Finance Mcqs – (Management Sciences) MCQs Latest For FPSC, PPSC, NTS, KPPSC, SPSC & Other Tests
“ Finance Mcqs “. Tab this page to check “Latest Finance MCQs” for the preparation of competitive mcqs, FPSC mcqs, PPSC mcqs, SPSC mcqs, KPPSC mcqs, AJKPSC mcqs, BPSC mcqs, NTS mcqs, PTS mcqs, OTS mcqs, Atomic Energy mcqs, Pak Army mcqs, Pak Navy mcqs, CTS mcqs, ETEA mcqs and others. The most occurred mcqs of Finance in past papers. Past papers of Finance mcqs. Past papers of Finance MCQs. Finance Mcqs are the necessary part of any competitive / job related exams. The Finance mcqs having specific numbers in any written test. It is therefore everyone have to learn / remember the related Finance mcqs. The Important series of Finance Mcqs are given below:
___________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.
A. Financial management
B. Agency theory
C. Profit maximization
D. Social responsibility
Having some overall goal in mind, financial management is concerned with:
A. Financing of assets
B. Acquisition of assets
C. Management of assets
D. All of them
The investment decision is the most important of the firm’s three major decisions, when it comes to:
A. Value creation
B. Value proposition
C. Value addition
D. Value deletion
Annual cash dividends divided by annual earnings; or alternatively, dividends per share divided by earning per share is termed as:
A. Proposed dividend ratio
B. Earning per share ratio
C. Dividend payout ratio
D. Expected dividend ratio
Profit maximization is the maximizing a firm’s Earning:
A. After Tax
B. Before Tax
C. Both A and B
D. None of Them
An individual authorized by another person, called the principle, to act on the latter’s on behalf is known as an/a:
A. Agent
B. Subordinate
C. Servant
D. Assistant
Stakeholders include:
A. Creditors and customs
B. Stakeholders
C. Employees and suppliers
D. All of Them
All the constituencies with a stake in the fortunes of the company are termed as:
A. Stakeholders
B. Chief executives
C. Directors
D. Subordinates
The system by which companies are managed and controlled is known as:
A. Strategic System
B. Management System
C. Corporate Governance
D. Internal System
Corporate governance encompasses the relationship among a company’s:
A. Shareholders and senior management
B. Board of directors and senior management
C. Shareholders and board of director
D. Shareholders, board of directors and senior management
The Board of Directors sets company-wide policy and advices the CEO and other senior executies, who manage the company’s:
A. Year-to-Year activities
B. Managerial activities
C. Day-to-Day activities
D. Financial activities
A major facet of financial management involves providing the financing necessary to support:
A. Debts
B. Liabilities
C. Loans
D. Assets
The market price of a firm’s stock represents the focal judgment of all market participants as to the value of the:
A. Particular creditor
B. Particular firm
C. Particular market
D. Particular debtor
Agency theory suggests that managers(the agents), particularly those of large , publically-owned firms, may have different objectives from those of the:
A. Subordinates
B. Workers
C. Shareholders
D. Employees
Maximizing Shareholder wealth:
A. Partially relives the firm’s responsibility towards society
B. Does not relieve the firm’s responsibility towards society
C. Relieves the firms responsibility towards society
D. None of Them
Period costs include which of the following?
A. Selling expense
B. Direct labor
C. Raw material
D. Manufacturing overhead
Product costs include which of the following?
A. General expenses
B. Selling expenses
C. Manufacturing overhead
D. Administrative expenses
Financial policy is evaluated by which of the following?
A. Total Assets Turnover
B. Profit Margin
C. Debt-equity ratio
D. None of the given options
Cash flow from assets involves which of the following component(s)?
A. Capital spending
B. Operating cash flow
C. Change in net working capital
D. All of the given options
Which of the following refers to the cash flows that result from the firm‟s day-to-day activities of producing and selling?
A. Operating Cash Flows
B. Financing Cash Flows
C. Investing Cash Flows
D. All of the given options
Finance is vital for which of the following business activity (activities)?
A. Product Pricing
B. Marketing Research
C. Design of marketing and distribution channels
D. All of the given options
Which of the following costs are reported on the income statement as the cost of goods sold?
A. Product cost
B. Both product cost and period cost
C. Period cost
D. Neither product cost nor period cost
Standard Company had net sales of Rs. 750,000 over the past year. During that time, average receivables were Rs. 150,000. Assuming a 365-day year, what was the average collection period?1
A. 36 days
B. 5 days
C. 48 days
D. 73 days
Which of the following terms refers to the use of debt financing?
A. Manufacturing Leverage
B. Financial Leverage
C. Operating Leverage
D. None of the given options
In which type of market, new securities are traded?
A. Primary market
B. Tertiary market
C. Secondary market
D. None of the given options
Which of the following ratios are particularly interesting to short-term creditors?
A. Liquidity Ratios
B. Profitability Ratios
C. Long-term Solvency Ratios
D. Market Value Ratios
Quick Ratio is also known as_______________?
