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.

321. The dividend-payout ratio is equal to __________.

by
the dividend yield plus the capital gains yield
dividends per share divided by earnings per share
dividends per share divided by par value per share
dividends per share divided by current price per share.
✅ The correct answer is B.
The dividend-payout ratio is equal to dividends per share divided by earnings per share.

322. Capital gains yield is multiplied for beginning price to calculate

by
capital gain
growth gain
regular yield
variable yield
✅ The correct answer is A.
Capital gains yield is multiplied for beginning price to calculate capital gain. Capital gain is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.

323. In financial markets, period of maturity within one to five years of financial instruments is classified as

by
short-term
long-term
intermediate term
capital term
✅ The correct answer is C.
In financial markets, period of maturity within one to five years of financial instruments is classified as intermediate term. A term is an intermediate (or innominate) term if the remedy for its breach depends on the effect of the breach at the time it happens.

324. Net income available to stockholders is Rs 150 and total assets are Rs 2,100 then return on total assets would be

by
0.07%
7.14%
0.05 times
7.15 times
✅ The correct answer is B.
Net income available to stockholders = 150

Total assets = 2100

Return on common equity rate shows the net income earned per every rupee invested.It acts as a yardstick of profitability.

Return on common equity

= (net income – preferential stock)/Average common stock holder’s equity

No further information is available

= (150/2100)×100

= 7.14%

325. In cash flow estimation, depreciation is considered as

by
cash charge
noncash charge
cash flow discounts
net salvage discount
✅ The correct answer is B.
In cash flow estimation, depreciation is considered as noncash charge. A company will take a non-cash charge against non-cash items on the balance sheet, such as depreciation, amortization, and depletion. These charges are typically made when something unusual happens, often outside the control of the company.

326. Which of the following statement are true in respect of working capital?

by
Gross Working Capital is the sum of the total current assets
Net working capital represents current assets – current liablities
Net working capital can be negative
All the above
✅ The correct answer is D.
Gross Working Capital is the sum of the total current assets, Net working capital represents current assets – current liablities and Net working capital can be negative of the following statement are true in respect of working capital.

328. An excess of actual price of option over an exercise value of option is classified as

by
time value options
actual options
estimated options
optional pricing
✅ The correct answer is A.
An excess of actual price of option over an exercise value of option is classified as time value options. In options trading, time value refers to the portion of an option’s premium that is attributable to the amount of time remaining until the expiration of the option contract.

329. Type of stock which have characteristics of bonds and common stock is classified as

by
bonds equity
common shares
common stock
preferred stock
✅ The correct answer is D.
Type of stock which have characteristics of bonds and common stock is classified as preferred stock. Preferred stock refers to a class of ownership that has a higher claim on assets and earnings than common stock has.

330. An outstanding bonds are also classified as

by
standing bonds
outdated bonds
dated bonds
seasoned bonds
✅ The correct answer is D.
An outstanding bonds are also classified as seasoned bonds. A seasoned issue is an issue of additional securities from an established company whose securities already trade in the secondary market. A seasoned issue is also known as a “seasoned equity offering” or “follow-on offering.”