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.

542. An estimation by marginal investor, a higher expected return is earned on

by
more risky securities
less risky securities
less premium
high premium
✅ The correct answer is A.
An estimation by marginal investor, a higher expected return is earned on more risky securities. The marginal investor in a firm is the investor who is most likely to be trading at the margin and therefore has the most influence on the pricing of its equity.

544. The volume of sales is influenced by ____ of a firm.

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finance policy
credit policy
profit policy
fund policy
✅ The correct answer is B.
The volume of sales is influenced by credit policy of a firm. Credit policy is an important part of the overall strategy of a firm to market its products. It refers to those decision variables that influence the amount of trade credit i.e investment in receivables.

545. __________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

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Financial management
Profit maximization
Agency theory
Social responsibility
✅ The correct answer is A.
Financial management is concerned with the acquisition, financing, and management of assets with some overall goal in mind. Financial Management is the application of general principles of management to the financial possessions of an enterprise.

547. Second mortgages pledged against bond’s security are referred as

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loan mortgages
medium mortgages
senior mortgages
junior mortgages
✅ The correct answer is D.
Second mortgages pledged against bond’s security are referred as junior mortgages. A junior mortgage is a mortgage that is subordinate to a first or prior (senior) mortgage. A junior mortgage often refers to a second mortgage, but it could also be a third or fourth mortgage. In the case of foreclosure, the senior mortgage will be paid down first.

550. An analysis of decision making of investors and managers is classified as

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risky finance
behavioral finance
premium finance
buying finance
✅ The correct answer is B.
An analysis of decision making of investors and managers is classified as behavioral finance. Behavioral finance is the study of the influence of psychology on the behavior of investors or financial analysts. It also includes the subsequent effects on the markets.