This quiz works best with JavaScript enabled. Home > Management > Financial Management > Financial Management – Quiz 112 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Management Quiz 112 (19 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. In constant growth model, the value of equity share is sensitive to growth rate. A) True. B) False. Show Answer Correct Answer: A) True. 2. ..... are property and other items of value owned by a business. A) Current assets. B) Fixed assets. C) Liabilities. D) Assets. Show Answer Correct Answer: D) Assets. 3. Flotation cost is the cost involved in the issue of shares and debentures. A) True. B) False. Show Answer Correct Answer: A) True. 4. AM 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) $ 90, 910. B) $ 125, 000. C) $ 115, 740. D) $ 74, 403. Show Answer Correct Answer: C) $ 115, 740. 5. It is also known as static measure or structural ratios A) HORIZONTAL ANALYSIS. B) VERTICAL ANALYSIS. Show Answer Correct Answer: B) VERTICAL ANALYSIS. 6. It has to do with motivating people, paying them well and taking cared of their interest. A) Money Has Time Value. B) Risk Return Trade Off. C) Cash Flows Are Source of Values. D) Individuals Respond to Incentives. Show Answer Correct Answer: D) Individuals Respond to Incentives. 7. Which of the following is not an element of financial management? A) Allocation of resources. B) Financial Planning. C) Financial Decision-making. D) Financial control. Show Answer Correct Answer: D) Financial control. 8. In carrying out Break Even Point analysis, we must know what is called Cost Behavior. Below are types of cost behavior, except: A) Advertising Costs. B) Variable Costs. C) Fixed cost. D) Semi Variable Costs. Show Answer Correct Answer: A) Advertising Costs. 9. Which of the following statements concerning capital structure theory is correct? A) In the traditional view, there is a linear relationship between the cost of equity and financial risk. B) Modigliani and Miller said that, in the absence of tax, the cost of equity would remain constant. C) Pecking order theory indicates that preference shares are preferred to convertible debt as a source of finance. D) Business risk is assumed to be constant as the capital structure changes. Show Answer Correct Answer: D) Business risk is assumed to be constant as the capital structure changes. 10. Main limitation of financial analysis is: A) To know earning capacity. B) To know financial strength. C) Do not reflect changes in price level. D) Comparative study with other firms. Show Answer Correct Answer: C) Do not reflect changes in price level. 11. ..... is not included in owner's capital? A) Equity share capital. B) Long-term debt. C) Preference share capital. D) Retained profit. Show Answer Correct Answer: B) Long-term debt. 12. With an increase in the investment in fixed assets, there is a commensurate ..... in the working capital requirement. A) Decrease. B) Increase. C) May increase or decrease. D) No change. Show Answer Correct Answer: B) Increase. 13. The objective of wealth maximization takes into consideration: A) Risk related to uncertainty of returns. B) Timing of expected returns. C) Amount of returns expected. D) All of the above. Show Answer Correct Answer: D) All of the above. 14. Which of the following is used as Working Capital? A) Stock. B) Factory. C) Furniture. D) Machinery. Show Answer Correct Answer: A) Stock. 15. How much to invest in long term assets? This decision belongs to ..... A) Capital Budgeting. B) Working capital management. C) Financing decision. D) Dividend decision. Show Answer Correct Answer: A) Capital Budgeting. 16. What Is NOT a technique for credit worthiness A) Spending only 20% of your credit limit. B) Pay more then the minnium balance. C) Limit the number of credit cards you have. D) Avoid cash advances. E) Pay off your bar tab. Show Answer Correct Answer: E) Pay off your bar tab. 17. Which TWO of the following are examples of internal stakeholders in a firm? A. Company directors B. Customers C. Suppliers D. Employees E. Finance providers A) B & C. B) A & D. C) B & D. D) A & E. Show Answer Correct Answer: B) A & D. 18. If the "original price" a item is $ 49.99 and has a 25% discount, what is the new discounted sale price: A) $ 37.50. B) $ 37.49. C) $ 12.4975. D) $ 12.50. Show Answer Correct Answer: B) $ 37.49. 19. Flotation cost includes the cost of discount of issue of shares. A) True. B) False. Show Answer Correct Answer: B) False. ← PreviousRelated QuizzesManagement QuizzesFinancial Management Quiz 1Financial Management Quiz 2Financial Management Quiz 3Financial Management Quiz 4Financial Management Quiz 5Financial Management Quiz 6Financial Management Quiz 7Financial Management Quiz 8Financial Management Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books