MBA Corporate Finance — practice questions
120 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice MBA Corporate Finance in the app →Money required for carrying out business activities is called:Financial management is concerned with the optimal procurement and:The primary aim of financial management is to maximise:The three broad financial decisions are investment, financing and:A long-term investment decision, such as buying a new machine, is called a:Decisions about levels of cash, inventory and receivables are:Two projects carry the same risk but return 10 and 12 per cent. Normally the firm picks:Shareholders' funds refer to equity capital and:Interest must be paid whether or not a firm earns profit, so debt brings:The cost incurred in raising funds is called:Debt is considered the cheapest source partly because interest is:A company afraid of a takeover bid, wanting no dilution of control, will prefer:The portion of profit distributed to shareholders is the:Companies with good growth opportunities generally pay dividends that are:Even a profitable company may not declare a dividend if it is short of:Investors generally view an increase in dividend as:Preparing a financial blueprint of a firm's future operations is:Financial planning is typically done for a period of:Financial plans made for a period of one year or less are called:Financial planning usually begins with the preparation of a:The mix between owners' funds and borrowed funds is called:The chance that a firm fails to meet its payment obligations is called:Funds needed to buy land, buildings, plant and machinery are the firm's:Funds used to hold stock, bills receivable and to pay wages and rent are the firm's:A trading concern usually needs how much fixed capital compared with a manufacturing concern?A firm selling on credit with a slow turnover needs more:Sources that meet needs for a period exceeding five years are:Funds required for more than one year but less than five years come from:Trade credit, bank loans and commercial paper mainly provide funds for:Short-term financing is most common for financing:Seasonal businesses that build stock before the selling season typically need:Funds provided by the owners of an enterprise, including reinvested profits, are:Which pair are the two important sources of owner's funds?Loans from banks, debentures, public deposits and trade credit together form:A burden of borrowed funds is that interest must be paid even when:Collecting receivables faster, selling surplus stock and ploughing back profit are examples of:Suppliers, lenders and investors outside the firm are:A limitation of internal sources of funds is that they:Profits kept back in the business instead of paid as dividend are:Which is a merit of retained earnings?Excessive ploughing back of profits may cause dissatisfaction because shareholders get:Credit extended by one trader to another for buying goods is:In the buyer's records, trade credit appears as sundry creditors or:Trade credit is granted to customers who have reasonable financial standing and:A financial market links savers and investors, performing what is known as its:The process by which allocation of funds is done through banks or markets is called:Which is one of the four functions of a financial market?By making financial assets easy to buy and sell, markets provide:Financial markets are classified on the basis of the:Instruments with a maturity of less than one year are traded in the:The money market has:Which is a major participant in the money market?A Treasury bill is an instrument of short-term borrowing by the:Treasury bills are also known as:A 91-day Treasury bill of face value 1,00,000 bought for 96,000 earns the investor:The difference between the issue price of a treasury bill and its redemption value is called:Treasury bills are available for a minimum amount of:A short-term unsecured promissory note issued by large creditworthy companies is:Using funds raised through commercial paper to meet floatation costs of a bigger issue is called:Short-term finance repayable on demand, with maturity of one day to fifteen days, used between banks, is:The interest rate paid on call money loans is known as the:Unsecured, negotiable, short-term bearer instruments issued by commercial banks are:A bill of exchange used to finance credit sales, drawn by the seller and accepted by the buyer, becomes a:A trade bill accepted by a commercial bank is known as a:Facilities and institutional arrangements through which long-term funds are raised form the:The SENSEX, the benchmark index of the BSE, is made up of how many actively traded stocks?A clerk records each day's sales and payments in a routine ledger. That routine work is:The three main accounting elements were defined in the late 15th century by:Cash, equipment and buildings a firm owns are its:What a firm owes to its creditors is recorded as its:Total investment in a firm minus its liabilities is called owners' equity, also known as:You open a shop with 10,000 in cash and no debt. Owners' equity at that moment is:You then borrow 10,000 from a bank. Your total assets become:That bank loan is entered as a liability of 10,000, keeping the equation balanced. This method is called:The process running from a business transaction through to the finished report is the accounting:Assets a firm can turn into cash quickly are classed as:Machinery a bakery uses in production for more than a year is recorded under:A patent or copyright a firm owns is recorded as an:Debts a firm must pay within a year of the balance sheet date are:Profits kept in the business since it started, rather than paid out, are called:The total expense of buying or producing what a firm sells is the:Net sales minus the cost of goods sold gives:Salaries and commissions paid to salespeople and the cost of advertising fall under:Cash a firm generates from producing and selling its goods appears under cash flow from:Cash movements tied to debt and equity funding appear under cash flow from:A lender divides a firm's current assets by its current liabilities. That measure is the:The same ratio worked out after leaving inventory out is called the:Net profit divided by net sales gives the net profit margin, also called:The art and science of managing a firm's money so that it can meet its goals is:Making sure the firm has cash on hand to pay bills as they come due is:Short-term investments that can be turned into cash easily are called:A firm sells its accounts receivable outright at a discount to raise money quickly. This is:A bank tells a firm the most it may borrow unsecured over the coming year. That agreement is a:A guaranteed version of that arrangement, where the bank commits the funds will be available, is a:A financially strong corporation issues an unsecured short-term IOU. That instrument is:Credit a seller gives a buyer between delivery and payment is called:A business loan with a maturity longer than one year is a:A long-term loan made against real estate as collateral is a:Analysing long-term projects and picking those with the best returns is:Investments in land, buildings and machinery expected to serve beyond a year are:The chance that a firm cannot make scheduled interest and principal payments on its debt is:The principle that a higher risk should bring the chance of a greater return is the:A security representing an ownership interest in a corporation is:An equity security whose dividend is fixed when it is issued is:Payments made to stockholders out of a corporation's profits are:The amount borrowed by the issuer of a bond, also called par value, is the:Bonds issued by states, cities and counties are called:New securities are sold to the public for the first time in the:Already-issued securities are bought and sold between investors in the:A firm that pools investors' money to buy a selection of securities is a:The idea that money available now is worth more than the same amount later is the:A friend puts 1,000 in an account paying 4% a year. After one year the balance is:Leaving that same money for a second year at 4% gives a balance of:The extra 1.60 earned in that second year is interest on:Interest earned in later periods on interest already earned is called:A person deposits 300 in an account paying 5% a year. After one year they have:A company earning 2.50 per share sees a 10% rise the next year. New earnings per share are:A shop raising a 50 rupee item by 3% next year will price it at:The value a present sum grows to at a future date is called its:The value today of a sum to be received later is called its: