# Business Studies/Corporate Finance MCQ Set 1 Sample Test,Sample questions

1. liberal.

2.formal

3.strict

4.Varying

1.dividend

2.commission

3.interest

4.brokerage

1.dividend

2.commission

3.interest

4.brokerage

## Question: ` Arbitrage is the level processing technique introduced in ____________.`

1.. Net income approach

2. MM approach

3.Operating approach

1.payable.

2.receivables

3.borrowings

4.debts

2.marketing

3.financial

4.debt

## Question: ` Financial leverage helps one to estimate ____________.`

2.the financial risk

3.both risks

4.production risk.

## Question: ` Future value interest factor takes ____`

1. Compounding rate

2.Discounting rate.

3.Inflation rate

4.Deflation rate.

1.1955

2.1665

3.1965

4.1954

1.worse.

2.better

3.the best

4.equal

## Question: ` lndustrial Development Bank of India is`

1.Wholly-owned Government of India undertaking

2.Wholly-owned subsidiary of Reserve Bank of India

3.A corporation and owned by the Government of India and public sector banks

4.Public Limited Company

## Question: ``` Medium-term notes (MTNs) have maturities that range up to ```

1.one year (but no more)

2. two years (but no more).

3. ten years (but no more)

4.thirty years (or more)

1. 1947

2.1948

3.1949

4.1950

## Question: ``` The formula for cost of debt is __________. ```

1. kd=(1/2+f-p)/f+p

2.f+p

3. f-P

4. f*p

## Question: `A demerit of IRR method is that it does not distinguish between ____________.`

1. lending & borrowing

2.discounting & non- discounting

3.cash flow & non- cash flow

4. inflow & outflow.

## Question: `A way to analyze whether debt or lease financing would be preferable is to:`

1.compare the net present values under each alternative, using the cost of capital as the discount rate.

2.compare the net present values under each alternative, using the after-tax cost of borrowing as the discount rate.

3.compare the payback periods for each alternative.

4.compare the effective interest costs involved for each alternative

## Question: `Beta measures the ____________.`

1. A. Financial risk.

2.Investment risk rate

3. Market risk

4.Market and finance risk.

## Question: `Capital budgeting decisions in India cannot be reversed due to ____.`

1.economic conditions.

2.ill-organized market for second-hand capital goods

3.government regulations.

4.policy of the management

## Question: `Capital budgeting is related to ____`

1.long terms assets.

2.short term assets.

3. long terms and short terms assets

4.fixed assets.

## Question: `Corporation is not a part of ____________finance .`

1. Public.

2.Private

3. Public & private

4.Organization

## Question: ```Cost of retained earnings is equal to ____________. ```

1.Cost of equity.

2.Cost of debt.

3.Cost of term loans

4.Cost of bank loan.

1.higher

2.lower

3.equal

4.medium

## Question: `Financial decisions involve ____________.`

1. Investment, financing and dividend decisions.

2.Investment sales decisions.

3.Financing cash decisions

4.Investment dividend decisions.

## Question: `Financial leverage is also known as ____________.`

3. Interest on equity.

4.Interest on debt.

## Question: ```Financial leverage measures ____________. ```

1.sensitivity of EBIT with respect of 1% change with respect to output

2.1% variation in the level of production .

3.C. sensitivity of EPS with respect to 1% change in level of EBIT

4. no change with EBIT and EPS.

## Question: ```Financial leverage measures ____________. ```

1.sensitivity of EBIT with respect of 1% change with respect to output

2.1% variation in the level of production .

3.C. sensitivity of EPS with respect to 1% change in level of EBIT

4. no change with EBIT and EPS.

## Question: `Financial security with low degree risk and investment held by businesses is classified as`

1.treasury bills

2.commercial paper

3. negotiable certificate of deposit

4.money market mutual funds

## Question: `Fixed cost per unit ____________.`

1.changes according to the volume of production

2.be flexible according to the rate of interest.

3.does not change with the volume of production

4.remains constant.

## Question: ```Future value interest factor takes ____________. ```

1.Compounding rate

2.Discounting rate

3.Inflation rate

4.Deflation rate

## Question: `Future value interest factor takes ____________.`

1.. Compounding rate

2.Discounting rate

3. Inflation rate

4. Deflation rate

1. lower.

2.no change.

3.larger

4.fixed

1.. Mumbai

3.Mysore

4.Bangalore

## Question: `In his traditional role the finance manager is responsible for ______`

1.arrange of utilization of funds.

2.arrangement of financial resources.

3.acquiring capital assets of the organization.

4.effective management of capital

## Question: `In his traditional role the finance manager is responsible for ___________.`

1.proper utilisation of funds

2. arrangement of financial resources

3.acquiring capital assets of the organization

4.Efficient management of capital

## Question: ```Market value of the shares are decided by ____________. ```

1. the respective companies.

2.the investment market

3.the government.

4. shareholders.

## Question: ```Net present value is a popular method which falls ____________. ```

1.Within non- discount cash flow method.

2.Within discount cash flow method

3. Equal Within non- discount cash flow method

4.No discount cash flow

## Question: `Net working capital is the excess of current asset over ____________.`

1.. Current liability.

2.Net liability.

3.Total payable.

4.Total liability.

## Question: `Net working capital refers to.`

1. total assets minus fixed assets

2.current assets minus current liabilities

3.current assets minus inventories

4.current assets.

## Question: `Net working capital refers to.`

1. total assets minus fixed assets

2.current assets minus current liabilities

3.current assets minus inventories

4.current assets.

