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FINANCIAL MANAGEMENT
1. The objective of financial management to increase the wealth of the shareholders means
to
a) Increase the physical assets owned by the firm
b) Increase the market value of the shares of the firm
c) Increase the current asset of the firm
d) Increase the cash balance of the company.
Ans: b
2. Which among the following is the major factor that affects capital structure?
a) Solvency
b) Profitability
c) Leverage
d) Flexibility
Ans: c
3. ........... is defined as the opportunity cost in terms of dividends forgone by withholding
from the equity shareholders.
a) Cost of debenture
b) Cost of preference capital
c) Cost of term loans
d) Cost of retained earnings
Ans: d
4. The.......is the minimum rate of return of a company which it must earn to meet expenses
of the various categories of investors.
a) Capital gain
b) Cost of capital
c) Capital budgeting
d) Capital market
Ans: b
5. The...... refers to the degree to which a firm has built in fixed cost due to its particular or
unique production process.
a) Combined leverage
b) Financial leverage
c) Operating leverage
d) Capital structure
Ans: c
6. In.........approach, the capital structure decision is relevant to the valuation of the firm
a) Net operating income
b) Net income
c) Traditional
d) Miller and Modigliani
Ans: b
7. .........cannot be recovered after they have been incurred
a) Opportunity cost
b) Capital cost
c) Sunk cost
d) Financing cost
Ans: c
8. Which among the following risk is defined as the measure of the unpredictability of a
given stock value?
a) Portfolio risk
b) Stand alone risk
c) Corporate risk
d) Market risk
Ans: d
9. When.......is greater than zero the project should be accepted
a) Internal rate of return
b) Profitability index
c) Net present value
d) Modified internal rate of return
Ans: c
10. ........is defined as the capital rationing that cannot be violated under any circumstances.
a) External capital rationing
b) Hard capital rationing
c) Soft capital rationing
d) Internal capital rationing
Ans: b

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Financial management

  • 1. FINANCIAL MANAGEMENT 1. The objective of financial management to increase the wealth of the shareholders means to a) Increase the physical assets owned by the firm b) Increase the market value of the shares of the firm c) Increase the current asset of the firm d) Increase the cash balance of the company. Ans: b 2. Which among the following is the major factor that affects capital structure? a) Solvency b) Profitability c) Leverage d) Flexibility Ans: c 3. ........... is defined as the opportunity cost in terms of dividends forgone by withholding from the equity shareholders. a) Cost of debenture b) Cost of preference capital c) Cost of term loans d) Cost of retained earnings Ans: d 4. The.......is the minimum rate of return of a company which it must earn to meet expenses of the various categories of investors. a) Capital gain b) Cost of capital c) Capital budgeting d) Capital market Ans: b 5. The...... refers to the degree to which a firm has built in fixed cost due to its particular or unique production process. a) Combined leverage b) Financial leverage c) Operating leverage d) Capital structure Ans: c 6. In.........approach, the capital structure decision is relevant to the valuation of the firm a) Net operating income b) Net income c) Traditional d) Miller and Modigliani Ans: b
  • 2. 7. .........cannot be recovered after they have been incurred a) Opportunity cost b) Capital cost c) Sunk cost d) Financing cost Ans: c 8. Which among the following risk is defined as the measure of the unpredictability of a given stock value? a) Portfolio risk b) Stand alone risk c) Corporate risk d) Market risk Ans: d 9. When.......is greater than zero the project should be accepted a) Internal rate of return b) Profitability index c) Net present value d) Modified internal rate of return Ans: c 10. ........is defined as the capital rationing that cannot be violated under any circumstances. a) External capital rationing b) Hard capital rationing c) Soft capital rationing d) Internal capital rationing Ans: b