____________?
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A. Incremental cash flow

B. Decrease cash flow

C. Relevant cash flow

D. Irrelevant cash flow

76. You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?
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A. Rs. 1,000 because it has the higher future value

B. Rs. 1,000 because you receive it sooner

C. Rs. 1,050 because it is more money

D. Either because both options are of equal value
77. Which of the following is the process of planning and managing a firm?s long-term investments?
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A. Capital Structuring

B. Capital Rationing

C. Capital Budgeting

D. Working Capital Management

78. Bond that has been issued in very recent timing is classified as_______?
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A. Mature issue

B. Recent issue

C. Earning issue

D. New issue
79. A company having a current ratio of 1 will have ________ net working capital.
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A. Negative

B. zero

C. Positive

D. None of the given options

80. In which type of business, all owners share in gains and losses and all have unlimited liability for all business debts?
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A. Sole-proprietorship

B. Limited Partnerhsip

C. Corporation

D. General Partnership