Finance is a field that deals with the study of investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk. Finance can also be defined as the science of money management. Market participants aim to price assets based on their risk level, fundamental value, and their expected rate of return. Finance can be broken into three sub-categories: public finance, corporate finance and personal finance. Finance describes the management, creation and study of money, banking, credit, investments, assets and liabilities that make up financial systems, as well as the study of those financial instruments. Some people prefer to divide finance into three distinct categories: public finance, corporate finance and personal finance. There is also the recently emerging area of social finance. Additionally, the study of behavioral finance aims to learn about the more “human” side of a science considered by most to be highly mathematical.Just follow the Mcqs online quiz being dispatched over here with respect to your preparation for entry admission test NTS PPSC OTS PTS and missllenous job exams simultaneously.
Here we have large collection of Finance Mcqs for all Students and jobs test preparation purpose. These Finance Mcqs will be updated on daily basis and added more multiple choice question about Finance frequently.You can prepare your Finance Subject for different classes like 9th class, 10th class ,11th class 12th class exams, Entry Test like MCAT NTS ,OTS ,PTS ,BTS, GTS, Jobs Test,Recruitment Test like PPSC CSS FPSC SPSC KPPSC and interviews here.
Finance Mcqs Online With Answers for NTS PPSC Entry Test Classes
If you have Rs. 850 and you plan to save it for 4 years with an interest rate of 10%, what will be the future value of your savings?
A. Rs. 1,000
B. Rs. 1,244
C. Rs. 1,331
D. Rs. 1,464
Right Answer: Rs. 1,244
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In which form of Business, owners have limited liability?
A. sole proprietorship
B. partnership
C. joint stock company
D. none of the above
Right Answer: joint stock company
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Quick Ratio is also known as?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. Solvency Ratio
Right Answer: Acid-test Ratio
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Which of the following is measured by profit margin?
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
Right Answer: Operating efficiency
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Balance Sheet is based upon which of the following formula?
A. Assets = Liabilities – Stockholder’s equity
B. Assets + Liabilities = Stockholder’s equity
C. Assets + Stockholder’s equity = Liabilities
D. Assets = Liabilities + Stockholder’s equity
Right Answer: Assets = Liabilities + Stockholder’s equity
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A firm reports total liabilities of Rs. 300,000 and owner’s equity of Rs. 500,000. What would be the total worth of the firm’s assets?
A. Rs. 300,000
B. Rs. 500,000
C. Rs. 800,000
D. Rs. 1100,000
Right Answer: Rs. 800,000
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Which of the following is a special case of annuity, where the stream of cash flows continues forever?
A. Ordinary Annuity
B. Special Annuity
C. Annuity Due
D. Perpetuity
Right Answer: Perpetuity
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The formula to calculate the present value of a single cash flow is given by?
A. CF1 / (1+r)n
B. C2 / (1+r)
C. C0 + C (1+r)n
D. None of these
Right Answer: CF1 / (1+r)n
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Which of the following statement is CORRECT regarding compound interest?
A. It is the most basic form of calculating interest.
B. It earns profit not only on principal but also on interest.
C. It is calculated by multiplying principal by rate multiplied by time.
D. It does not take into account the accumulated interest for calculation.
Right Answer: It is calculated by multiplying principal by rate multiplied by time.
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Which of the following is measured by retention ratio?
A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy
Right Answer: Dividend policy
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An individual authorized by another person, called the principle, to act on the latter’s on behalf is known as an/a?
A. Agent
B. Servant
C. Subordinate
D. Assistant
Right Answer: Agent
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Annual cash dividends divided by annual earnings; or alternatively, dividends per share divided by earning per share is termed as?
A. Earning per share ratio
B. Proposed dividend ratio
C. Dividend payout ratio
D. Expected dividend ratio
Right Answer: Dividend payout ratio
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Which of the following is not a quality of IRR ?
A. Most widely used
B. Ideal to rank the mutually exclusive investments
C. Easily communicated and understood
D. Can be estimated even without knowing the discount rate
Right Answer: Ideal to rank the mutually exclusive investments
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During the accounting period, sales revenue is Rs. 25,000 and accounts receivable increases by Rs. 8,000. What will be the amount of cash received from customers for the period?
A. Rs. 33,000
B. Rs. 25,000
C. Rs. 17,000
D. Rs. 8,000
Right Answer: Rs. 17,000
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__ refers to the most valuable alternative that is given up if a particular investment is undertaken?
