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.

641. Type of bonds that pays no coupon payment but provides little appreciation are classified as

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depreciated bond
interest bond
zero coupon bond
appreciation bond
✅ The correct answer is C.
Type of bonds that pays no coupon payment but provides little appreciation are classified as zero coupon bond. A zero-coupon bond is a bond where the face value is repaid at the time of maturity. Note that this definition assumes a positive time value of money. It does not make periodic interest payments, or have so-called coupons, hence the term zero-coupon bond.

644. An expected dividend yield is subtracted from an expected rate of return which is used to calculate

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specialized growth rate
capital gains yield
casual growth yield
past growth rate
✅ The correct answer is B.
An expected dividend yield is subtracted from an expected rate of return which is used to calculate capital gains yield. Capital gains yield is the percentage price appreciation on an investment.

645. In balance sheet, sum of retained earnings and common stock are considered as

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preferred equity
due equity
common perpetuity
common equity
✅ The correct answer is D.
In balance sheet, sum of retained earnings and common stock are considered as common equity. Common equity is the amount that all common shareholders have invested in a company. Most importantly, this includes the value of the common shares themselves.

646. Claim against assets are represented by

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saved earning
retained earnings
maintained earnings
saving account earning
✅ The correct answer is B.
Claim against assets are represented by retained earnings. Retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to investors. This amount is adjusted whenever there is an entry to the accounting records that impacts a revenue or expense account.

647. In portfolio, beta of individual security in portfolio represented as their weighted average is classified as

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average of portfolio
beta of portfolio
weighted portfolio
collective stocks
✅ The correct answer is B.
In portfolio, beta of individual security in portfolio represented as their weighted average is classified as beta of portfolio. The beta of a portfolio is the weighted sum of the individual asset betas, According to the proportions of the investments in the portfolio.

648. In binomial approach of option pricing model, last step for finding an option is

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price hike
price value
put price
call price
✅ The correct answer is D.
In binomial approach of option pricing model, last step for finding an option is call price. The call price is the price a bond issuer or preferred stock issuer must pay investors if it wants to buy back, or call, all or part of an issue before the maturity date.

649. An information uses by investors for expecting future earnings is all recorded in

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five years report
annual report
stock report
exchange report
✅ The correct answer is B.
An information uses by investors for expecting future earnings is all recorded in annual report. An annual report is a comprehensive report on a company’s activities throughout the preceding year.