Home
Accounting, Banking and Finance MCQs
Business Finance
Quiz # 4, MCQs
-
1)
When real rate is high, all the interest rates tend to be _______.
- A) Higher
- B) Lower
- C) Constant
- D) None of the given options
-
2)
Based on ________ the investment is accepted if the _____ exceeds the required return. It should be rejected otherwise.
- A) Profitability index
- B) Payback period
- C) Internal rate of return
- D) Net present value
-
3)
Profitability index (PI) rule is to take an investment, if the index exceeds______:
- A) -1
- B) 0
- C) 1
- D) 2
-
4)
Average Accounting Return is a measure of accounting profit relative to:
- A) Book value
- B) Intrinsic value
- C) Cost
- D) Market value
-
5)
Which of the following is the cheapest source of financing available to a firm?
- A) Bank loan
- B) Commercial papers
- C) Trade credit
- D) None of the given options.
-
6)
. ---------------- refers to the extent to which fixed-income securities (debt and preferred stock) are used in a firm's capital structure.
- A) Financial risk
- B) Portfolio risk
- C) Operating risk
- D) Market risk
-
7)
The use of Personal borrowing to alter the degree of financial leverage is called
- A) Homemade leverage
- B) Financial leverage
- C) Operating leverage
- D) None of the given option
-
8)
. _______________ refers to the most valuable alternative that is given up if a particular investment is undertaken.
- A) Sunk cost
- B) Opportunity cost
- C) Financing cost
- D) All of the given options
-
9)
A model which makes an assumption about the future growth of dividends is known as:
- A) Dividend Price Model
- B) Dividend Growth Model
- C) Dividend Policy Model
- D) All of the given options
-
10)
Which of the following is not a quality of IRR ?
- A) Most widely used
- B) Ideal to rank the mutually exclusive investments
- C) Easily communicated and understood
- D) Can be estimated even without knowing the discount rate