A. Sunk cost
B. Opportunity cost
C. Financing cost
D. All of the given options
Right Answer: Opportunity cost
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The conflict of interest between stockholders and management is known as?
A. Agency problem
B. Interest conflict
C. Management conflict
D. Agency cost
Right Answer: Agency problem
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How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual payment and a 5% interest rate?
A. 6 years
B. 12 years
C. 24 years
D. 48 years
Right Answer: 12 years
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Between the two identical bonds having different maturity periods, the price of the ______ bond will change less than that of ______ bond?
A. long-term; short-term
B. short-term; long-term
C. lower-coupon; higher-coupon
D. None of the given options
Right Answer: short-term; long-term
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A company having a current ratio of 1 will have ________ net working capital?
A. Positive
B. Negative
C. zero
D. None of the given options
Right Answer: zero
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Which of the following ratios are particularly interesting to short term creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
Right Answer: Liquidity Ratios
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Which of the following ratios are intended to address the firm’s financial leverage?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Asset Management Ratios
D. Profitability Ratios
Right Answer: Long-term Solvency Ratios
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Which of the following refers to the cash flows that result from the firm‟s day-to-day activities of producing and selling?
A. Operating Cash Flows
B. Investing Cash Flows
C. Financing Cash Flows
D. All of the given options
Right Answer: Operating Cash Flows
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Which of the following costs are reported on the income statement as the cost of goods sold?
A. Product cost
B. Period cost
C. Both product cost and period cost
D. Neither product cost nor period cost
Right Answer: Both product cost and period cost
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The investment decision is the most important of the firm’s three major decisions, when it comes to?
A. Value creation
B. Value addition
C. Value proposition
D. Value deletion
Right Answer: Value creation
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Which of the following terms refers to the use of debt financing?
A. Operating Leverage
B. Financial Leverage
C. Manufacturing Leverage
D. None of the given options
Right Answer: Financial Leverage
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The most important item that can be extracted from financial statements is the actual ________ of the firm?
A. Net Working Capital
B. Cash Flow
C. Net Present Value
D. None of the given options
Right Answer: Cash Flow
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In which type of market, new securities are traded?
A. Primary market
B. Secondary market
C. Tertiary market
D. None of the given options
Right Answer: Primary market
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Business Finance addresses which of the following?
A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options
Right Answer: All of the given options
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An Asset is ?
A. Sources of funds
B. Use of funds
C. Inflow of funds
D. None of these
Right Answer: Use of funds
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If we were studying a sample of 100 students and their examination performance and if the standard deviation of the list of results was say 14, then we could calculated the standard error by?
A. Dividing the square root of the number of items in the sample by the mean
B. Dividing standard deviation by number of items in the sample
C. Dividing the standard deviation by the square root of the number of items in the sample
D. We cannot calculate standard error on account of inadequacy of information
Right Answer: We cannot calculate standard error on account of inadequacy of information
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When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at?
A. Premium
B. Discount
C. Par
D. Cannot be determined without more information
Right Answer: Premium
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Which of the following form of business organization is least regulated?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnership
D. Corporation
Right Answer: Sole-proprietorship
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If a firm uses cash to purchase inventory, its quick ratio will?
A. Increase
B. Decrease
C. Remain unaffected
D. Become zero
Right Answer: Decrease
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The market price of a firm’s stock represents the focal judgment of all market participants as to the value of the?
A. Particular market
B. Particular firm
C. Particular creditor
D. Particular debtor
Right Answer: Particular firm
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Mr. Y and Mr. Z are planning to share their capital to run a business. They are going to employ which of the following type of business?
A. Sole-proprietorship
B. Partnership
C. Corporation
D. None of the given options
Right Answer: Partnership
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___________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind?
A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility
Right Answer: Financial management
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Finance is vital for which of the following business activity (activities)?
A. Marketing Research
B. Product Pricing
C. Design of marketing and distribution channels
D. All of the given options
Right Answer: All of the given options
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Net income available to stockholders is $125 and total assets are $1,096 then return on common equity would be?
0.11%
11.40%
0.12 times
12% Right Answer: 11.40%
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You just won a prize, you can either receive Rs. 1000 today or Rs. 1,050 in one year. Which option do you prefer and why if you can earn 5 percent on your money?
A. Rs. 1,000 because it has the higher future value
B. Rs. 1,000 because you receive it sooner
C. Rs. 1,050 because it is more money
D. Either because both options are of equal value
Right Answer: Either because both options are of equal value
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A portion of profits, which a company retains itself for further expansion, is known as?
