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.

221. New York Stock Exchange and Nada stock market are classified as types of

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primary stock market
equity market
secondary stock market
public offering market
✅ The correct answer is C.
New York Stock Exchange and Nada stock market are classified as types of secondary stock market. The secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the “stock market,” though stocks are also sold on the primary market when they are first issued.

224. Variability of stock price, option term to maturity and risk free rate are dependents of

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price of an option
expiry of an option
exercise of an option
estimation of an option
✅ The correct answer is A.
Variability of stock price, option term to maturity and risk free rate are dependents of price of an option. Variability is the extent to which data points in a statistical distribution or data set diverge from the average value as well as the extent to which these data points differ from each other.

225. In capital budgeting, term of bond which has great sensitivity to interest rates is

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long-term bonds
short-term bonds
internal term bonds
external term bonds
✅ The correct answer is A.
In capital budgeting, term of bond which has great sensitivity to interest rates is long-term bonds. Bond with a maturity period of more than 15 years. Long bonds pay higher interest rates but have greater credit and inflation risk. Also called long bond

230. Which of the following statement is true if the Net Present Value (NPV) of a positive?

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The IRR must be greater than 0.
The discount rate exceeds the cost of capital.
The profitability index equals 1
Accepting the project has an indeterminate effect on shareholders
✅ The correct answer is A.
The IRR must be greater than 0 is true if the Net Present Value (NPV) of a positive.