Finance Mcq: ( 6 TO 8)

_________ refers to the most valuable alternative that is given up if a particular investment
is undertaken?
A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options
A model which makes an assumption about the future growth of dividends is known as:
A. Dividend Price Model
B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options
Which of the following is not a quality of IRR ?
A. Most widely used
B. Ideal to rank the mutually exclusive investments
C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate
Which of the following is a series of constant cash flows that occur at the end of each period
for some fixed number of periods?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options
During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases
by Rs. 8,000. What will be the amount of cash received from customers for the period?
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000
The conflict of interest between stockholders and management is known as:
A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost
Which of the following form of business organization is least regulated?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation
Which of the following ratios are intended to address the firm’s financial leverage?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios
Balance Sheet is based upon which of the following formula?
A. Assets = Liabilities – Stockholder’s equity
B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity
Quick Ratio is also known as_________?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options
Which of the following is a special case of annuity, where the stream of cash flows
continues forever?
A. Ordinary Annuity
B. Special Annuity
C. Annuity Due
D. Perpetuity
You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which
option do you prefer and why if you can earn 5 percent on your money?
A. Rs. 1,000 because it has the higher future value
B. Rs. 1,000 because you receive it sooner
C. Rs. 1,050 because it is more money
D. Either because both options are of equal value
Which of the following ratios are particularly interesting to shortterm creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
In which form of Business, owners have limited liability?
A. sole proprietorship
B. partnership
C. joint stock company
D. none of the above
Which of the following item provides the important function of shielding part of income
from taxes?
A. Inventory
B. Supplies
C. Machinery
D. Depreciation
The process of determining the present value of a payment or a stream of payments that is
to be received in the future is known as:
A. Discounting
B. Compounding
C. Factorization
D. None of the given options
You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent
compounded annually, how long will you have to wait to buy the television?
A. 8.42 years
B. 10.51 years
C. 15.75 years
D. 18.78 years
In which of the following type of annuity, cash flows occur at the beginning of each period?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options
Between the two identical bonds having different maturity periods, the price of the ______
bond will change less than that of ______ bond.
A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options
Which of the given area is NOT addressed by Business Finance?
A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options
A company having a current ratio of 1 will have ________ net working capital.
A. Positive
B. Negative
C. zero
D. None of the given options
Business Finance addresses which of the following?
A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options
In which type of business, all owners share in gains and losses and all have unlimited
liability for all business debts?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation
Which of the following is measured by retention ratio?
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual
payment and a 5% interest rate?
A. 6 years
B. 12 years
C. 24 years
D. 48 years
Which one of the following terms refers to the risk arises for bond owners from fluctuating
interest rates?
A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk
Which of the following set of ratios relates the market price of the firm’s common stock to
selected financial statement items?
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios
If a firm uses cash to purchase inventory, its quick ratio will?
A. Increase
B. Decrease
C. Remain unaffected
D. Become zero
Standard Corporation sold fully depreciated equipment for Rs.5,000. This transaction will
be reported on the cash flow statement as a(n):
A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options
Which of the following ratios are particularly interesting to short term creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios