finance MCQs – Page 6

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 Review each marked answer and report any item that may be outdated or unclear.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
251. An internal rate of return in capital budgeting can be modified to make it representative of_________?
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A. Relative inflow

B. Relative outflow

C. Relative cost

D. Relative profitability
252. Product costs include which of the following?
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A. Administrative expenses

B. General expenses

C. Selling expenses

D. Manufacturing overhead
253. First step in calculation of net present value is to find out_________?
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A. Present value cash flow

B. Future value of equity

C. Future value of cash flow

D. Present value of equity

254. Which of the following ratios are particularly interesting to short term creditors?
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A. Liquidity Ratios

B. Market Value Ratios

C. Long-term Solvency Ratios

D. Profitability Ratios

255. A series of constant cash flows that occur at the end of each period for some fixed number of periods is ____________ .
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A. annuity due

B. perpetuity

C. multiple cash flows

D. an ordinary annuity
256. Company low earning power and high interest cost cause financial changes which have_____________?
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A. High return on assets

B. Low return on equity

C. High return on equity

D. Low return on assets

257. In which of the following type of annuity, cash flows occur at the beginning of each period?
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A. Perpetuity

B. Ordinary annuity

C. None of the given options

D. Annuity due
258. Real rate expected cash flows and nominal rate expected cash flows must be______________?
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A. Equal

B. Different

C. Inflated

D. Accelerated

259. Type of options that permit bond holder to buy stocks at stated price are classified as______?
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A. Warrants

B. Provision

C. Convertibles

D. Guarantee

260. Long period of bond maturity leads to_________?
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A. Standing prices

B. More price changes

C. Stable prices

D. Mature prices

261. Capital budgeting decisions are analyzed with help of weighted average and for this purpose____________?
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A. Common stock value is used

B. Component cost is used

C. Cost of capital is used

D. Asset valuation is used

262. A technique uses in comparative analysis of financial statement is_________?
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A. Preference analysis

B. Common size analysis

C. Graphical analysis

D. Returning analysis

263. An uncovered cost at start of year is divided by full cash flow during recovery year then added in prior years to full recovery for calculating__________?
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A. Investment period

B. Forecasted period

C. Payback period

D. Original period

264. Tendency of moving together of two variables is classified as_____________?
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A. Variables tendency

B. Move tendency

C. Double tendency

D. Correlation
265. Payment of security if it is made at end of each period such as beginning of year is classified as______________?
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A. Annuity due

B. Payment fixed series

C. Ordinary annuity

D. Deferred annuity

266. The total assets divided by common equity is a formula uses for calculating _________?
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A. graphical multiplier

B. turnover multiplier

C. stock multiplier

D. equity multiplier
267. An equation in which total assets are multiplied to profit margin is classified as _________?
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A. preference equation

B. common equation

C. turnover equation

D. du DuPont equation
268. Total amount of depreciation charged on long term assets is classified as______________?
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A. Accumulated appreciation

B. Depleted depreciation

C. Accumulated appreciation schedule

D. Accumulated depreciation
269. Purchase cost of assets over its useful life is classified as_________?
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A. Depreciation

B. Appreciated liabilities

C. Appreciation

D. Appreciated assets

270. Financial securities that can be converted into cash at closing to their book value price are classified as_______________?
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A. Short-term investments

B. Long-term investments

C. Inventories

D. Cash equivalents
271. In capital budgeting, a technique which is based upon discounted cash flow is classified as ___________?
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A. net future value method

B. net capital budgeting method

C. net equity budgeting method

D. net present value method
272. Betas tend to move towards 1.0 with passage of time are classified as__________?
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A. Varied betas

B. Historical betas

C. Standard betas

D. Adjusted betas
273. Low price for earnings ratio is result of________________?
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A. High riskier firms

B. Low riskier firms

C. Low dividends paid

D. High marginal rate

274. An income available for shareholders after deducting expenses and taxes from revenues is classified as______________?
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A. Net earnings

B. Net expenses

C. Net income

D. Net revenues

275. According to capital asset pricing model assumptions, investors will borrow unlimited amount of capital at any given___________?
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A. Identical and fixed returns

