Finance Basics MCQs I Multiple Choice Questions I Business Finance PDF

5/15/2019 Finance Basics MCQs I Multiple Choice Questions I Business Finance
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Finance Basics MCQs

Contents [show]
MCQs 1-10
1. In finance, we refer to the market where new

securities are bought and sold for the first time?
(a) Money market
(b) Capital market 2
(c) Primary market
(d) Secondary market

www.accountancyknowledge.com/finance-basics-mcqs/ 1/11
2. Which one of the following can issue the

corporate bond?
(a) Individuals
(b) Government
(c) Public limited companies
(d) All of before
3. Which is the treasurer’s responsibility for

managing the firm’s cash and marketable
securities?
(a) Planning its capital structure
(b) Overseeing the corporate pension fund
(c) Selling stocks and bonds to raise capital
(d) All of the above
4. Which of the following is the activity which

finance people are involved?
(a) Investing decisions

2
(b) Marketing decisions
(c) Promotion decisions
(d) Non of Above
5. What should be the long term focal point of

financial management in a firm?
(a) The number and types of products or services provided by the firm
(b) The creation of value for shareholders
(c) The minimization of the amount of taxes paid by the firm
(d) The profits earned by the firm
6. Financing decision determines?
(a) Current asset
(b) Fix asset
(c) Equity
(d) Mix of finance
7. Profit maximization is a?
(a) Long term concept
(b) Short term concept 2

(c) Both a & b
(d) None
8. What are the three interrelated areas of

finance?
(a) Financial markets, option and forwards
(b) Banking, financial institutions and swap currency
(c) Investment, Financial management and Financial market &

Financial institution
(d) All of above
9. Which of the following is not normally a

responsibility of the controller of the modern
corporation?
(a) Budgets and forecasts
(b) Asset management
(c) Financial reporting
(d) Cost accounting
10. Financial decisions are concerned with which

of the following?
(a) Making investment decisions that optimize economic value

2
(b) Making asset management decisions that optimize economic wealth
(c) Raising capital that is needed for growth
>> Read Finance Basics chapter.
MCQs 11-20
11. The goal of fundamental analysts is to find

securities?
(a) Whose intrinsic value exceeds market price
(b) With a positive present value of growth opportunities
(c) With high market capitalization rates
12. The combination of two or more firm, the

resulting firm maintains the identity of one of the
firm usually the larger?
(a) Joint venture
(b) Partnership
2
(c) Merger
(d) Consolidation
13. If an investor were to sell 100 shares of

Microsoft stock to another investor in the
securities market, this would be referred to as
what type of transaction?
(a) It is primary market transaction
(b) A secondary market transaction
(c) A money market transaction
(d) A futures market transaction
14. A Financial institution that underwrites new

securities for resale?
(a) Financial intermediaries
(b) Mortgage Banker
(c) Investment Banker
(d) None
15. Which of the following statements always

apply to corporations?
(a) Limited life
(b) Limited liability 2
(c) Single taxation
(d) None
16. The purpose of financial markets is to?
(a) Increase the price of common stocks
(b) Lower the yield on bonds
(c) Allocate savings efficiently
(d) Control inflation
17. Which of the following is a depository

financial institution?
(a) A savings bank
(b) An investment bank
(c) A finance company
(d) A pension fund
18. Among the pairs given below select a (n)

example of a principal and a (n) example of an
agent respectively?
(a) Shareholder; manager

2
(b) Manager; owner
(c) Accountant; bondholder
(d) Shareholder; bondholder
19. What is potentially the biggest advantage of a

small partnership over a sole proprietorship?
(a) Unlimited liability
(b) Single tax filing
(c) Difficult ownership resale
(d) Raising capital
20. Which of the following statements is most

correct?
(a) One of the way in which firm can mitigate or reduce agency
problems between bondholders and stockholders is by increasing the
amount of debt in the capital structure
(b) Managerial compensation can be structured to reduce agency

problems between stockholders & managers
(c) All of above statements are incorrect
(d) All of the statements above are correct
>> Practice Time Value of Money.
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2
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5/15/2019 Finance Basics MCQs I Multiple Choice Questions I Business Finance

Home Courses  MCQs  Problems  Formats Quizzes 

Assignment Papers  Result GAT

Finance Basics MCQs

1. In finance, we refer to the market where new

(a) Money market

(b) Capital market 2

(c) Primary market

(d) Secondary market

2. Which one of the following can issue the

(c) Public limited companies

(d) All of before

3. Which is the treasurer’s responsibility for

(a) Planning its capital structure

(b) Overseeing the corporate pension fund

(c) Selling stocks and bonds to raise capital

(d) All of the above

4. Which of the following is the activity which

(a) Investing decisions

(c) Promotion decisions

(d) Non of Above

5. What should be the long term focal point of

(b) The creation of value for shareholders

(c) The minimization of the amount of taxes paid by the firm

(d) The profits earned by the firm

6. Financing decision determines?

(a) Current asset

(b) Fix asset

(d) Mix of finance

(a) Long term concept

(b) Short term concept 2

8. What are the three interrelated areas of

(a) Financial markets, option and forwards

(b) Banking, financial institutions and swap currency

(c) Investment, Financial management and Financial market &

(d) All of above

9. Which of the following is not normally a

(a) Budgets and forecasts

(b) Asset management

(c) Financial reporting

(d) Cost accounting

10. Financial decisions are concerned with which

(a) Making investment decisions that optimize economic value

(c) Raising capital that is needed for growth

(d) All of the above

>> Read Finance Basics chapter.

11. The goal of fundamental analysts is to find

(a) Whose intrinsic value exceeds market price

(b) With a positive present value of growth opportunities

(c) With high market capitalization rates

(d) All of the above

12. The combination of two or more firm, the

(a) Joint venture

13. If an investor were to sell 100 shares of

(a) It is primary market transaction

(b) A secondary market transaction

(c) A money market transaction

(d) A futures market transaction

14. A Financial institution that underwrites new

(a) Financial intermediaries

(b) Mortgage Banker

(c) Investment Banker

15. Which of the following statements always