Financial Management
Financial Management MCQs with Answers and Explanations | Corporate Finance & Investment Objective Questions
Master the core concepts of Financial Management with our comprehensive set of MCQs with answers and detailed explanations. Covering topics such as time value of money, capital budgeting, cost of capital, working capital management, capital structure, dividend policy, risk and return, portfolio management, and financial planning, these questions are ideal for students, teachers, and candidates preparing for professional and competitive exams (CA, ACCA, ICMA, CFA, MBA, BBA, CSS, PMS, NTS, FPSC, PPSC, UPSC, etc.). Each MCQ is followed by a clear explanation to build strong concepts, sharpen decision-making skills, and enhance exam readiness. Perfect for practice, revision, and self-assessment in the field of Financial Management and Corporate Finance.
super poison covenant
super poison put
super poison call
super poison redemption
✅ The correct answer is B.
Protective covenant devised in market to reduce event risk and to control debt cost is classified as super poison put. Protective covenant. A part of an indenture or loan agreement that limits certain actions a company may take during the term of the loan to protect the lender’s interests.
higher
lower
equal
medium
✅ The correct answer is B.
Effective cost of debentures is lower as compared to shares. Cost of debt refers to the effective rate a company pays on its current debt.
stock
loan
debt
debentures
✅ The correct answer is A.
Ownership securities consist of equity stock and preferred stock. The term ‘ownership securities,’ also known as ‘capital stock’ represents shares. Shares are the most universal form of raising long-term funds from the market. Every company, except a company limited by guarantee, has a statutory right to issue shares.
at bond issuance
expected in future
expected at time of maturity
expected at deferred call
✅ The correct answer is B.
An inflation rate includes in bond’s interest rates is one which is inflation rate expected in future. Inflation is measured in a variety of ways depending upon the types of goods and services considered and is the opposite of deflation which indicates a general decline occurring in prices for goods and services when the inflation rate falls below 0 percent.
internal rate of return
international rate of return
intrinsic rate of return
investment return rate
✅ The correct answer is A.
In uneven cash flow, ‘IRR’ is an abbreviation of an internal rate of return. The internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
economic analysis
industry analysis
company analysis
technical analysis
✅ The correct answer is D.
The last step in fundamental analysis is technical analysis. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.
U.S treasury bills
commercial paper
certificate of deposit
mutual funds
✅ The correct answer is B.
Low default-risk security issued by financially secure firms is classified as commercial paper. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities.
9.90%
10.00%
3.10%
19.12%
✅ The correct answer is A.
Expected rate of return = Constant growth rate + Expected dividend yield
= 6.5% + 3.4% = 9.90%
industry cannot control
industry cannot control
firm must control
firm cannot control
✅ The correct answer is D.
Interest rates, tax rates and market risk premium are factors which a firm cannot control.
equalize beginning price
equalize range of payoffs
equalize domain of payoff
equalize ending price
✅ The correct answer is B.
Third step in binomial approach of option pricing is to equalize range of payoffs.