A. Dividends
B. Retained Earnings
C. Capital Gain
D. None of the given options
Right Answer: Retained Earnings
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In which of the following type of annuity, cash flows occur at the beginning of each period?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options
Right Answer: Ordinary annuity
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Which of the following statement is considered as the accountant’s snapshot of firm’s accounting value as of a particular date?
A. Income Statement
B. Balance Sheet
C. Cash Flow Statement
D. Retained Earning Statement
Right Answer: Balance Sheet
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Financial policy is evaluated by which of the following?
A. Profit Margin
B. Total Assets Turnover
C. Debt-equity ratio
D. None of the given options
Right Answer: Debt-equity ratio
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Which of the following measure reveals how much profit a company generates with the money shareholders have invested?
A. Profit Margin
B. Return on Assets
C. Return on Equity
D. Debt-Equity Ratio
Right Answer: Return on Equity
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Which one of the following terms refers to the risk arises for bond owners from fluctuating interest rates?
A. Fluctuations Risk
B. Interest Rate Risk
C. Real-Time Risk
D. Inflation Risk
Right Answer: Interest Rate Risk
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Base year of Pakistan for national accounting is:
A. 1979-1980
B. 1989-1990
C. 1999-2000
D. 2009-2010
Right Answer: 1999-2000
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Which of the following is a series of constant cash flows that occur at the end of each period for some fixed number of periods?
A. Ordinary annuity
B. Annuity due
C. Perpetuity
D. None of the given options
Right Answer: Ordinary annuity
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The effect of purchasing power or inflation on present value is important because?
A. It increases the real value of cash flows received in the future
B. It reduces the real value of cash flows received in the future
C. It has no effect on real value of cash flow received in the future
D. None of these
Right Answer: It reduces the real value of cash flows received in the future
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The process of determining the present value of a payment or a stream of payments that is to be received in the future is known as?
A. Discounting
B. Compounding
C. Factorization
D. None of the given options
Right Answer: Discounting
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The principal amount of a bond at issue is called?
A. Par value
B. Coupon value
C. Present value of an annuity
D. Present value of a lump sum
Right Answer: Par value
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Average Accounting Return is a measure of accounting profit relative to?
A. Book value
B. Intrinsic value
C. Cost
D. Market value
Right Answer: Book value
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Which of the following item provides the important function of shielding part of income from taxes?
A. Inventory
B. Supplies
C. Machinery
D. Depreciation
Right Answer: Depreciation
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Which of the given area is NOT addressed by Business Finance?
A. Financing
B. Investing
C. Managing day today expenses
D. None of the given options
Right Answer: None of the given options
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Which of the following equation is known as Cash Flow (CF) identity?
A. CF from Assets = CF to Creditors – CF to Stockholder
B. CF from Assets = CF to Stockholders – CF to Creditors
C. CF to Stockholders = CF to Creditors + CF from Assets
D. CF from Assets = CF to Creditors + CF to Stockholder
Right Answer: CF from Assets = CF to Creditors + CF to Stockholder
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Which of the following ratios are particularly interesting to short-term creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
Right Answer: Liquidity Ratios
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Which of the following refers to the difference between the sale price and cost of inventory?
A. Net loss
B. Net worth
C. Markup
D. Markdown
Right Answer: Markup
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A technique uses in comparative analysis of financial statement is?
graphical analysis
preference analysis
common size analysis
returning analysis Right Answer: common size analysis
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If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth of your amount after 4 years if interest is compounded annually?
A. Rs. 5,400
B. Rs. 5,900
C. Rs. 6,600
D. Rs. 6,802
Right Answer: Rs. 6,802
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The Yield to Maturity of a bond is the same as?
A. The present value of the bond
B. The bonds internal rate of return
C. The future value of the bond
D. None of these
Right Answer:The bonds internal rate of return
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A major facet of financial management involves providing the financing necessary to support?
A. Liabilities
B. Debts
C. Loans
D. Assets
Right Answer: Assets
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A series of constant cash flows that occur at the end of each period for some fixed number of periods is?
A. an ordinary annuity
B. annuity due
C. multiple cash flows
D. perpetuity
Right Answer: an ordinary annuity
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The difference between current assets and current liabilities is known as?
A. Surplus Asset
B. Short-term Ratio
C. Working Capital
D. Current Ratio
Right Answer: Working Capital
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Full Form of BCCI ?
