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.

251. Second factor in Fama French three factor model is the

by
size of industry
size of market
size of company
size of portfolio
✅ The correct answer is C.
Second factor in Fama French three factor model is the size of company. The Fama and French model has three factors: size of firms, book-to-market values and excess return on the market. In other words, the three factors used are SMB (small minus big), HML (high minus low) and the portfolio’s return less the risk free rate of return.

252. In time value of money, nominal rate is

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not shown on timeline
shown on timeline
multiplied on timeline
divided on timeline
✅ The correct answer is A.
In time value of money, nominal rate is not shown on timeline. The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity.

253. Company specific risk is also known as ________.

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Market risk
Systematic risk
Non-diversifiable risk
Idiosyncratic risk
✅ The correct answer is D.
Idiosyncratic risk, also known as unsystematic risk or residual risk or diversifiable risk, is risk that is not correlated to overall market risk – it is the risk of price change caused by the unique circumstances of a particular security, or the risk that is sector-specific or company-specific.

255. A right which controls and prevents transfer from current stockholders to other new stockholders is considered as

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corporate charter
selling charter
laws
purchase chart
✅ The correct answer is A.
A right which controls and prevents transfer from current stockholders to other new stockholders is considered as corporate charter. A corporate charter, also known as a “charter” or “articles of incorporation,” is a written document filed with the Secretary of State (or registrar in Canada) by the founders of a corporation.

259. Depreciation is include in costs in case of __________.

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Pay back method
Accounting rate
Discounted cash flow
Present value method
✅ The correct answer is B.
Depreciation is include in costs in case of Accounting rate. Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account for declines in value. Businesses depreciate long-term assets for both tax and accounting purposes.

260. Pre-emptive right of common stockholders are necessarily included in company

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laws
purchase chart
corporate charter
selling charter
✅ The correct answer is C.
Pre-emptive right of common stockholders are necessarily included in company corporate charter. A corporate charter sets forth a corporation’s basic information, its location, profit/ nonprofit status, board composition, and ownership structure.