Financial Management MCQ 2023: FM is the planning, directing, monitoring, organizing, and controlling of the monetary resources of an organization. Financial management example of company includes hiring new employees, project budgets, managing telephone cost etc. The purpose of (FM) financial management is the planning, directing, monitoring, organizing and controlling of the monetary resources of the organization. The financial manager will be expected Bachelor degree course like maths, accounting, finance or Economics.
Table of Contents
1. Questions and Answers for Financial Management MCQ 2023
1. In his traditional role the finance manager is responsible for ___________.
A. acquiring capital assets of the organization
B. proper utilization of funds
C. arrangement of financial resources
D. efficient management of capital
Answer: arrangement of financial resources
2. Which one of the following is not a money market securities?
A. Certificate of deposit
B. National savings certificate
C. Treasury bills
D. Commercial paper
Answer: National savings certificate
3. Capital budgeting is related to ________
A. long terms and short terms assets
B. short term assets
C. long terms assets
D. fixed assets
Answer: long terms assets
4. Working capital management is managing ____________.
A. long terms liabilities
B. short term assets and liabilities
C. long term assets
D. only short term assets
Answer: short term assets and liabilities
5. ___________ are financial assets.
A. Machines
B. Bonds
C. Stocks
D. Both B & C
Answer: Both B & C
6. Present value takes _________.
A. Compounding rate
B. Inflation rate
C. Discounting rate
D. Deflation rate
Answer: Discounting rate
7. The expansion of CAPM is ____________.
A. Capital asset pricing model
B. Capital amount pricing model
C. Capital asset printing model
D. Capital amount printing model
Answer: Capital asset printing model
8. Market value of the shares are decided by ____________.
A. the government
B. the investment market
C. the respective companies
D. shareholders
Answer: the investment market
9. Financial leverage measures ____________.
A. sensitivity of EPS with respect to % change in level of EBIT
B. % variation in the level of production
C. sensitivity of EBIT with respect of % change with respect to output
D. no change with EBIT and EPS
Answer: sensitivity of EPS with respect to % change in level of EBIT
10. Future value interest factor takes ____________.
A. Discounting rate
B. Compounding rate
C. Inflation rate
D. Deflation rate
Answer: Compounding rate
11. Investment is the _______________.
A. person’s commitment to buy a flat or house
B. net additions made to the nation’s capital stocks
C. employment of funds on assets to earn returns
D. employment of funds on goods and services that are used in production process
Answer: employment of funds on assets to earn returns
12. Operating leverage measures ____________.
A. production risk
B. financial risk
C. business risk
D. both risks
Answer: business risk
13. The underwriter has to take up ________________.
A. the unsubscribed part of the agreed portion
B. the fixed portions of the issue capital
C. the unfixed portions of the issue capital
D. the agreed portion or can refuse if
Answer: the unsubscribed part of the agreed portion
14. An example of a derivative security is ______.
A. a commodity futures contract
B. a common share of General Motors
C. a call option on Mobil stock
D. Both A & C
Answer: Both A & C
15. The company’s average cost of capital is ____________.
A. the average cost of equity preference shares
B. the average cost of equity shares and debentures
C. the average cost of short term funds
D. the average cost of shares and all sources of long-term funds
Answer: the average cost of shares and all sources of long-term funds
16. Operating leverage x Financial leverage = ________
A. Fixed leverage
B. Financial Combined Leverage
C. Combined Leverage
D. Operating Combined Leverage
Answer: Combined Leverage
17. Traditional approach confines finance function only to _________ funds
A. utilizing
B. mobilizing
C. raising
D. financing
Answer: raising
18. Most investors are risk averse which means____________.
A. they will always invest in the investment with the lowest possible risk
B. they will always invest in the investment with the lowest possible risk
C. they will assume more risk only if they are compensated by higher expected return
Answer: they avoid the stock market due to the high degree of risk
19. Financial leverage helps one to estimate ____________.
A. financial risk
B. business risk
C. both risks
D. production risk
Answer: financial risk
20. Which of the following would be considered a risk-free investment?
A. High-grade corporate bonds
B. Equity in a house
C. Gold
D. Treasury bills
Answer: Treasury bills
21. The company’s cost of capital is called ________.
A. Hurdle rate
B. Leverage
C. Risk rate
D. Return rate
Answer: Hurdle rate
22. Cost of retained earnings is equal to _______.
A. Cost of term loans
B. Cost of debt
C. Cost of bank loan
D. Cost of equity
Answer: Cost of equity
23. Beta measures the ________.
A. Market and finance risk
B. Financial risk
C. Market risk
D. Investment risk rate
Answer: Market risk
24. The primary goal of the financial management is ____________.
A. to maximize the wealth of owners
B. to maximize the return
C. to minimize the risk
D. to maximize profit
Answer: to maximize the wealth of owners
25. EBIT is usually the same thing as__________
A. earnings before taxes
B. funds provided by operations
C. operating profit
D. net income
Answer: operating profit
26. The decision to invest a substantial sum in any business venture expecting to earn a minimum return is called ____________.
A. an investment decision
B. working capital decision
C. a production decision
D. a sales decision
Answer: an investment decision
27. The largest single institutional owner of common stocks is________.
A. pension funds
B. insurance companies
C. mutual funds
D. commercial banks
Answer: mutual funds
28. Savings accounts are___________ but are not__________.
A. marketable; liquid
B. liquid; personal
C. liquid; marketable
D. negotiable; liquid
Answer: liquid; marketable
29. Operating incomes and the discount rate of a particular risk class are the 2 factors determining ____________.
A. Modern view
B.Traditional view
C. Dependence hypothesis
D. Independence hypothesis
Answer: Independence hypothesis
30. Financial Management is mainly concerned with ______________.
A. Efficient Management of every business
B. All aspects of acquiring and utilizing financial resources for firms activities
C. Arrangement of funds
D. Profit maximization
Answer: All aspects of acquiring and utilizing financial resources for firms activities
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