This quiz works best with JavaScript enabled. Home > Finance > Management > Financial Management > Financial Management – Quiz 27 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 27 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Mainly general type of Direct Foreign Investment (DFI) is A) Franchising. B) Establishment of new subsidiaries. C) International trade. D) Patent. Show Answer Correct Answer: B) Establishment of new subsidiaries. 2. It is a kind of bank with the motive of profit earning, and for this purpose, it performs the functions of accepting the deposits of the public and lends them the loan. A) Rural Bank. B) Universal Bank. C) Thrift Bank. D) Commercial Bank. Show Answer Correct Answer: D) Commercial Bank. 3. The concept that value of a rupee to be received in future is less than the value Of a rupee on hand today is known as A) A. Recovery factor concept. B) B time value of money. C) C. Compounding fator concept. D) D. None of these. Show Answer Correct Answer: B) B time value of money. 4. An investment is lucrative when: A) The equity IRR is higher than NPV to equity capital providers. B) The NPV to equity capital providers is higher than cost of equity. C) The NPV is higher than cost of investment. D) The equity IRR is higher than cost of equity. Show Answer Correct Answer: D) The equity IRR is higher than cost of equity. 5. Which of the following refers to corporation A) Tax paid by individual owners. B) Unlimited liability. C) More than one person enter the business. D) Decision making will be done by the board of directors. Show Answer Correct Answer: D) Decision making will be done by the board of directors. 6. Anything of value that is owned or controlled A) Property. B) Owner's equity. C) Capital. D) Equity. Show Answer Correct Answer: A) Property. 7. Which of the following is an external source of finance A) Retained earnings. B) Preference shares. C) Debentures. D) Equity shares. Show Answer Correct Answer: C) Debentures. 8. The following are investment approaches, except: A) Conservative. B) Aggressive. C) Moderate. D) Proactive. Show Answer Correct Answer: D) Proactive. 9. One of the goals of company owners and managers in studying financial management is? A) Make decisions that can increase company profits. B) Make decisions that can streamline the organization. C) Make decisions that can expand the company's market share. D) Make decisions with the aim of maximizing company value. Show Answer Correct Answer: D) Make decisions with the aim of maximizing company value. 10. Records and statements are based on most reliable data available. A) Matching Principle. B) Revenue Recognition Principle. C) Objectivity Principle. D) Historical Cost. Show Answer Correct Answer: C) Objectivity Principle. 11. What is the time value of money (TVM)? A) The concept that money has a constant value over time. B) The concept that money available today is worth more than the same amount in the future. C) The concept that money available in the future is worth more than the same amount today. D) The concept that money should be invested in stocks for long-term growth. Show Answer Correct Answer: B) The concept that money available today is worth more than the same amount in the future. 12. Other things remaining the same, an increase in the tax rate on corporate profits will: A) Make the debt relatively dearer. B) Have no impact on the cost of debt. C) Make the debt relatively cheaper. D) Can't say. Show Answer Correct Answer: C) Make the debt relatively cheaper. 13. All of the following are types of taxes EXCEPT ..... A) Roadside Tax. B) Property Tax. C) Payroll Tax. D) Sales Tax. E) Income Tax. Show Answer Correct Answer: A) Roadside Tax. 14. Sinovac is a Chinese company that developed a Covid-19 vaccine. Sinovac got $ 515 million dollars in exchange for 15% ownership in Sinovac. What type of financial instrument was used to raise the $ 515 million? A) Equity. B) Debt. C) Stakeholder. D) Stockholder. Show Answer Correct Answer: A) Equity. 15. The question, "By WHEN will the goal be accomplished?" goes with which letter of SMART? A) Timely. B) Measurable. C) Attainable. D) Specific. Show Answer Correct Answer: A) Timely. 16. Sales with credit will be entered in the P/L as 'revenue/income' and entered in the Balance Sheet as what? A) Account receivable profitability. B) Short-term liability. C) Operating Cash Flow. D) Long-term assets. Show Answer Correct Answer: A) Account receivable profitability. 