B. Fixed rate of interest

C. Risk free rate of interest

D. Risk free expected return

276. The graph which is plotted for projected net present value and capital rates is called ___________?
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A. net future value profile

B. net gain profile

C. net present value profile

D. net loss profile

277. Rate of return which is asked by investors is classified as_____________________?
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A. Weighted average cost of capital

B. Weighted cost of capital

C. Mean cost of capital

D. Average cost of capital

278. In financial planning, most high option price will lead to__________?
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A. Longer option period

B. Smaller option period

C. Higher price

D. Lesser price

279. The companies that help to set benchmarks are classified as ___________?
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A. competitive companies

B. return companies

C. benchmark companies

D. analytical companies

280. Correct measure of risk of stock is called_____________?
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A. Beta

B. Alpha

C. Market relevance

D. Variance

281. The price per share is $25 and the cash flow per share is $6 then the price to cash flow ratio would be ___________?
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A. 0.24

B. 4.16 times

C. 0.0416

D. 0.24 times

282. The net income available to stockholders is $125 and total assets are $1,096 then return on common equity would be ___________?
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A. 0.12 times

B. 0.114

C. 0.12

D. 0.00114

283. Cost which has occurred already and not affected by decisions is classified as______________?
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A. Mean cost

B. Occurred cost

C. Weighted cost

D. Sunk cost
284. Risk which is caused by events such as strikes, unsuccessful marketing programs and other lawsuits is classified as____________?
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A. Stock risk

B. >Diversifiable risk

C. Portfolio risk

D. Market risk

285. Relationship between risk and required return is classified as___________?
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A. Riskier return line

B. Market risk line

C. Required return line

D. Security market line
286. If payment of security is paid as $100 at end of year for three years, it is an example of______________?
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A. Fixed payment investment

B. Lump sum amount

C. Annuity

D. Fixed interval investment

287. The initial cost is $5000 and the probability index is 3.2 then the present value of cash flows is _________?
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A. 1562.5

B. 8200

C. 0.0064

D. 16000
288. If book value is greater than market value comparison with investors for future stock are considered as_______________?
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A. Experienced

B. Pessimistic

C. Optimistic

D. Inexperienced

289. The ratios which relate firms stock to its book value per share, cash flow and earnings are classified as _________?
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A. marginal ratios

B. return ratios

C. equity ratios

D. market value ratios
290. In capital budgeting, two projects having cost of capital as 12% is classified as __________?
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A. return rate

B. budgeting rate

C. capital rate

D. hurdle rate

291. Stocks which has high book for market ratio are considered as_____________?
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A. Optimistic

B. Less risky

C. Pessimistic

D. More risky
292. Standard deviation is 18% and expected return is 15.5% then coefficient of variation would be__________?
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A. 2.50%

B. 0.86%

C. 2.50%

D. 1.16%
293. The present value of future cash flows is $4150 and an initial cost is $1300 then the profitability index will be ____________?
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A. 0.0319

B. 5450

C. 0.31 times

D. 3.19

294. Difference between actual return on stock and predicted return is considered as___________?
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A. Prediction error

B. Actual error

C. Probability error

D. Random error
295. A project which have one series of cash inflows and results in one or more cash outflows is classified as __________
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A. abnormal cash flow

B. normal costs

C. normal cash flows

D. abnormal costs

296. Other factors held constant, but the lesser project liquidity is because of __________?
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A. shorter payback period

B. less project return

C. greater payback period

D. greater project return

297. Future beta is needed to calculate in most situations is classified as____________?
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A. Standard betas

B. Adjusted betas

C. Varied betas

D. Historical betas
298. An uncovered cost at the start of the year is $300, full cash flow during recovery year is $650 and prior years to full recovery is 4 then payback would be _________?
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A. 4.46 years

B. 2.46 years

C. 5.46 years

D. 3.46 years

299. Coefficient of variation is used to identify an effect of__________?
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A. Risk

B. Return

C. Deviation

D. Both A and B
300. Return on assets = 6.7% and equity multiplier = 2.5% then return on equity will be ______________?
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A. 0.37%

B. 16.75%

C. 2.68%

D. 9.20%