Human Resource Management (HRM) MCQS - Page 4 of 10

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

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

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

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

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

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

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

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

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

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

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

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

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

Which of these is an example of a tangible source of short-term financing?

A. Commercial paper

B. Factoring

C. Accrued expenses

D. Bank loan

Correct answer is: D. Bank loan

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

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

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

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

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

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

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

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

Which of the following is NOT a perspective of the Balanced Scorecard?

A. Customer

B. Internal business procedure

C. Human resource planning

D. Financial

Correct answer is: C. Human resource planning

Financial decisions involve:

A. Investment decision only

B. Financing decision only

C. Dividend decision only

D. All of the above: Investment, financing, and dividend decisions

Correct answer is: D. All of the above: Investment, financing, and dividend decisions

Contribution in break-even analysis is best expressed as:

A. Selling price minus absorption cost per unit

B. Selling price minus fixed cost per unit

C. Selling price minus variable cost per unit

D. Selling price minus total cost per unit

Correct answer is: C. Selling price minus variable cost per unit