17. What does the term "ROI" stand for in finance? A) Rate of Interest. B) Return on Investment. C) Revenue on Investment. D) Risk of Inflation. Show Answer Correct Answer: B) Return on Investment. 18. If you borrow $ 100, 000 at an annual rate of 8.00% for a 10-year period and repay the total amount of principal and interest due of $ 215, 892.50 at the end of 10 years, what type of loan did you have? A) Discount loan. B) Interest-only loan. C) Discount Decline loan. D) Discount and Compound loan. Show Answer Correct Answer: A) Discount loan. 19. Which of the following is the correct statement of the conclusion of Modigliani and Miller on the relevance of dividend policy? A) Increase in retentions result in a higher growth rate. B) All shareholders are indifferent between receiving dividend income and capital gains. C) The value of the shareholders' equity is determined solely by the firm's investment selection criteria. D) Discounting the dividends is not an appropriate way to value the firm's equity. Show Answer Correct Answer: C) The value of the shareholders' equity is determined solely by the firm's investment selection criteria. 20. The Characteristics of an effective controlsystem is/are: A) Integration. B) Accuracy. C) Flexibility. D) All of above. Show Answer Correct Answer: D) All of above. 21. A(n) ..... is the purchase of goods that are not consumed today but are used in the future to create wealth A) Savings. B) Investment. C) Income. D) Credit. Show Answer Correct Answer: B) Investment. 22. The money you get before deductions is called? A) Gross Pay. B) Take Home Amount. C) Year To Date. D) Net Pay. Show Answer Correct Answer: A) Gross Pay. 23. ..... is the system of recording business transactions, and analyzing, verifying, and reporting the results. A) Accounts receivable. B) Accounting. C) Generally accepted accounting principals (GAAP). D) Fixed assets. Show Answer Correct Answer: B) Accounting. 24. The main variables of the TVM equation are A) Present value, future value, time, interest rate, and payment. B) Present value, future value, perpetuity, interest rate, and payment. C) Present value, future value, time, annuity, and interest rate. D) Present value, future value, perpetuity, interest rate, and principal. Show Answer Correct Answer: A) Present value, future value, time, interest rate, and payment. 25. The cost of equity share capital is greater than the cost of debt because ..... A) The face value of equity shares is lower than the face values of debentures in most cases. B) Equity shares are not easily saleable. C) Equity shares carry a higher risk than debts. D) Equity shares do not provide a fixed dividend rate. Show Answer Correct Answer: C) Equity shares carry a higher risk than debts. 26. M Co will receive a perpetuity starting in 2 years' time of $ 10, 000 per annum, increasing by the rate of inflation (which is 2%).What is the present value of this perpetuity assuming a money cost of capital of 10.2%? A) $ 125, 000. B) $ 90, 910. C) $ 115, 740. D) $ 74, 403. Show Answer Correct Answer: C) $ 115, 740. 27. The basic format of an income statement is A) Sales-Expenses = Profits. B) Income-Expenses = EBIT. C) Assets-Liabilities = Profits. D) Sales-Liabilities = Profits. Show Answer Correct Answer: A) Sales-Expenses = Profits. 28. Edward wishes to save enough money to purchase a retirement lake cabin. He is willing to spend $ 500, 000 for the cabin and he can save $ 25, 000 per year and invest the money into an account earning 8.00% per year. If Edward's investments come in the form of equal annual end-of-the-year cash flows and the first cash flow is in exactly one year, how long will it take him to save enough money to buy the lake cabin? A) Between 8 and 9 years. B) Between 10 and 11 years. C) Between 12 and 13 years. D) Exactly 20 years. Show Answer Correct Answer: C) Between 12 and 13 years. 29. Which of the following is not a long term source of finance A) Preference shares. B) Treasury bills. C) Equity capital. D) Debentures. Show Answer Correct Answer: B) Treasury bills. 30. The extent to which an organisation uses fixed cost on its total structure is called A) Overall leverage. B) Financial leverage. C) Fixed Leverage. D) Operating leverage. Show Answer Correct Answer: D) Operating leverage. ← PreviousNext →Related QuizzesManagement QuizzesFinance QuizzesFinancial Management Quiz 1Financial Management Quiz 2Financial Management Quiz 3Financial Management Quiz 4Financial Management Quiz 5Financial Management Quiz 6Financial Management Quiz 7Financial Management Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books