#### 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:

**If a company revaluates its fixed assets, the current ratio of the company will:**

A. Improve if assets are revalued downwards **B. Remain unaffected**

C. Improve if assets are revalued upward

D. Undergo change only if liabilities are remaining constant

**If we were studying a sample of 100 students and their examination performance and if the standard deviation of the list of results was say 14, then we could calculated the standard error by ___________?**

A. Dividing the standard deviation by the square root of the number of items in the sample

B. Dividing standard deviation by number of items in the sample

C. Dividing the square root of the number of items in the sample by the mean **D. We cannot calculate standard error on account of inadequacy of information**

**Rule of 72 as a short cut method is explained by the formula:**

**A. 72 divided by the annual interest rate**

B. 72 divided by (annual interest rate multiplied by discount factor)

C. Annual interest rate dividend by 72

D. None of these

**Full Form of BCCI ?**

A. Bank of Central Cooperation International

B. Bank of Commerce and Cooperation International **C. Bank of Credit and Commerce International**

D. None of These

**The Capital Asset Pricing Model calculate expected:**

A. Return **B. Risk and Return**

C. Risk

D. None of the above

**A technique uses in comparative analysis of financial statement is____________?**

A. Preference analysis

B. Graphical analysis **C. Common size analysis**

D. Returning analysis

**Net income available to stockholders is $125 and total assets are $1,096 then return on common equity would be________?**

A. 0.12 times **B. 11.40%**

C. 0.11%

D. 12%

**Price per share is $30 and an earnings per share is $3.5 then price for earnings ratio would be_____________?**

**A. 8.57 times**

B. 0.11 times

C. 8.57%

D. 11%

**Formula such as net income available for common stockholders divided by total assets is used to calculate__________________________?**

**A. Return on total assets**

B. Return on debt

C. Return on total equity

D. Return on sales

**Price per ratio is divided by cash flow per share ratio which is used for calculating___________?**

A. Sales to growth ratio

B. Dividend to stock ratio

C. Cash flow to price ratio**D. Price to cash flow ratio**

**A techniques uses to identify financial statements trends are included____________?**

A. Percent change analysis

B. Common size analysis

C. Returning ratios analysis**D. Both A and B**

**Companies that help to set benchmarks are classified as__________?**

A. Analytical companies **B. Benchmark companies**

C. competitive companies

D. Return companies

**Total assets divided common equity is a formula uses for calculating___________?**

**A. Equity multiplier**

B. Turnover multiplier

C. Graphical multiplier

D. Stock multiplier

**Price per share divided by earnings per share is formula for calculating_________?**

**A. Price earnings ratio**

B. Pricing ratio

C. Earning price ratio

D. Earning ratio

**In independent projects evaluation, results of internal rate of return and net present value lead to_____________?**

A. Cost decision

B. Cash flow decision **C. Same decisions**

D. Different decisions

**Company low earning power and high interest cost cause financial changes which have_____________?**

A. Low return on assets **B. High return on assets**

C. High return on equity

D. Low return on equity

**Projects which are mutually exclusive but different on scale of production or time of completion then the__________________?**

A. Net future value method **B. Net present value of method**

C. External return method

D. Internal return method

**A point where profile of net present value crosses horizontal axis at plotted graph indicates project____________________?**

A. Cash flows

B. Costs **C. Internal rate of return**

D. External rate of return

**Profit margin multiply assets turnover multiply equity multiplier is used to calculate____________?**

A. Return on turnover

B. Return on assets

C. Return on stock **D. Return on equity**

**Payback period in which an expected cash flows are discounted with help of project cost of capital is classified as___________________?**

