12th Class Business Studies Financial Management Question Bank

done Financial Management (MCQ) Total Questions - 12

• question_answer1)
  The cheapest source of finance is
  A)
  Debenture done clear
  B)
  equity share capital done clear
  C)
  Preference share done clear
  D)
  retained earning done clear
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• question_answer2)
  A decision to acquire a new and modern plant to upgrade an old one is a
  A)
  Financing decision done clear
  B)
  working capital decision done clear
  C)
  Investment decision done clear
  D)
  dividend decision done clear
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• question_answer3)
  Other things remaining the same, an increase in the tax rate on corporate profits will
  A)
  Make debt relatively cheaper done clear
  B)
  Make debt relatively less cheap home done clear
  C)
  No impact on the cost of debt done clear
  D)
  We can't say done clear
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• question_answer4)
  Companies with higher growth paternal are likely to
  A)
  Pay lower dividends done clear
  B)
  Pay higher dividends done clear
  C)
  Dividends are not affected by growth considerations done clear
  D)
  None of the above done clear
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• question_answer5)
  Financial leverage is called favorable if
  A)
  Return on Investment is lower than cost of debt. done clear
  B)
  ROI is higher than cost of debt. done clear
  C)
  Debt is nearly available. done clear
  D)
  If the degree of existing financial leverage is low. done clear
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• question_answer6)
  Higher debt equity ratio \[\,\,\left( \frac{Debt}{Equity} \right)\,\] results in
  A)
  Lower financial risk done clear
  B)
  Higher degree of operating risk done clear
  C)
  Higher degree of financial risk done clear
  D)
  Higher EPS done clear
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• question_answer7)
  Higher working capital usually results in
  A)
  Higher current ratio, higher risk and higher profits. done clear
  B)
  Lower current ratio, higher risk and profits. done clear
  C)
  Higher equitably, lower risk and lower profits. done clear
  D)
  Lower equitably, lower risk and higher profits. done clear
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• question_answer8)
  Current assets are those assets which get converted into cash
  A)
  Within six month done clear
  B)
  Within one year done clear
  C)
  Between one and three year done clear
  D)
  Between three and five year done clear
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• question_answer9)
  Financial planning arrives at
  A)
  Minimising the external borrowing by resorting to equity issues done clear
  B)
  Entering that the firm always have significantly more fund than required so that there is no paucity of funds done clear
  C)
  Ensuring that the firm paces neither a shortage nor a glut of unusable funds. done clear
  D)
  Doing only what is possible with the funds that the firms has at its disposal done clear
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• question_answer10)
  Higher dividends per share is associated with
  A)
  High earnings, high cash flows, unusable earnings and higher growth opportunities. done clear
  B)
  High earnings, high cash flows, stable earnings and high growth opportunities. done clear
  C)
  High earnings, high cash flows, stable earnings and lower growth opportunities. done clear
  D)
  High earnings, low cash flows, stable earnings and lower growth opportunities. done clear
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• question_answer11)
  A fixed asset should be financed through
  A)
  A long-term liability done clear
  B)
  A short-term liability done clear
  C)
  A mix of long and short-term liabilities done clear
  D)
  None of these done clear
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• question_answer12)
  Current assets of a business firm should be financed through
  A)
  Current liability only done clear
  B)
  Long-term liability only done clear
  C)
  Partly from both types, i.e., long and short term liabilities done clear
  D)
  None of these done clear
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