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.

461. When price of bond is calculated below its par value, it is classified as

by
classified bond
discount bond
compound bond
consideration earning
✅ The correct answer is B.
When price of bond is calculated below its par value, it is classified as discount bond. A discount bond is a bond that is issued for less than its par or face value. Discount bonds may also be a bond currently trading for less than its face value in the secondary market. A bond is considered a deep-discount bond if it is sold at a significantly lower price than par value, usually at 20% or more.

464. If a market is inefficient, as new information is received about a security____________.

by
nothing will happen
the stock price will fall at first and then later rise
there will be a lag in the adjustment of the stock price
there will be negative demand for the stock
✅ The correct answer is C.
If a market is inefficient, as new information is received about a security there will be a lag in the adjustment of the stock price.

465. Value of option which is considered as its worth as soon as it is expired is classified as

by
minimum option value
minimum value
maximum value
exercise value
✅ The correct answer is D.
Value of option which is considered as its worth as soon as it is expired is classified as exercise value. The profit that an option holder would receive by exercising an in-the-money option. That is, the exercise value of an option is how much the strike price is below the underlying asset (for a call) or above the underlying asset (for a put).

466. Legal document in which rights of issuing corporation and bondholder’s state is classified as

by
legal rights classification
indenture
ownership statement
guarantee statement
✅ The correct answer is B.
Legal document in which rights of issuing corporation and bondholder’s state is classified as indenture. An indenture is a legal and binding contract between a bond issuer and the bondholders.

470. Expected returns weighted average on assets in portfolio is considered as

by
weighted portfolio
expected return on portfolio
coefficient of portfolio
expected assets
✅ The correct answer is B.
Expected returns weighted average on assets in portfolio is considered as expected return on portfolio. The expected return for an investment portfolio is the weighted average of the expected return of each of its components.