## Question: `Offering cash discount to customers result is ____________.`

1.reducing the average collection period.

2.increasing the average collection period

3.increasing sales

4.decreasing sales.

## Question: `Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.`

1.Dependence hypothesis

3.Modern view

4.Independence hypothesis.

## Question: `Operating leverage = ______..`

1. A. contribution less profit.

2.contribution less sales

3.contribution less total expenses

4.contribution less operating profit

## Question: `Operating leverage measures ____________.`

2.financial risk

3.both risks

4.production risk.

## Question: `Operating leverage x financial leverage= _____.`

1. composite leverage.

2.financial composite leverage.

3.operating composite leverage

4.fixed leverage

1. selling.

3.stocking

4.financing

1. securities.

2.equities

3.debt

4.debentures

## Question: `Payback period is superior to other methods, if the objective of the investor is to ____________.`

1.consider cash flow in its entirety

2.consider the present value of future cash flows

3.consider the liquidity

4.consider the inflows in its entirety.

## Question: `Present value takes ____________.`

1. A. Compounding rate.

2. Discounting rate.

3.Inflation rate

4.Deflation rate.

## Question: `Shares having no face value are known as ____`

1.no-par stock.

2. at par stock

3.equal stock

4.debt-equity stock.

## Question: `The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________.`

1.capital positioning.

2.capital structuring

3. capital rationing.

4.capital budgeting.

## Question: ```The cash management refers to management of ___. ```

1.A. cash only

2.cash and bank balances

3.cash and near-cash assets

4.fixed assets.

1.6 months.

2.3 months.

3.2 months.

4.1 month.

## Question: `The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.`

1. working capital decision

2. an investment decision

3.a production decision.

4.a sales decision.

## Question: `The expansion of CAPM is ____`

1.Capital amount pricing model

2.Capital asset pricing model

3.Capital asset printing model.

4.a. Capital amount printing model.

## Question: `The expansion of EAR is ____.`

1. equivalent annual rate.

2.equivalent annuity rate

3. equally applied rate

1. IDBI

2.ICICI

3.UTI D

4.SFC

## Question: `The fixed proportion of working capital should be generally financed from the ____ capital sources`

1. fixed.

2.variable

3. semi-variable.

4.borrowed

1.964

2.1965

3.1966

4.1967

1.constant.

2.variable

3.higher

4.lower

## Question: `The most difficult to calculate is ____________.`

1.the cost of equity capital.

2. the cost of preferred capital.

3.the cost of retained earnings.

4.. the cost of equity and preference capital.

## Question: `The policy concerning quarters of profit to be distributed as dividend is termed as ____________.`

1.Profit policy.

2.Dividend policy

3.Credit policy.

4.Reserving policy.

## Question: `The policy concerning quarters of profit to be distributed as dividend is termed as ____________.`

1.Profit policy.

2.Dividend policy

3.Credit policy.

4.Reserving policy.

## Question: `The primary goal of the financial management is ____`

1.to maximize the return

2.to minimize the risk

3.to maximize the wealth of owners

4. to maximize profit..

## Question: `The principal objective to form ICICI was:`

1.To create a development financial institution

2.To create a financial institution for providing medium-term and long term project financing

3.Create a financial institution for providing medium-term and long term project financing to Indian businesses

4. All of the above areas

## Question: `The principal objective was to create a development financial institution for providing ______project financing to Indian businesses:`

1.Medium Term

2.Long Term

3.Medium Term and Long Term

4.short term

## Question: `The probability of bankrupt is higher ____________.`

1. for a levered firm than an unlevered firm.

2.for a unlevered firm than an levered firm

3.only levered firm

4.only unlevered firm

1.. falls.

2.going

3.constant

4.change

## Question: `The required rate of return for an investment project should _____`

1.leave the market price of the stock unchanged

2. increase the market price.

3. reduce the market price.

4.constant market price.

## Question: `The type of lease that includes a third party, a lender, is called a(n)`

1. sale and leaseback.

2.direct leasing arrangement.

3. leveraged lease.

4.operating lease.

## Question: ```The volume of sales is influenced by ____ of a firm ```

1. finance policy.

2. credit policy

3.profit policy

4. fund policy.

1.raising

2.mobilizing

3.utilizing

4.financing

## Question: ```Traditional theorists believe that. ```

1. there exists an optimal capital structure

2.no optimal capital structure

3.equal optimal capital structure

4.100% debt financial organizations

## Question: `Variable cost per unit ____________.`

1. varies with the level of output.

2.remains constant irrespective of the level of output.

3.changes with the growth of the firm.

4.does not change with the volume of production

## Question: ```Which of the following is/are assumption(s) underlying the Miller and Modigliani analysis? ```

1.Capital markets are perfect

2.Investors are assumed to be rational and behave accordingly

3.There is no corporate or personal income tax

4.All the above

## Question: ```Which one of the following is not a money market securities? ```

1.treasury bills

2.National savings certificate

3.Certificate of deposit

4.Commercial paper

## Question: `Which one of the following is the main objective of Unit Trust of India?`

1.To mobilize the savings of high-income groups.

2.To mobilize the savings to low and high-income groups.

3.To mobilize the savings of corporate.

4.To mobilize the savings of low and middle-income groups.

## Question: `Working capital management is managing ____________.`

1.short term assets and liabilities

2. long term assets

3. long terms liabilities

4.only short term assets

1. Scrip.

2.Cash

3.Stock

4.Property

1.Bonds

2.Machines

3.Stocks

4.A and C

1.Scrip.

2.Cash

3.Stock

4.Property

## More MCQS

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