MCQ Set of FM
1 The only feasible purpose of financial management is
a Wealth Maximization
b Sales Maximization
c Profit Maximization
d Assets maximization
2 Agency cost consists of
a Binding
b Monitoring
c Opportunity and structure cost
d All of the above
3. The objective of wealth maximization takes into account
a Amount of returns expected
b Timing of anticipated returns
c Risk associated with uncertainty of returns
d All of the above
4. Financial management mainly focuses on
a Efficient management of every business
b Brand dimension
c Arrangement of funds
d All elements of acquiring and using means of financial resources for financial activities
5. Time value of money supports the comparison of cash flows recorded at different time period by
a Discounting all cash flows to a common point of time
b Compounding all cash flows to a common point of time
c Using either a or b
d None of the above.
6. If the nominal rate of interest is 10% per annum and there is quarterly compounding, the effective rate of interest will be:
a 10% per annum
b 10.10 per annum
c 10.25%per annum
d 10.38% per annum
7. If nominal rate of return is 10% per annum and annual effective rate of interest is 10.25% per annum, determine the frequency of compounding:
a 1
b 2
c 3
d None of the above
8. Heterogeneous cash flows can be made comparable by
a Discounting technique
b Compounding technique
c Either a or b
d None of the above
9. A portfolio having two risky securities can be turned risk less if
a The securities are completely positively correlated
b If the correlation ranges between zero and one
c The securities are completely negatively correlated
d None of the above.
10. Capital market line is:
a Capital allocation line of a market portfolio
b Capital allocation line of a risk free asset
c Both a and b
d None of the above
11 The point of tangency between risk return indifferences curves and efficient frontier highlights:
a Optimal portfolio
b Efficient portfolio
c Sub-optimal portfolio
d None of the above
12. Return on any financial asset consists of capital yield and current yield.
a True
b False.
13. If the coupon rate is constant, the value of bond when close to maturity will be
a) Issued value
b) Par value
c) Redemption value
d) All of the above
14. When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as
a Accounting ratio
b Financial ratio
c Costing ratio
d None of the above
15. Liquidity ratios are expressed in
a Pure ratio form
b Percentage
c Rate or time
d None of the above