What is the cost of debt generally lower than cost of equity?
Correct answer is: B. Tax deductibility of interest
Financial Management Mcqs
here are key Multiple Choice Questions (MCQs) on Financial Management, covering core topics like capital budgeting, cost of capital, and financial analysis.
What does the term “cost of capital” mean?
Correct answer is: B. Minimum return required by investors
An increase in the value of a sunk cost should have which effect on investment appraisal calculations?
Correct answer is: D. Have no effect
Maximizing shareholders’ wealth means maximizing the:
Correct answer is: C. Total market value of the firm’s common stock
Which of the following is a cash outflow from financing activities?
Correct answer is: B. Payment of dividends
Which of the following increases a firm’s financial risk?
Correct answer is: B. High debt in capital structure
The discount rate that results in a Net Present Value (NPV) of zero is known as the:
Correct answer is: C. Internal Rate of Return (IRR)
One limitation of the ____________ is that it is based on historical costs.
Correct answer is: C. Balance sheet
The concept that represents what you give up as a result of making an alternative decision is called:
Correct answer is: C. Opportunity cost