MBA/MBA Financial Management MCQ Set 6 Sample Test,Sample questions

Question:
'Bird in hand' argument is given by

1.Walker's Model

2.Gordon's Model

3.MM Mode

4.Residuals Theory


Question:
'That there is no corporate tax' is assumed by:

1.Net Income Approach

2.Net Operating Income Approach

3.Traditional Approach

4.All of these


Question:
5Cs of the credit does not include

1.Collateral

2.Character

3.Conditions

4.None of the above


Question:
80% of sales of 10,00,000 of a firm are on credit. It has a Receivable Turnover of 8. What is the Average collection period (360 days a year) and Average Debtors of the firm?

1.45 days and 1,00,000

2.360 days and 1,00,000

3.45 days and 8,00,000

4.360 days and 1,25,000


Question:
A short-term lease which is often cancellable is known as

1.Finance Lease

2.Net Lease

3.Operating Lease

4.Leverage Lease


Question:
ABC Analysis is used in

1.Inventory Management

2.Receivables Management

3.Accounting Policies

4.Corporate Governance


Question:
An implicit cost of increasing proportion of debt is:

1.Tax should would not be available on new debt

2.P.E. Ratio would increase

3.Equity shareholders would demand higher return

4.Rate of Return of the company would decrease


Question:
Basic objective of diversification is

1.Increasing Return

2.Maximising Return

3.Decreasing Risk

4.Maximizing Risk


Question:
Benefit of 'Trading on Equity' is available only if:

1.Rate of Interest < Rate of Return

2.Rate of Interest > Rate of Return

3.Both (a) and (b)

4.None of (d) and (b)


Question:
Between two capital plans, if expected EBIT is more than indifference level of EBIT, then

1.Both plans be rejected

2.Both plans are good

3.One is better than other

4.None of the above


Question:
Capital Budgeting is a part of:

1.Investment Decision

2.Working Capital Management

3.Marketing Management

4.capital structure


Question:
Cash Inflows from a project include:

1.Tax Shield of Depreciation

2.After-tax Operating Profits

3.Raising of Funds

4.Both (a) and (b)


Question:
Cheques deposited in bank may not be available for immediate use due to

1.Payment Float

2.Recceipt Float

3.Net Float

4.Playing the Float


Question:
Concept of Maximum Permissible Bank finance was introduced by

1.Kannan Committee

2.Chore Committee

3.Nayak Committee

4.Tandon Committee


Question:
Cost of Capital refers to:

1.Flotation Cost

2.Dividend

3.Required Rate of Return

4.None of the above


Question:
Cost of issuing new shares to the public is known as:

1.Cost of Equity

2.Cost of Capital

3.Flotation Cost

4.Marginal Cost of Capital


Question:
Debt to Total Assets of a firm is.2. The Debt to Equity boo would be:

1.0.80

2.0.25

3.1.00

4.0.75


Question:
Dividends are paid out of

1.Accumulated Profits

2.Gross Profit

3.Profit after Tax

4.General Reserve


Question:
Financial break-even level of EBIT is:

1.Intercept at Y-axis

2.Intercept at X-axis

3.Slope of EBIT-EPS line

4.None of the above


Question:
Financial Leverage measures relationship between

1.EBIT and PBT

2.EBIT and EPS

3.Sales and PBT

4.Sales and EPS


Question:
Float management is related to

1.Cash Management

2.Inventory Management

3.Receivables Management

4.Raw Materials Management


Question:
Gordon's Model of dividend relevance is same as

1.No-growth Model of equity valuation

2.Constant growth Model of equity valuation

3.Price-Earning Ratio

4.Inverse of Price Earnings Ratio


Question:
High degree of financial leverage means:

1.High debt proportion

2.Lower debt proportion

3.Equal debt and equity

4.No debt


Question:
If 'r' = 'ke', than MP by Walter's Model and Gordon's Model for different payout ratios would be

1.Unequal

2.Zero

3.Equal

4.Negative


Question:
If a firm has a DOL of 2.8, it means:

1.If sales increase by 2.8%, the EBIT will increase by 1%

2.If EBIT increase by 2.896, the EPS will increase by 1 %

3.If sales rise by 1%, EBIT will rise by 2.8%

4.None of the above


Question:
If cash discount is offered to customers, then which of the following would increase?

1.Sales

2.Debtors

3.Debt collection period

4.All of the above


Question:
If ke = r, then under Walter's Model, which of the following is irrelevant?