A. Cash Ratio
B. Acid-test Ratio
C. Current Ratio
D. Solvency Ratio
A portion of profits, which a company retains itself for further expansion, is known as:
A. Capital Gain
B. Retained Earnings
C. Dividends
D. None of the given options
Which of the following is measured by profit margin?
A. Operating efficiency
B. Financial policy
C. Asset use efficiency
D. Dividend policy
Which of the following set of ratios is used to assess a business’s ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time?1
A. Leverage Ratios
B. Liquidity Ratios
C. Profitability Ratios
D. Market Value Ratios
A company having a current ratio of 1 will have __________ net working capital.
A. Negative
B. Positive
C. zero
D. None of the given options
Which of the following equation is known as Cash Flow (CF) identity?
A. CF from Assets = CF to Stockholders – CF to Creditors
B. CF from Assets = CF to Creditors – CF to Stockholder
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder
The difference between current assets and current liabilities is known as____________?
A. Short-term Ratio
B. Surplus Asset
C. Working Capital
D. Current Ratio
The principal amount of a bond at issue is called____________?
A. Par value
B. Present value of an annuity
C. Coupon value
D. Present value of a lump sum
Which of the following is the process of planning and managing a firm‟s long-term investments?
A. Capital Rationing
B. Capital Structuring
C. Capital Budgeting
D. Working Capital Management
A standardized financial statement presenting all items of the statement as a percentage of total is:
A. a common-size statement
B. a cash flow statement
C. an income statemen
D. a balance sheet
The DuPont Identity tells us that Return on Equity is affected by:
A. financial Leverage (as measured by equity multiplier)
B. asset use efficiency (as measured by total assets turnover)
C. asset use deficiency (as measured by total assets turnover)
D. all of the given options (a, b and c)
A series of constant cash flows that occur at the end of each period for some fixed number of periods is ____________ .
A. an ordinary annuity
B. multiple cash flows
C. annuity due
D. perpetuity
Which of the following is the overall return the firm must earn on its existing assets to maintain the value of the stock?
A. MIRR (Modified Internal Rate of Return)
B. IRR (Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)
Which of the following is known as the group of assets such as stocks and bonds held by an investor ?
A. Capital Structure
B. Portfolio
C. Stock Bundle
D.. None of the given options
Which of the following relationships holds TRUE if a bond sells at a discount?
A. Bond Price < Par Value and YTM > coupon rate
B. Bond Price > Par Value and YTM > coupon rate
C. Bond Price < Par Value and YTM < coupon rate D. Bond Price > Par Value and YTM < coupon rate
Which of the following strategy belongs to restrictive policy regarding size of investments in current assets?
A. To less short-term debt and more long-term debt
B. To maintain a low ratio of current assets to sales
C. To maintain a high ratio of current assets to sales
D. To more short-term debt and less long-term debt
Which of the following statement is CORRECT regarding compound interest?
A. It is calculated by multiplying principal by rate multiplied by time.
B. It earns profit not only on principal but also on interest.
C. It is the most basic form of calculating interest.
D. It does not take into account the accumulated interest for calculation.
When real rate is high, all the interest rates tend to be ___________?
A) Higher
B) Constant
C) Lower
D) None of the given options
Profitability index (PI) rule is to take an investment, if the index exceeds___________?
A. -1
B. 2
C. 1
D. 0
Average Accounting Return is a measure of accounting profit relative to:
A. Book value
B. Cost
C. Intrinsic value
D. Market value
Which of the following is the cheapest source of financing available to a firm?
A. Commercial papers
B. Bank loan
C. Trade credit
D. None of the given options.
_______________refers to the extent to which fixed-income securities (debt and preferred stock) are used in a firm’s capital structure?
A. Financial risk
B. Operating risk
C. Portfolio risk
D. Market risk
The use of Personal borrowing to alter the degree of financial leverage is called__________?
A. Homemade leverage
B. Operating leverage
C. Financial leverage
D. None of the given option
_________ refers to the most valuable alternative that is given up if a particular investment is undertaken?
A. Financing cost
B. Opportunity cost
C. Sunk cost
D. All of the given options
A model which makes an assumption about the future growth of dividends is known as:
A. Dividend Policy Model
B. Dividend Growth Model
C. Dividend Price Model
D. All of the given options
Which of the following is not a quality of IRR ?
A. Easily communicated and understood
B. Ideal to rank the mutually exclusive investments
C. Most widely used
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. Perpetuity
C. Annuity due
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. 25,000
B. Rs. 33,000
C. Rs. 17,000
D. Rs. 8,000
The conflict of interest between stockholders and management is known as:
A. Agency problem
B. Agency cost
C. Management conflict
D. Interest conflict
Which of the following form of business organization is least regulated?
A. Sole-proprietorship
B. Limited Partnership
C. General Partnership
D. Corporation
Which of the following ratios are intended to address the firm’s financial leverage?
