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.

831. Tendency of measuring correlation of two variables is classified as

by
tendency coefficient
variable coefficient
correlation coefficient
double coefficient
✅ The correct answer is C.
Tendency of measuring correlation of two variables is classified as correlation coefficient. The correlation coefficient is a statistical measure that calculates the strength of the relationship between the relative movements of two variables.

832. Partners who are only liable for their own part of investment are considered as

by
venture partners
corporate partners
limited partners
general partners
✅ The correct answer is C.
Partners who are only liable for their own part of investment are considered as corporate partners. Corporate Partnership is an exclusive academic-corporate partnership based on Corporate Partners contributing to the Alliance and its MIM programme and benefitting from privileged access to a global pool of top talent from the world’s leading business schools.

833. A markets which deals with long-term corporate stocks are classified as

by
liquid markets
short-term markets
capital markets
money markets
✅ The correct answer is C.
A markets which deals with long-term corporate stocks are classified as capital markets. Capital markets refer to the places where savings and investments are moved between suppliers of capital and those who are in need of capital.

836. Type of bond in which payments are made on basis of inflation index is classified as

by
borrowed bond
purchasing power bond
surplus bond
deficit bond
✅ The correct answer is B.
Type of bond in which payments are made on basis of inflation index is classified as purchasing power bond. Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you would be able to purchase.

837. A high portfolio return is subtracted from low portfolio return to calculate

by
HML portfolio
R portfolio
subtracted portfolio
ML portfolio
✅ The correct answer is A.
A high portfolio return is subtracted from low portfolio return to calculate HML portfolio. HML is one of three factors in the original Fama and French’s Three-Factor model, which is often used to evaluate a portfolio manager’s returns.

838. At last day when European and American option can be exercised is classified as

by
European date
American date
expiration date
money date
✅ The correct answer is C.
At last day when European and American option can be exercised is classified as expiration date. An expiration date in derivatives is the last day that a derivative, such as options or futures, is valid. On or before this day, investors will have already decided what to do with their expiring position.

839. In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as

by
greater annual annuity method
equivalent annual annuity
lesser annual annuity method
zero annual annuity method
✅ The correct answer is B.
In alternative investments, constant cash flow stream is equal to initial cash flow stream in approach which is classified as equivalent annual annuity. The equivalent annual annuity approach is one of two methods used in capital budgeting to compare mutually exclusive projects with unequal lives. The EAA approach calculates the constant annual cash flow generated by a project over its lifespan if it was an annuity.