Which of these is a motive for holding cash? A. Transaction motive B. Precautionary motive C. Speculative motive D. All of the above Correct answer is: D. All of the above 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is the term for the return that is forgone by investing in a project rather than investing in financial markets at the same level of risk? A. Internal rate of return B. Capital saving C. Opportunity cost D. Opportunity saving Correct answer is: C. Opportunity cost 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
If your income exceeds the amount that you wish to spend, you should ____________ your investments or ____________ loans. A. reduce; repay existing B. increase; repay existing C. increase; obtain more D. reduce; obtain more Correct answer is: B. increase; repay existing 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. reduce; repay existing B. increase; repay existing C. increase; obtain more D. reduce; obtain more
Which of the following is NOT a type of decision made to manage your liquidity? A. How much money to maintain in your checking account B. How much money to maintain in your savings account C. Whether you should use credit cards as a means of borrowing money D. How much money you can borrow to spend on a car Correct answer is: D. How much money you can borrow to spend on a car 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. How much money to maintain in your checking account B. How much money to maintain in your savings account C. Whether you should use credit cards as a means of borrowing money D. How much money you can borrow to spend on a car
Which type of risk is eliminated by diversification? A. Systematic risk B. Unsystematic risk C. Market risk D. Interest rate risk Correct answer is: B. Unsystematic risk 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does EBIT stand for? A. Earnings Before Interest and Taxes B. Earnings Before Income Taxes C. Equity Before Interest and Taxes D. Earnings Before Interest and Turnover Correct answer is: A. Earnings Before Interest and Taxes 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Earnings Before Interest and Taxes B. Earnings Before Income Taxes C. Equity Before Interest and Taxes D. Earnings Before Interest and Turnover
What does the term “blue chip” refer to? A. High-risk stock B. Large, stable, well-established company C. New startup D. Government bond Correct answer is: B. Large, stable, well-established company 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A portion of profits that a company distributes among its shareholders is known as: A. Dividends B. Retained Earnings C. Capital Gain D. Bonus Shares Correct answer is: A. Dividends 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is NOT a key component of a complete personal financial plan? A. Plan to manage your liquidity B. Budget plan C. Plan for working at a major brokerage firm D. Plan for financing (managing credit and loans) Correct answer is: C. Plan for working at a major brokerage firm 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Plan to manage your liquidity B. Budget plan C. Plan for working at a major brokerage firm D. Plan for financing (managing credit and loans)
An appropriate financial plan is most likely NOT influenced by one’s: A. Age B. Wealth C. Career decision D. Gender Correct answer is: D. Gender 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does the term “float” refer to in cash management? A. Time between writing a check and funds being debited B. Cash in hand C. Petty cash D. Bank overdraft Correct answer is: A. Time between writing a check and funds being debited 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Time between writing a check and funds being debited B. Cash in hand C. Petty cash D. Bank overdraft
Financial leverage is favorable when: A. ROI > Cost of debt B. ROI < Cost of debt C. Tax rate is high D. Sales are low Correct answer is: A. ROI > Cost of debt 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is a profitability ratio? A. Net profit margin B. Debt-equity ratio C. Current ratio D. Inventory turnover ratio Correct answer is: A. Net profit margin 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Financial leverage is considered favorable when: A. ROI is less than cost of debt B. ROI is greater than cost of debt C. Tax rate is high D. Sales are low Correct answer is: B. ROI is greater than cost of debt 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. ROI is less than cost of debt B. ROI is greater than cost of debt C. Tax rate is high D. Sales are low
An investment which gives the holder a regular income in return for one initial payment may be known as a(n): A. Ordinary share B. Annuity C. Return D. Discount factor Correct answer is: B. Annuity 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A __________ represents the composition of a firm’s long-term funds and its capital structure. A. Capitalisation B. Over Capitalisation C. Under Capitalisation D. Market Capitalisation Correct answer is: A. Capitalisation 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following short-term financing sources is typically secured by tangible assets? A. Commercial paper B. Factoring C. Accrued expenses D. Bank loan Correct answer is: D. Bank loan 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
Which of the following is an example of spontaneous financing? A. Bank loan B. Accounts payable C. Lease financing D. Debentures Correct answer is: B. Accounts payable 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What is sensitivity analysis in capital budgeting? A. Change in NPV due to change in an input variable B. Breakeven analysis C. Regression analysis D. Simulation analysis Correct answer is: A. Change in NPV due to change in an input variable 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Change in NPV due to change in an input variable B. Breakeven analysis C. Regression analysis D. Simulation analysis
The strength and vigor of a firm’s overall financial posture is referred to as: A. Liquidity B. Stability C. Effectiveness D. Profitability Correct answer is: B. Stability 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
The job of a finance manager is confined to: A. Raising funds B. Management of cash C. Raising of funds and their effective utilization D. Preparing financial statements Correct answer is: C. Raising of funds and their effective utilization 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Raising funds B. Management of cash C. Raising of funds and their effective utilization D. Preparing financial statements
An ideal combination of borrowed and owned capital that helps attain the marginal goal is known as __________ capital structure. A. Preference share B. Optimum C. Equity D. Debt Correct answer is: B. Optimum 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
What does the retention ratio measure? A. Dividends / Earnings B. Retained earnings / Total equity C. Retained earnings / Earnings after tax D. Earnings / Share price Correct answer is: C. Retained earnings / Earnings after tax 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Dividends / Earnings B. Retained earnings / Total equity C. Retained earnings / Earnings after tax D. Earnings / Share price
What is the goal of cash management? A. Maximize cash balance B. Minimize transaction needs C. Maintain optimum cash balance D. Invest all cash in fixed assets Correct answer is: C. Maintain optimum cash balance 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar
A. Maximize cash balance B. Minimize transaction needs C. Maintain optimum cash balance D. Invest all cash in fixed assets
Which of the following is NOT a feature of preference shares? A. Fixed dividend B. Cumulative dividend C. Voting rights D. Priority over equity Correct answer is: C. Voting rights 📖 Read Detailed Explanation → Financial Management Mcqs Leave a Comment | Umar