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.

392. Sellers of options in financial markets are classified as

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expiry writer
option writer
contract writer
bond writer
✅ The correct answer is B.
Sellers of options in financial markets are classified as option writer. A writer of a call option promises to sell the underlying investment to the call purchaser, who has bought the right to purchase it at a specific price.

394. Second step in determining efficient portfolios is to consider efficient subset from set of

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attainable portfolios
unattainable portfolios
attributable portfolios
non-attributable portfolio
✅ The correct answer is A.
Second step in determining efficient portfolios is to consider efficient subset from set of attainable portfolios. The feasible, or attainable, set represents all portfolios that can be constructed from a given set of stocks. This set is only efficient for part of its combinations. An efficient portfolio is that portfolio which provides the highest expected return for any degree of risk.

395. Transfer through institutions such as mutual funds or banks are classified as

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non-financial intermediary
financial intermediary
savers intermediary
discounted intermediary
✅ The correct answer is B.
Transfer through institutions such as mutual funds or banks are classified as financial intermediary. A financial intermediary is an entity that acts as the middleman between two parties in a financial transaction, such as a commercial bank, investment banks, mutual funds and pension funds.

397. Proceeds of company shares of sold stock is recorded in

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preferred stock account
common stock account
due stock account
preceded stock account
✅ The correct answer is B.
Proceeds of company shares of sold stock is recorded in common stock account. The common stock account is a general ledger account in which is recorded the par value of all common stock issued by a corporation.

399. According to investors point of view, an expected rate of return is rate on stocks which they

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receive in future
received in past
yearly growth
semi-annual growth
✅ The correct answer is A.
According to investors point of view, an expected rate of return is rate on stocks which they receive in future. The expected rate of return is the return on investment that an investor anticipates receiving.

400. In capital budgeting, cost of capital is used as discount rate and is based on pre-determines

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cost of inflation
cost of debt and equity
cost of opportunity
cost of transaction
✅ The correct answer is B.
In capital budgeting, cost of capital is used as discount rate and is based on pre-determines cost of debt and equity. Cost of debt refers to the effective rate a company pays on its current debt. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.