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Accounting, Banking and Finance MCQs

Business Finance

Quiz # 3, MCQs





NOTE: Attempt all Questions to see the Result at the bottom of this page.



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  1. 1)

    A standardized financial statement presenting all items of the statement as a percentage of total is:


    • A) a common-size statement
    • B) an income statemen
    • C) a cash flow statement
    • D) a balance sheet

  2. 2)

    The Du Pont Identity tells us that Return on Equity is affected by:


    • A) The Du Pont Identity tells us that Return on Equity is affected by:
    • B) asset use efficiency (as measured by total assets turnover)
    • C) financial Leverage (as measured by equity multiplier)
    • D) all of the given options (a, b and c)

  3. 3)

    A series of constant cash flows that occur at the end of each period for some fixed number of periods is ____________ .


    • A) an ordinary annuity
    • B) annuity due
    • C) multiple cash flows
    • D) perpetuity

  4. 4)

    Which of the following is the overall return the firm must earn on its existing assets to maintain the value of the stock?


    • A) IRR (Internal Rate of Return)
    • B) MIRR (Modified Internal Rate of Return)
    • C) WACC (Weighted Average Cost of Capital)
    • D) AAR (Average Accounting Return)

  5. 5)

    In which type of projects, the unequal lives of the projects do affect the analysis ?


    • A) Mutually exclusive
    • B) Dependent
    • C) Independent
    • D) Correlated

  6. 6)

    Which of the following is known as the group of assets such as stocks and bonds held by an investor ?


    • A) Stock Bundle
    • B) Portfolio
    • C) Capital Structure
    • D) None of the given options

  7. 7)

    Which of the following relationships holds TRUE if a bond sells at a discount?


    • A) Bond Price < Par Value and YTM > coupon rate
    • B) Bond Price > Par Value and YTM > coupon rate
    • C) Bond Price > Par Value and YTM < coupon rate
    • D) Bond Price < Par Value and YTM < coupon rate

  8. 8)

    Which of the following is the process of planning and managing a firm’s long-term investments?


    • A) Capital Structuring
    • B) Capital Rationing
    • C) Capital Budgeting
    • D) Working Capital Management

  9. 9)

    Which of the following strategy belongs to restrictive policy regarding size of investments in current assets?


    • A) To maintain a high ratio of current assets to sales
    • B) To maintain a low ratio of current assets to sales
    • C) To less short-term debt and more long-term debt
    • D) To more short-term debt and less long-term debt

  10. 10)

    Which of the following statement is CORRECT regarding compound interest?


    • A) It is the most basic form of calculating interest.
    • B) It earns profit not only on principal but also on interest.
    • C) It is calculated by multiplying principal by rate multiplied by time.
    • D) It does not take into account the accumulated interest for calculation.