**A. Discounted payback period**

B. Discounted cash flows

C. Discounted rate of return

D. Discounted project cost

**Ratios which relate firm’s stock to its book value per share, cash flow and earnings are classified as_________?**

A. Marginal ratios **B. Market value ratios**

C. Return ratios

D. Equity ratios

**An equation in which total assets are multiplied to profit margin is classified as_____________?**

**A. Du DuPont equation**

B. Preference equation

C. Turnover equation

D. Common equation

**In capital budgeting, term of bond which has great sensitivity to interest rates is______________?**

**A. Long-term bonds**

B. Internal term bonds

C. Short-term bonds

D. External term bonds

**Price earning ratio and price by cash flow ratio are classified as___________?**

A. Marginal ratios

B. Return ratios

C. Equity ratios **D. Market value ratios**

**High price to earning ratio shows company’s_____________?**

A. High risk prospect

B. Low dividends paid **C. High growth prospect**

D. High marginal rate

**Process of comparing company results with other leading firms is considered as____________?**

A. Analysis

B. Comparison **C. Bench marking**

D. Return analysis

**An equity multiplier is multiplied to return on assets to calculate_________?**

**A. Return on assets**

B. Return on turnover

C. Return on multiplier

D. Return on stock

**A project whose cash flows are more than capital invested for rate of return then net present value will be___________?**

**A. Positive**

B. Negative

C. Independent

D. Zero

**In mutually exclusive projects, project which is selected for comparison with others must have____________?**

**A. Higher net present value**

B. Zero net present value

C. Lower net present value

D. All of above

**Profitability index in capital budgeting is used for_________?**

A. Relative projects

B. Negative projects **C. Evaluate projects**

D. Earned projects

**Relationship between Economic Value Added (EVA) and Net Present Value (NPV) is considered as____________?**

A. Economic relationship

B. Valued relationship **C. Direct relationship**

D. Inverse relationship

**An uncovered cost at start of year is $200, full cash flow during recovery year is $400 and prior years to full recovery is 3 then payback would be__________?**

