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.

454. Tendency of people to blame failure on bad luck but given tribute of success to themselves is classified as

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self-attribution bias
self-success bias
self-failure bias
self-condition bias
✅ The correct answer is A.
Tendency of people to blame failure on bad luck but given tribute of success to themselves is classified as self-attribution bias. Self-attribution bias is a long-standing concept in psychology research and refers to individuals’ tendency to attribute successes to personal skills and failures to factors beyond their control.

455. Funds which are used as an interest-bearing checking accounts are classified as

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money market funds
capital market funds
money mutual funds
insurance money funds
✅ The correct answer is A.
Funds which are used as an interest-bearing checking accounts are classified as money market funds. A money market fund is a kind of mutual fund that invests only in highly liquid instruments such as cash, cash equivalent securities, and high credit rating debt-based securities with a short-term, maturity—less than 13 months.

456. In capital asset pricing model, characteristic line is classified as

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regression line
probability line
scattered points
weighted line
✅ The correct answer is A.
In capital asset pricing model, characteristic line is classified as regression line. The Regression Line is the line that best fits the data, such that the overall distance from the line to the points (variable values) plotted on a graph is the smallest.

458. Expected dividends in each year and price investor expecting to get at selling of stock are two components of

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dividend cash flow
expected cash flows
price cash flows
investing cash
✅ The correct answer is B.
Expected dividends in each year and price investor expecting to get at selling of stock are two components of expected cash flows. The cash flow an investor or company expects to realize from a project before that project begins.

459. An unsecured bond that provides no lien against property as security for bond obligation is classified as

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secured bond
debenture
obligation bond
specific bond
✅ The correct answer is B.
An unsecured bond that provides no lien against property as security for bond obligation is classified as debenture. A debenture is a type of debt instrument that is not secured by collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.

460. If coupon rate is more than current rate of interest then bond will be sold

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More than its par value
Seasoned par value
At par value
Below its par value
✅ The correct answer is A.
A bond’s interest rate is related to the current prevailing interest rates and the perceived risk of the issuer. When interest rates are less than the coupon rate, the bond can be sold at a premium (higher than the face value). When current interest rates are greater than a bond’s coupon rate, the bond will sell below its face value at a discount.