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.

821. Payment if it is divided with interest rate will be formula of

by
future value of perpetuity
present value of perpetuity
due perpetuity
deferred perpetuity
✅ The correct answer is B.
Payment if it is divided with interest rate will be formula of present value of perpetuity. A perpetuity is a type of annuity that receives an infinite amount of periodic payments. An annuity is a financial instrument that pays consistent periodic payments. As with any annuity, the perpetuity value formula sums the present value of future cash flows.

823. Input call parity relationship, present value of exercise price is added to call option which is equal to

by
put option stock
call option + stock
call option + market price
put option + market price
✅ The correct answer is A.
Input call parity relationship, present value of exercise price is added to call option which is equal to put option stock. A put or put option is a stock market device which gives the owner the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).

825. Beta coefficient is used to measure market risk which is an index of

by
coefficient risk volatility
market risk volatility
stock market volatility
portfolio market portfolio
✅ The correct answer is C.
Beta coefficient is used to measure market risk which is an index of stock market volatility. In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a “volatile” market.

826. A schedule which shows interest constitutes reduced principal and unpaid balance is considered as

by
repaid schedule
depreciated schedule
amortization schedule
appreciated schedule
✅ The correct answer is C.
A schedule which shows interest constitutes reduced principal and unpaid balance is considered as amortization schedule. An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.

827. Corporate associations who have common bonds being employees of same firm are classified as

by
credit unions
debit unions
preferred unions
solving unions
✅ The correct answer is A.
Corporate associations who have common bonds being employees of same firm are classified as credit unions. A credit union is a type of financial cooperative that provides traditional banking services.

828. A stock which is hybrid and works as a cross between debt and common stock is considered as

by
hybrid stock
common liabilities
debt liabilities
preferred stock
✅ The correct answer is D.
A stock which is hybrid and works as a cross between debt and common stock is considered as preferred stock. Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders.

829. Rate of return which is asked by investors is classified as

by
average cost of capital
mean cost of capital
weighted cost of capital
weighted average cost of capital
✅ The correct answer is D.
Rate of return which is asked by investors is classified as weighted average cost of capital. The weighted average cost of capital (WACC) is a calculation of a firm’s cost of capital in which each category of capital is proportionately weighted. All sources of capital, including common stock, preferred stock, bonds, and any other long-term debt, are included in a WACC calculation.