A. 4 years **B. 3.5 years**

C. 5 years

D. 4.5 years

**Present value of future cash flows is divided by an initial cost of project to calculate_______?**

A. Exchange index

B. Negative index

C. Project index**D. Profitability index**

**First step in calculation of net present value is to find out_________?**

A. Future value of equity

B. Present value of equity **C. Present value cash flow**

D. Future value of cash flow

**Life that maximizes net present value of an asset is classified as__________?**

A. Present value life

B. Minimum life **C. Economic life**

D. Transaction life

**In capital budgeting, positive net present value results in_________________?**

A. Zero economic value added **B. Positive economic value added**

C. Negative economic value added

D. Percent economic value added

**In estimating value of cash flows, compounded future value is classified as its__________?**

**A. Terminal value**

B. Quit value

C. Existed value

D. Relative value

**If two independent projects having hurdle rate, then both projects should________?**

**A. Be accepted**

B. Have capital acceptance

C. Not be accepted

D. Have return rate acceptance

**Cash flow which starts negative than positive then again positive cash flow is classified as__________?**

A. Non-normal costs

B. Normal costs **C. Non-normal cash flow**

D. Normal cash flow

**Cash inflows are revenues of project and are represented by__________?**

A. Relative number

B. Hurdle number

C. Negative numbers**D. Positive numbers**

**Net present value, profitability index, payback and discounted payback are methods to______________?**

A. Evaluate budgeting **B. Evaluate projects**

C. Evaluate cash flow

D. Evaluate equity

**A type of project whose cash flows would not depend on each other is classified as______________?**

A. Dependent projects **B. Independent projects**

C. Project net gain

D. Net value projects

**Bonds issued by corporations and exposed to default risk are classified as_________?**

**A. Corporation bonds**

B. Risk bonds

C. Default bonds

D. Zero risk bonds

**Falling interest rate leads change to bondholder income which is__________?**

**A. Reduction in income**

B. Matured income

C. Increment in income

D. Frequent income

**Bonds that have high liquidity premium are usually have_________?**

A. Default free trading

B. Inflated trading **C. Less frequently traded**

D. Frequently traded

**Treasury bonds are exposed to additional risks that are included________?**

A. Interest rate risk

B. Reinvestment risk

C. Investment risk**D. Both A and B**

**Payment divided by par value is classified as______________?**

A. Par payment **B. Coupon payment**

C. Divisible payment

D. Per period payment

**An annual interest payment divided by current price of bond is considered as_____________?**

**A. Current yield**

B. Return yield

C. Maturity yield

D. Earning yield

**Coupon rate of convertible bond is_________?**

A. Variable **B. Lower**

C. Higher

D. Stable

**An outstanding bond are also classified as__________?**

A. Outdated bonds

B. Standing bonds

C. Dated bonds**D. Seasoned bonds**

**A market interest rate for specific type of bond is classified as bond’s_____________?**

**A. Required rate of return**

B. Required rate of redemption

C. Required option

D. Required rate of earning

**An inflation rate includes in bond’s interest rates is one which is inflation rate________?**

A. Expected at deferred call **B. Expected in future**

C. Expected at time of maturity

D. At bond issuance

**An average inflation rate which is expected over life of security is classified as__________?**

**A. Inflation premium**

B. Nominal premium

C. Off season premium

D. Required premium

**Type of bond which pays interest payment only when it earns is classified as__________?**

**A. Income bond**

B. Payment bond

C. Interest bond

D. Earning bond

**Price of an outstanding bond increases when market rate___________?**

A. Increases

B. Never changes **C. Decreases**

D. Earned

**If coupon rate is less than going rate of interest, then bond will be sold________?**

A. Seasoned par value **B. More than its par value**

C. Seasoned par value

D. At par value

**A bond whose price will rise above its face value is classified as________?**

A. Premium stock **B. Premium bond**

C. Premium face value

D. Premium warrants

**Stated value of bonds or face value is considered as_____________?**

A. Bond value **B. Par value**

C. State value

D. Per value

**Real risk-free interest rate in addition with an inflation premium is equal to_____________?**

A. Liquidity risk-free interest rate **B. Quoted risk-free interest rate**

C. Required interest rate

D. Premium risk-free interest rate

**Bonds with deferred call have protection which is classified as__________?**

A. Provision protection

B. Provision protection

C. Deferred protection**D. Call protection**

**When price of bond is calculated below its par value, it is classified as___________?**

A. Compound bond **B. Discount bond**

C. classified bond

D. Consideration earning

**Rate on debt that increases as soon market rises is classified as________?**

A. Market rate debt **B. Floating rate debt**

C. Rising bet rate

D. Stable debt rate

**Bonds that can be converted into shares of common stock are classified as_________?**

**A. Convertible bonds**

B. Shared bonds

C. Stock bonds

D. Common bonds

**Reinvestment risk of bond’s is usually higher on______?**

A. Premium bonds **B. Callable bonds**

C. Income bonds

D. Default free bonds

**Market in which bonds are traded over-the-counter than in an organized exchange is classified as__________?**

A. Trade markets

B. Organized markets

C. Counter markets**D. Bond markets**

**Coupon payment of bond which is fixed at time of issuance____________?**

**A. Remains same**

B. Becomes change

C. Becomes stable

D. Becomes low

**Coupon payment is calculated with help of interest rate, then this rate considers as________?**

A. Par interest

B. Payment interest **C. Coupon interest**

