Business Studies MCQ Quiz Hub

1. In his traditional role the finance manager is responsible for ______
arrange of utilization of funds.
arrangement of financial resources.
acquiring capital assets of the organization.
effective management of capital

2. The primary goal of the financial management is ____
to maximize the return
to minimize the risk
to maximize the wealth of owners
to maximize profit..

3. Capital budgeting is related to ____
long terms assets.
short term assets.
long terms and short terms assets
fixed assets.

4. A way to analyze whether debt or lease financing would be preferable is to:
compare the net present values under each alternative, using the cost of capital as the discount rate.
compare the net present values under each alternative, using the after-tax cost of borrowing as the discount rate.
compare the payback periods for each alternative.
compare the effective interest costs involved for each alternative

5. The type of lease that includes a third party, a lender, is called a(n)
sale and leaseback.
direct leasing arrangement.
leveraged lease.
operating lease.

6. Future value interest factor takes ____
Compounding rate
Discounting rate.
Inflation rate
Deflation rate.

7. Present value takes ____________.
A. Compounding rate.
Discounting rate.
Inflation rate
Deflation rate.

8. Financial decisions involve ____________.
Investment, financing and dividend decisions.
Investment sales decisions.
Financing cash decisions
Investment dividend decisions.

9. Traditional approach confines finance function only to ____________.
raising
mobilizing
utilizing
financing

10. Market value of the shares are decided by ____________.
the respective companies.
the investment market
the government.
shareholders.

11. Cost of retained earnings is equal to ____________.
Cost of equity.
Cost of debt.
Cost of term loans
Cost of bank loan.

12. Beta measures the ____________.
A. Financial risk.
Investment risk rate
Market risk
Market and finance risk.

13. The expansion of CAPM is ____
Capital amount pricing model
Capital asset pricing model
Capital asset printing model.
a. Capital amount printing model.

14. Medium-term notes (MTNs) have maturities that range up to
one year (but no more)
two years (but no more).
ten years (but no more)
thirty years (or more)

15. Which one of the following is the main objective of Unit Trust of India?
To mobilize the savings of high-income groups.
To mobilize the savings to low and high-income groups.
To mobilize the savings of corporate.
To mobilize the savings of low and middle-income groups.

16. The first development financial institution in India that has got merged with a bank
IDBI
ICICI
UTI D
SFC

17. The most difficult to calculate is ____________.
the cost of equity capital.
the cost of preferred capital.
the cost of retained earnings.
. the cost of equity and preference capital.

18. The required rate of return for an investment project should _____
leave the market price of the stock unchanged
increase the market price.
reduce the market price.
constant market price.

19. ICICI was formed in _______:
1955
1665
1965
1954

20. The principal objective to form ICICI was:
To create a development financial institution
To create a financial institution for providing medium-term and long term project financing
Create a financial institution for providing medium-term and long term project financing to Indian businesses
All of the above areas

21. Headquarter of ICICI Bank is located at:
. Mumbai
Hyderabad
Mysore
Bangalore

22. Fixed cost per unit ____________.
changes according to the volume of production
be flexible according to the rate of interest.
does not change with the volume of production
remains constant.

23. The principal objective was to create a development financial institution for providing ______project financing to Indian businesses:
Medium Term
Long Term
Medium Term and Long Term
short term

24. Variable cost per unit ____________.
varies with the level of output.
remains constant irrespective of the level of output.
changes with the growth of the firm.
does not change with the volume of production

25. Financial leverage measures ____________.
sensitivity of EBIT with respect of 1% change with respect to output
1% variation in the level of production .
C. sensitivity of EPS with respect to 1% change in level of EBIT
no change with EBIT and EPS.

26. Financial leverage measures ____________.
sensitivity of EBIT with respect of 1% change with respect to output
1% variation in the level of production .
C. sensitivity of EPS with respect to 1% change in level of EBIT
no change with EBIT and EPS.

27. Operating leverage measures ____________.
A. the business risk.
financial risk
both risks
production risk.

28. Financial leverage helps one to estimate ____________.
the business risk
the financial risk
both risks
production risk.

29. Financial leverage is also known as ____________.
Trading on equity
Trading on debt.
Interest on equity.
Interest on debt.

30. lndustrial Development Bank of India is
Wholly-owned Government of India undertaking
Wholly-owned subsidiary of Reserve Bank of India
A corporation and owned by the Government of India and public sector banks
Public Limited Company

31. Operating leverage x financial leverage= _____.
composite leverage.
financial composite leverage.
operating composite leverage
fixed leverage

32. Operating leverage = ______..
A. contribution less profit.
contribution less sales
contribution less total expenses
contribution less operating profit

33. The IDBI was established in
964
1965
1966
1967

34. The financial institute IFCI established in
1947
1948
1949
1950

35. In his traditional role the finance manager is responsible for ___________.
proper utilisation of funds
arrangement of financial resources
acquiring capital assets of the organization
Efficient management of capital

