This quiz works best with JavaScript enabled. Home > Finance > Management > Financial Management > Financial Management – Quiz 49 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 49 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Suppose you postpone consumption and invest at 9% when inflation is 3%. What is the approximate real rate of your reward for saving? A) 6%. B) 7%. C) 5%. D) 3%. Show Answer Correct Answer: A) 6%. 2. AW Co needs to have $ 100, 000 working capital in place immediately for the start of a 2-year project. The amount will stay constant in real terms. Inflation is running at 10% per annum, and AW Co's money cost of capital is 12%. What is the present value of the cash flows relating to working capital? A) $ (4, 090). B) $ (108, 730). C) $ (21, 260). D) $ (20, 300). Show Answer Correct Answer: C) $ (21, 260). 3. Which of the following statements best represents the "Agency Problem" ? A) Managers might attempt to benefit themselves in terms of salary and perquisites at the expense of shareholders. B) The agency problem results from the separation of management and the ownership of the firm. C) The agency problem may interfere with the implementation of maximizing shareholder wealth. D) All of the above. Show Answer Correct Answer: D) All of the above. 4. Bonds are bought and sold in ..... markets. A) Debt. B) Foreign exchange. C) Equity. D) Derivatives. Show Answer Correct Answer: A) Debt. 5. Which situation shows a financially responsible citizen? A) Purchasing an expensive automobile you CANNOT afford. B) Hiding your money under your mattress. C) Only buying items that you CAN afford. D) Throwing money out the window. Show Answer Correct Answer: C) Only buying items that you CAN afford. 6. Amount of Fixed Assets is decided by A) Investment Decision. B) Financing Decision. C) Working Capital Concept. D) Fixed Capital. Show Answer Correct Answer: D) Fixed Capital. 7. Liquidity in financial markets refers to the stability of long-term financial instruments. A) FALSE . B) TRUE. Show Answer Correct Answer: A) FALSE . 8. It also refers to the firm's speed or pace in turning over accounts receivable, inventory and long-term assets. A) ASSET UTILIZATION OR ACTIVITY. B) DEBT-UTILIZATION OR LEVERAGE. Show Answer Correct Answer: A) ASSET UTILIZATION OR ACTIVITY. 9. The principle of risk-return trade-off means that A) Higher risk investments must earn higher returns. B) An investor who takes more risk will earn a higher return. C) A rational investor will only take on higher risk if he expects a higher return. D) An investor who bought stock in a small corporation five years ago has more money than an investor who bought U.S. Treasury bonds five years ago. Show Answer Correct Answer: C) A rational investor will only take on higher risk if he expects a higher return. 10. Your credit score is a number that banks and credit card companies use to find out how likely you are to pay back money on time. A) True. B) False. Show Answer Correct Answer: A) True. 11. It is considered as separate and distinct from its owners and executives. A) CORPORATION. B) PARTNERSHIP. Show Answer Correct Answer: A) CORPORATION. 12. Market Value of share is decided by A) Directors. B) Investment Market. C) Investment Decision. D) Govt. Show Answer Correct Answer: B) Investment Market. 13. Its failure to consider changes in the purchasing power of currencies. A) FALSE. B) TRUE. Show Answer Correct Answer: B) TRUE. 14. Cost is a feature of a financial plan? A) True. B) False. Show Answer Correct Answer: B) False. 15. An accounts receivable record identifies the companies from which credit purchases were made and the status of each account. A) True. B) False. Show Answer Correct Answer: B) False. 16. Cash & Cash Equivalent-24, 890Held for Trading-10, 000Trade and Other Receivables-16, 000Inventory-8, 960If total current liabilities amounted to 19, 900, Net Sales for the present year amounted to 480, 000 and the ending receivables totaled to 16, 500. However, it was found out that the ending inventory amounted to 9, 500 and the Cost of Goods Sold totaled to 364, 000. What is the inventory turnover ratio? A) 39.44. B) 52.00. C) 52.04. D) 76.63. Show Answer Correct Answer: A) 39.44. 17. In the present days, corporation finance is also referred to as business finance and financial management A) False. B) True. Show Answer Correct Answer: B) True. 18. The same cash flow repeated in multiple time periods in a row, is the meaning of ..... A) Uneven Cash Flows. B) Annuities. C) Deferred Annuities. D) Lump Sums. Show Answer Correct Answer: B) Annuities. 19. If operating leverage is 4, this means that- A) 1% change in sales will cause 4% change in EPS. B) 1% change in sales will cause 4% change in EBIT. C) 4% change in sales will cause 1% change in EBIT. D) 4% change in sales will cause 1% change in EPS. Show Answer Correct Answer: B) 1% change in sales will cause 4% change in EBIT. 20. The concept which provides a link between investment and financing decision A) Financial Planning. B) Trading on equity. C) Capital structure. D) Financial leverage. Show Answer Correct Answer: A) Financial Planning. 21. Financial reporting: A) Provides information about a company's financial performance to investors, creditors, and other stakeholders. B) Helps investors make informed investment decisions. C) Both of the above. D) Neither of the above. Show Answer Correct Answer: A) Provides information about a company's financial performance to investors, creditors, and other stakeholders. 22. A $ 100 deposit today that earns an annual interest rate of 10% is worth how much at the end of two years? Assume all interest received at the end of the first year is reinvested the second year. A) $ 141. B) $ 120. C) $ 122. D) $ 121. Show Answer Correct Answer: D) $ 121. 23. Which of the following would NOT be considered an expense? A) Wages paid to employees. B) Taxes. C) Interest earned on investments. D) Purchases of supplies. Show Answer Correct Answer: C) Interest earned on investments. 24. If the discounting factor of year 5 and assuming cost of capital of 5% is $ 0.8, it means that: A) $ 0.8 is the present value of $ 1 in 5 years with annual compounding of 3%. B) $ 0.8 is the present value of $ 1 in 5 years with annual compounding of 5%. C) $ 0.8 is the present value of $ 1 in 3 years with annual compounding of 3%. D) $ 0.8 is the present value of $ 1 in 3 years with annual compounding of 5%. Show Answer Correct Answer: B) $ 0.8 is the present value of $ 1 in 5 years with annual compounding of 5%. 25. Who is the most common creditor A) The government. B) Your parents. C) A bank. D) A person. E) A school. Show Answer Correct Answer: C) A bank. 26. There are 12 months in a year. How many years is 48 months? A) 3. B) 4. C) 5. D) None of above. Show Answer Correct Answer: B) 4. 27. What is the chief financial question before an organisation? A) How much finance will be required for various business activities. B) How much amount can be acquired from various resources. C) How the profit of the business will be divided. D) All of these. Show Answer Correct Answer: D) All of these. 28. Which of the following is NOT a component of financial strategy formulation? A) Budgeting and forecasting. B) Marketing strategy. C) Capital structure decisions. D) Investment analysis. Show Answer Correct Answer: B) Marketing strategy. 29. What is the term for the process of converting future cash flows into today's equivalent value to make meaningful comparisons? A) Capital Budgeting. B) Liquidity Management. C) Present Value (PV). D) Investment Appraisal. Show Answer Correct Answer: C) Present Value (PV). 30. Nature of business is an important factor to decide requirement of fixed capital. A) False. B) True. Show Answer Correct Answer: B) True. ← 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