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 Review each marked answer and report any item that may be outdated or unclear.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

101. 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. 0.11%

B. 12%

C. 11.40%

D. 0.12 times

102. If market interest rate falls below coupon rate then bond will be sold__________?
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A. Equal to return rate

B. Above its par value

C. Below its par value

D. Seasoned price

103. Present value of future cash flows is divided by an initial cost of project to calculate_______?
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A. Project index

B. Profitability index

C. Exchange index

D. Negative index

104. During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?
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A. Rs. 25,000

B. Rs. 33,000

C. Rs. 17,000

D. Rs. 8,000

105. The Capital Asset Pricing Model calculate expected:
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A. None of the above

B. Risk and Return

C. Risk

D. Return

106. Other factors held constant, greater project liquidity is because of___________?
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A. Less project returns

B. Greater payback period

C. Shorter payback period

D. Greater project return

107. Profitability index (PI) rule is to take an investment, if the index exceeds___________?
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A. 0

B. -1

C. 1

D. 2

108. Number of years forecasted to recover an original investment is classified as________?
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A. Payback period

B. Original period

C. Investment period

D. Forecasted period

109. If a company revaluates its fixed assets, the current ratio of the company will:
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A. Remain unaffected

B. Undergo change only if liabilities are remaining constant

C. Improve if assets are revalued downwards

D. Improve if assets are revalued upward

110. If market interest rate rises above coupon rate, then bond will be sold_____________?
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A. Above its par value

B. Seasoned price

C. Equal to return rate

D. Below its par value

111. Which of the following ratios are intended to address the firms financial leverage?
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A. Long-term Solvency Ratios

B. Liquidity Ratios

C. Profitability Ratios

D. Asset Management Ratios

112. An annual interest payment divided by current price of bond is considered as_____________?
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A. Current yield

B. Maturity yield

C. Earning yield

D. Return yield

113. In cash flow estimation, depreciation is considered as________________?
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A. Cash charge

B. Non cash charge

C. Net salvage discount

D. Cash flow discounts

114. Earning per share is computed as:
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A. No of common shares outstanding

B. ____________Earning AfterTax_____________

115. A point where profile of net present value crosses horizontal axis at plotted graph indicates project____________________?
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A. Costs

B. Cash flows

C. External rate of return

D. Internal rate of return

116. Right held with corporations to call issued bonds for redemption is considered as___________?
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A. Original provision

B. Redeem provision

C. Artificial provision

D. Call provision

117. Legal entity separation from its legal owners and managers with help of state laws is classified as____________?
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A. Corporation

B. Limited corporate business

C. Unlimited corporate business

D. Controlled corporate business

118. _______________refers to the extent to which fixed-income securities (debt and preferred stock) are used in a firms capital structure?
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A. Operating risk

B. Portfolio risk

C. Market risk

D. Financial risk

119. The market price of a firms stock represents the focal judgment of all market participants as to the value of the:
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A. Particular market

B. Particular debtor

C. Particular firm

D. Particular creditor

120. Variability for expected returns for projects is classified as___________?
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A. Variable risk

B. Returning risk

C. Stand-alone risk

D. Expected risk

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