1.Earnings per share

2.Dividend per share

3.DP Ratio

4.None of the above


Question:
If the closing balance of receivables is less than the opening balance for a month then which one is true out of

1.Collections>Current Purchases

2.Collections>Current Sales

3.Collections<Current Purchases

4.Collections < Current Sales


Question:
If the following is an element of dividend policy?

1.Production capacity

2.Change in Management

3.Informational content

4.Debt service capacity


Question:
In Capital Budgeting, Sunk cost is excluded because it is:

1.of small amount

2.not incremental

3.not reversible

4.All of the above


Question:
In Certainty-equivalent approach, adjusted cash flows are discounted at:

1.Accounting Rate of Return

2.Internal Rate of Return

3.Hurdle Rate

4.Risk-free Rate


Question:
In stock dividend:

1.Authorized capital always increases

2.Paid up capital always increases

3.Face value per share decreases

4.Market price for share decreases


Question:
In the Traditional Approach, which one of the following remains constant?

1.Cost of Equity

2.Cost of Debt

3.WACC

4.None of the above


Question:
In Traditional Approach, which one is correct?

1.ke rises constantly

2.kd decreases constantly

3.k0 decreases constantly

4.None of the above


Question:
Inventory Turnover measures the relationship of inventory with:

1.Average Sales

2.Cost of Goods Sold

3.Total Purchases

4.Total Assets


Question:
Minimum Rate of Return that a firm must earn in order to satisfy its investors, is also known as:

1.Average Return on Investment

2.Weighted Average Cost of Capital

3.Net Profit Ratio

4.Average Cost of borrowing


Question:
Net Operating Income Approach, which one of the lowing is constant?

1.Cost of Equity

2.Cost of Debt

3.WACC & kd

4.Ke and Kd


Question:
One difference between Operating and Financial lease is:

1.There is often an option to buy in operating lease

2.There is often a call option in financial lease

3.An operating lease is generally cancelable by lease

4.A financial lease in generally cancelable by lease


Question:
Relationship between change in Sales and d Operating Profit is known as:

1.Financial Leverage

2.Operating Leverage

3.Net Profit Ratio

4.Gross Profit Ratio


Question:
The job of a finance manager is confined to

1.Raising funds

2.Management of cash

3.Raising of funds and their effective utilization

4.None of these


Question:
Walter’s Model suggests that a firm can always increase i.e. of the share by

1.Increasing Dividend

2.Decreasing Dividend

3.Constant Dividend

4.None of the above


Question:
Weighted Average Cost of Capital is generally denoted by:

1.kA

2.kw

3.k0

4.kc


Question:
What is Economic Order Quantity?

1.Cost of an Order

2.Cost of Stock

3.Reorder level

4.Optimum order size


Question:
Which of the following appearing in the balance! generates tax advantage and hence affects the c, structure decision ?

1.Reserves and Surplus

2.Long-term debt

3.Preference Share Capital

4.Equity Share Capital


Question:
Which of the following is incorrect for value of the firm?

1.In the initial preposition, MM Model argues that value is independent of the financing mix

2.Total value of levered and unlevered firms is otherwise arbitrage will take place

3.Total value incorporates borrowings by firm but excludes personal borrowing

4.Total value does not change because underlying does not change with financing mix


Question:
Which of the following is not a part of credit policy?

1.Collection Effort

2.Cash Discount

3.Credit Standard

4.Paying Practices of debtors


Question:
Which of the following is not included in cost of inventory?

1.Purchase cost

2.Transport in Cost

3.Import Duty

4.Selling Costs


Question:
Which of the following is true for a company which uses continuous review inventory system

1.Order Interval is fixed

2.Order Interval varies

3.Order Quantity is fixed

4.Both (a) and (c)


Question:
Which of the following is true?

1.Under Traditional Approach, overall cost of capital remains same

2.Under NI Approach, overall cost of capital remains same

3.Under NOI Approach, overall cost of capital remains same

4.None of the above


Question:
Which of the following stresses on investor's preference reorient dividend than higher future capital gains ?

1.Walter's Model

2.Residuals Theory

3.Gordon's Model

4.MM Model


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  60. MBA Business Environment MCQ Set 5
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  67. MBA Business Law Mcq Set 2
  68. MBA Business Law Mcq Set 3
  69. MBA Business Law Mcq Set 4
  70. MBA Business Law Mcq Set 5
  71. MBA Business Law Mcq Set 6
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  106. MBA Entrepreneurship Management MCQ Set 2
  107. MBA Entrepreneurship Management MCQ Set 3
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  125. MBA Human Resource Management Mcq Set 3
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  140. MBA Management Information Systems Mcq Set 4
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  148. MBA Marketing Management Mcq Set 3
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