D. Yearly interest rate

**An effect of interest rate risk and investment risk on a bond’s yield is classified as_________?**

A. Investment risk premium

B. Reinvestment premium **C. Maturity risk premium**

D. Defaulter’s premium

**Yield of interest rate which is below than coupon rate, this yield is classified as_________?**

A. Yield to earning **B. Yield to call**

C. Yield to maturity

D. Yield to investors

**If market interest rate falls below coupon rate then bond will be sold__________?**

A. Equal to return rate **B. Above its par value**

C. Below its par value

D. Seasoned price

**Rate of return (in percentages) consists of___________?**

**A. Capital gain yield interest yield**

B. Return yield + unstable yield

C. Return yield + stable yield

D. Par value + market value

**Type of bonds that are issued by foreign governments or foreign corporations are classified as__________?**

A. Zero bonds

B. Zero risk bonds **C. Foreign bonds**

D. Government bonds

**If market interest rate rises above coupon rate, then bond will be sold_____________?**

A. Seasoned price

B. Equal to return rate **C. Below its par value**

D. Above its par value

**An interest rate which is used in calculation of cash flows of bonds is called______________?**

A. Required rate of earning

B. Required rate of redemption **C. Required rate of return**

D. Required option

**Type of options that permit bond holder to buy stocks at stated price are classified as______?**

A. Guarantee

B. Provision **C. Warrants**

D. Convertibles

**Bond that has been issued in very recent timing is classified as_______?**

A. Earning issue

B. Mature issue **C. New issue**

D. Recent issue

**Bonds issued by local and state governments with default risk are____________?**

**A. Municipal bonds**

B. Default bonds

C. Corporation bonds

D. Zero bonds

**Maturity date decides at time of issuance of bond and legally permissible is classified as____________?**

**A. Original maturity**

B. Artificial maturity

C. Permanent maturity

D. Valued maturity

**Value generally promises to pay at maturity date and a firm borrows is considered as bond’s__________?**

A. Per value

B. Bond value

C. State value**D. Par value**

**Bonds issued by government and backed by Pak government are classified as_________?**

A. U.S bonds **B. Treasury bonds**

C. Issued security

D. Return security

**An increasing in interest rate leads to decline in value of__________?**

A. Standing bonds **B. Outstanding bonds**

C. Junk bonds

D. Premium bonds

**Coupon rate of bond is also called____________?**

A. Premium rate

B. Nominal rate

C. Quoted rate**D. Both a and c**

**Bonds issued by small companies tend to have_____________?**

**A. High liquidity premium**

B. High default premium

C. High inflation premium

D. High yield premium

**Type of bonds that pays no coupon payment but provides little appreciation are classified as______________?**

A. Interest bond

B. Depreciated bond **C. Zero coupon bond**

D. Appreciation bond

**Reinvestment risk of bonds is higher on__________?**

**A. Short maturity bonds**

B. High premium bonds

C. High maturity bonds

D. High inflated bonds

**In large expansion programs, increased riskiness and flotation cost associated with project can cause_______________?**

**A. Rise in marginal cost of capital**

B. Rise in transaction cost of capital

C. Fall in marginal cost of capital

D. Rise in transaction cost of capital

**Cash outflows are costs of project and are represented by___________?**

**A. Negative numbers**

B. Hurdle number

C. Positive numbers

D. Relative number

**Sum of discounted cash flows is best defined as____________?**

A. Defined future value

B. Technical equity **C. Project net present value**

D. Equity net present value

**If net present value is positive, then profitability index will be__________?**

A. Equal to

B. Greater than two

C. Less than one**D. Greater than one**

**Cash flows occurring with more than one change in sign of cash flow are classified as________?**

A. Non-normal cash flow

B. Normal costs

C. Normal cash flow **D. Non-normal costs**

**Situation in which firm limits expenditures on capital is classified as________?**

A. Marginal rationing **B. Capital rationing**

C. Optimal rationing

D. Transaction rationing

**An internal rate of return in capital budgeting can be modified to make it representative of_________?**

A. Relative inflow

B. Relative outflow

C. Relative cost**D. Relative profitability**

**Other factors held constant, greater project liquidity is because of___________?**

A. Greater project return

B. Less project returns **C. Shorter payback period**

D. Greater payback period

**Project whose cash flows are sufficient to repay capital invested for rate of return then net present value will be_________?**

A. Positive **B. Zero**

C. Negative

D. Independent

**Process in which managers of company identify projects to add value is classified as__________?**

**A. Capital budgeting**

B. Book value budgeting

C. Cost budgeting

D. Equity budgeting

**Number of years forecasted to recover an original investment is classified as________?**

**A. Payback period**

B. Original period

C. Forecasted period

D. Investment period

**In capital budgeting, a negative net present value result in______________?**

A. Percent economic value added

B. Zero economic value added **C. Negative economic value added**

D. Positive economic value added

**Modified rate of return and modified internal rate of return with exceed cost of capital if net present value is____________?**

**A. Positive**

B. Zero

C. Negative

D. One

**Set of projects or set of investments usually maximize firm value is classified as_________?**

**A. Optimal capital budget**

B. Maximum capital budget

C. Minimum capital budget

D. Greater capital budget

**In internal rate of returns, discount rate which forces net present values to become zero is classified as__________?**

A. Negative rate of return

B. Positive rate of return

C. External rate of return**D. Internal rate of return**