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.

562. Which of the following methods does a firm resort to avoid dividend payments?

by
Share splitting
Declaring bonus shares
Rights issue
New issue
✅ The correct answer is B.
Declaring bonus shares methods does a firm resort to avoid dividend payments. Bonus shares are shares distributed by a company to its current shareholders as fully paid shares free of charge. to capitalise a part of the company’s retained earnings.

564. Bonds that can be converted into shares of common stock are classified as

by
convertible bonds
stock bonds
shared bonds
common bonds
✅ The correct answer is A.
Bonds that can be converted into shares of common stock are classified as convertible bonds. A convertible bond is a fixed-income debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares.

565. Cash flows occurring with more than one change in sign of cash flow are classified as

by
non-normal cash flow
normal cash flow
normal costs
non-normal costs
✅ The correct answer is A.
Cash flows occurring with more than one change in sign of cash flow are classified as non-normal cash flow. Non-normal cash flow stream (also called unconventional cash flow) is a pattern of cash flows in which the direction of cash flows changes more than once.

566. An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expects use for calculating

by
dividend growth model
actual growth model
constant growth model
variable growth model
✅ The correct answer is C.
An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expects use for calculating constant growth model. The Gordon Growth Model is used to determine the intrinsic value of a stock based on a future series of dividends that grow at a constant rate. It is a popular and straightforward variant of a dividend discount model (DDM).