A. Profitability Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Liquidity 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. Cash Ratio
B. Acid-test Ratio
C. Current 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. Special Annuity
B. Ordinary 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 you receive it sooner
B. Rs. 1,000 because it has the higher future value
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. Profitability Ratios
C. Long-term Solvency Ratios
D. Market Value Ratios
In which form of Business, owners have limited liability?
A. partnership
B. sole proprietorship
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. Supplies
B. Inventory
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. Factorization
C. Compounding
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. 15.75 years
B. 10.51 years
C. 8.42 years
D. 18.78 years
In which of the following type of annuity, cash flows occur at the beginning of each period?
A. Perpetuity
B. Annuity due
C. Ordinary annuity
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. lower-coupon; higher-coupon
B. short-term; long-term
C. long-term; short-term
D. None of the given options
Which of the given area is NOT addressed by Business Finance?
A. Investing
B. Financing
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. Negative
B. Positive
C. zero
D. None of the given options
Business Finance addresses which of the following?
A. Capital structure
B. Capital budgeting
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. Limited Partnerhsip
B. General Partnership
C. Sole-proprietorship
D. Corporation
Which of the following is measured by retention ratio?
A. Asset use efficiency
B. Operating 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. 24 years
B. 12 years
C. 6 years
D. 48 years
Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?
A. Real-Time Risk
B. Interest Rate Risk
C. Fluctuations 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. Leverage Ratios
B. Liquidity Ratios
C. Profitability Ratios
D. Market Value Ratios
If a firm uses cash to purchase inventory, its quick ratio will?
A. Remain unaffected
B. Decrease
C. Increase
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. Financing activity
B. Investing activity
C. Operating activity
D. None of the given options
Which of the following ratios are particularly interesting to short term creditors?
A. Liquidity Ratios
B. Profitability Ratios
C. Long-term Solvency Ratios
D. Market Value Ratios
Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?
A. Corporation
B. Partnership
C. Sole-proprietorship
D. None of the given options
When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:
A. Premium
B. Par
C. Discount
D. Cannot be determined without more information
Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value as of a particular date?
A. Cash Flow Statement
B. Balance Sheet
C. Income Statement
D. Retained Earning Statement
The most important item that can be extracted from financial statements is the actual ________ of the firm.
A. Net Present Value
B. Cash Flow
C. Net Working Capital
D. None of the given options
A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is the retention ratio for the firm?
A. 25%
B. 12%
C. 40%
D. 60%
Which of the following ratios is NOT from the set of Asset Management Ratios?
A. Receivable Turnover
B. Inventory Turnover Ratio
C. Capital Intensity Ratio
D. Return on Assets
Which of the following statement about bond ratings is TRUE?
A. Bond ratings are based solely on information acquired from sources other than the bond issuer.
B. Bond ratings are typically paid for by a company’s bondholders.
C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
D. None of the given options
If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth of your amount after 4 years if interest is compounded annually?
A. Rs. 5,900
B. Rs. 5,400
C. Rs. 6,600
D. Rs. 6,802
Which of the following statement is TRUE regarding debt?
A. Debt provides the voting rights to the bondholders.
B. Unpaid debt can result in bankruptcy or financial failure.
C. Debt is an ownership interest in the firm.
D. Corporation’s payment of interest on debt is fully taxable.
A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000. What would be the total worth of the firm’s assets?
A. Rs. 500,000
B. Rs. 300,000
C. Rs. 800,000
D. Rs. 1100,000
Which of the following measure reveals how much profit a company generates with the money shareholders have invested?
A. Return on Assets
B. Profit Margin
C. Return on Equity
D. Debt-Equity Ratio
If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
A. Rs. 1,331
B. Rs. 1,244
C. Rs. 1,000
D. Rs. 1,464
In case of international business which of the given factor(s) must be considered?
A. Balance of payments
B. Role of foreign exchange
C. Attitude of Governments
D. All of the given options
Which of the following refers to the difference between the sale price and cost of inventory?
A. Net worth
B. Net loss
C. Markup
D. Markdown
Who of the following make a broader use of accounting information?
A. Auditors
B. Financial Analysts
C. Accountants
D. Marketers
The Yield to Maturity of a bond is the same as_____________?
A. The future value of the bond
B. The bonds internal rate of return
C. The present value of the bond
D. None of these
Choose from the following a symptom which is not relating to “Over Trading”?
A. Low current ratio
B. Low inventory turnover ratio
C. Cash shortage
D. High inventory turnover ratio
The formula to calculate the present value of a single cash flow is given by:
A. CF1 / (1+r)n
B. C0 + C (1+r)n
C. C2 / (1+r)
D. None of these
The effect of purchasing power or inflation on present value is important because _________?
A. It has no effect on real value of cash flow received in the future
B. It reduces the real value of cash flows received in the future
C. It increases the real value of cash flows received in the future
D. None of these
An Asset is __________?
A. Inflow of funds
B. Use of funds
C. Sources of funds
D. None of these