36. Shares having no face value are known as ____
no-par stock.
at par stock
equal stock
debt-equity stock.

37. A fixed rate of ____________is payable on debentures.
dividend
commission
interest
brokerage

38. A fixed rate of ____________is payable on debentures.
dividend
commission
interest
brokerage

39. Effective cost of debentures is ____________as compared to shares
higher
lower
equal
medium

40. Ownership securities are represented by ____________.
securities.
equities
debt
debentures

41. Corporation is not a part of ____________finance .
Public.
Private
Public & private
Organization

42. Finance function is one of the most important functions of ____________.
business.
marketing
financial
debt

43. Which one of the following is not a money market securities?
treasury bills
National savings certificate
Certificate of deposit
Commercial paper

44. The expansion of EAR is ____.
equivalent annual rate.
equivalent annuity rate
equally applied rate
equal advance rate

45. Working capital management is managing ____________.
short term assets and liabilities
long term assets
long terms liabilities
only short term assets

46. Future value interest factor takes ____________.
. Compounding rate
Discounting rate
Inflation rate
Deflation rate

47. Financial security with low degree risk and investment held by businesses is classified as
treasury bills
commercial paper
negotiable certificate of deposit
money market mutual funds

48. Future value interest factor takes ____________.
Compounding rate
Discounting rate
Inflation rate
Deflation rate

49. __________ are financial assets.
Bonds
Machines
Stocks
A and C

50. Arbitrage is the level processing technique introduced in ____________.
. Net income approach
MM approach
Operating approach
Traditional approach.

51. Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.
Dependence hypothesis
Traditional view.
Modern view
Independence hypothesis.

52. The probability of bankrupt is higher ____________.
for a levered firm than an unlevered firm.
for a unlevered firm than an levered firm
only levered firm
only unlevered firm

53. The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.
working capital decision
an investment decision
a production decision.
a sales decision.

54. The available capital funds are to be carefully allocated among competing projects by careful prioritization. This is called ____________.
capital positioning.
capital structuring
capital rationing.
capital budgeting.

55. Capital budgeting decisions in India cannot be reversed due to ____.
economic conditions.
ill-organized market for second-hand capital goods
government regulations.
policy of the management

56. Payback period is superior to other methods, if the objective of the investor is to ____________.
consider cash flow in its entirety
consider the present value of future cash flows
consider the liquidity
consider the inflows in its entirety.

57. If the payback is a bad rule, the average returns on book value is ____________.
worse.
better
the best
equal

58. Net present value is a popular method which falls ____________.
Within non- discount cash flow method.
Within discount cash flow method
Equal Within non- discount cash flow method
No discount cash flow

59. A demerit of IRR method is that it does not distinguish between ____________.
lending & borrowing
discounting & non- discounting
cash flow & non- cash flow
inflow & outflow.

60. Net working capital is the excess of current asset over ____________.
. Current liability.
Net liability.
Total payable.
Total liability.

61. Net working capital refers to.
total assets minus fixed assets
current assets minus current liabilities
current assets minus inventories
current assets.

62. Net working capital refers to.
total assets minus fixed assets
current assets minus current liabilities
current assets minus inventories
current assets.

63. The rate of return on investment ____ with the shortage of working capital
. falls.
going
constant
change

64. Greater the size of a business unit ____ will be the requirements of working capital.
lower.
no change.
larger
fixed

65. The fixed proportion of working capital should be generally financed from the ____ capital sources
fixed.
variable
semi-variable.
borrowed

66. The volume of sales is influenced by ____ of a firm
finance policy.
credit policy
profit policy
fund policy.

67. Factoring is a form of financing ___.
payable.
receivables
borrowings
debts

68. The formula for cost of debt is __________.
kd=(1/2+f-p)/f+p
f+p
f-P
f*p

69. Traditional theorists believe that.
there exists an optimal capital structure
no optimal capital structure
equal optimal capital structure
100% debt financial organizations

70. Ordering cost is the cost of ____________materials.
selling.
purchasing
stocking
financing

71. The policy concerning quarters of profit to be distributed as dividend is termed as ____________.
Profit policy.
Dividend policy
Credit policy.
Reserving policy.

72. The policy concerning quarters of profit to be distributed as dividend is termed as ____________.
Profit policy.
Dividend policy
Credit policy.
Reserving policy.

73. The company must implement the bonus issues decision within ____________ of the director approval.
6 months.
3 months.
2 months.
1 month.

74. The most appropriate dividend policy is the payment of ____________dividend per share consent
constant.
variable
higher
lower

75. A company having easy access to the capital markets can follow a ____________. dividend policy
liberal.
formal
strict
Varying

76. __________ dividend promises to pay shareholders at future date.
Scrip.
Cash
Stock
Property

77. _________ dividend is the usual method of paying dividend .
Scrip.
Cash
Stock
Property

78. Which of the following is/are assumption(s) underlying the Miller and Modigliani analysis?
Capital markets are perfect
Investors are assumed to be rational and behave accordingly
There is no corporate or personal income tax
All the above

79. The cash management refers to management of ___.
A. cash only
cash and bank balances
cash and near-cash assets
fixed assets.

80. Offering cash discount to customers result is ____________.
reducing the average collection period.
increasing the average collection period
increasing sales
decreasing sales.