A. Bank of Commerce and Cooperation International
B. Bank of Central Cooperation International
C. Bank of Credit and Commerce International
D. None of These
Right Answer: Bank of Credit and Commerce International
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When real rate is high, all the interest rates tend to be?
A) Higher
B) Lower
C) Constant
D) None of the given options
Right Answer: Higher
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Quick Ratio is also known as?
A. Current Ratio
B. Acid-test Ratio
C. Cash Ratio
D. None of the given options
Right Answer: Acid-test Ratio
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Which of the following statement about bond ratings is TRUE?
A. Bond ratings are typically paid for by a company’s bondholders.
B. Bond ratings are based solely on information acquired from sources other than the bond issuer.
C. Bond ratings represent an independent assessment of the credit-worthiness of bonds.
D. None of the given options.
Right Answer: Bond ratings represent an independent assessment of the credit-worthiness of bonds.
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Which of the following is the process of planning and managing a firm‟s long-term investments?
A. Capital Structuring
B. Capital Rationing
C. Capital Budgeting
D. Working Capital Management
Right Answer: Capital Budgeting
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Who of the following make a broader use of accounting information?
A. Accountants
B. Financial Analysts
C. Auditors
D. Marketers
Right Answer: Financial Analysts
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Having some overall goal in mind, financial management is concerned with?
A. Acquisition of assets
B. Financing of assets
C. Management of assets
D. All of them
Right Answer: All of them
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A company having a current ratio of 1 will have __________ net working capital?
A. Positive
B. Negative
C. zero
D. None of the given options
Right Answer: zero
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A model which makes an assumption about the future growth of dividends is known as?
A. Dividend Price Model
B. Dividend Growth Model
C. Dividend Policy Model
D. All of the given options
Right Answer: Dividend Growth Model
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In case of international business which of the given factor(s) must be considered?
A. Role of foreign exchange
B. Balance of payments
C. Attitude of Governments
D. All of the given options
Right Answer: All of the given options
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Which of the following is the overall return the firm must earn on its existing assets to maintain the value of the stock?
A. IRR (Internal Rate of Return)
B. MIRR (Modified Internal Rate of Return)
C. WACC (Weighted Average Cost of Capital)
D. AAR (Average Accounting Return)
Right Answer: WACC (Weighted Average Cost of Capital)
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Maximizing Shareholder wealth?
A. Relieves the firms responsibility towards society
B. Does not relieve the firm’s responsibility towards society
C. Partially relives the firm’s responsibility towards society
D. None of Them
Right Answer: Does not relieve the firm’s responsibility towards society
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A standardized financial statement presenting all items of the statement as a percentage of total is?
A. a common-size statement
B. an income statemen
C. a cash flow statement
D. a balance sheet
Right Answer: a common-size statement
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Product costs include which of the following?
A. Selling expenses
B. General expenses
C. Manufacturing overhead
D. Administrative expenses
Right Answer: Manufacturing overhead
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The DuPont Identity tells us that Return on Equity is affected by?
A. The DuPont Identity tells us that Return on Equity is affected by:
B. asset use efficiency (as measured by total assets turnover)
C. financial Leverage (as measured by equity multiplier)
D. all of the given options (a, b and c)
Right Answer: all of the given options (a, b and c)
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In which type of business, all owners share in gains and losses and all have unlimited liability for all business debts?
A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation
Right Answer: General Partnership
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Period costs include which of the following?
A. Selling expense
B. Raw material
C. Direct labor
D. Manufacturing overhead
Right Answer: Selling expense
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If a company revaluates its fixed assets, the current ratio of the company will?
A. Improve if assets are revalued upward
B. Remain unaffected
C. Improve if assets are revalued downwards
D. Undergo change only if liabilities are remaining constant
Right Answer: Remain unaffected
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Which of the following is known as the group of assets such as stocks and bonds held by an investor ?
A. Stock Bundle
B. Portfolio
C. Capital Structure
D.. None of the given options
Right Answer: Portfolio
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Stakeholders include?
A. Stakeholders
B. Creditors and customs
C. Employees and suppliers
D. All of Them
Right Answer: All of Them
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Standard Corporation sold fully depreciated equipment for Rs.5,000. This transaction will be reported on the cash flow statement as a(n)?
A. Operating activity
B. Investing activity
C. Financing activity
D. None of the given options
Right Answer: Investing activity
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Which of the following ratios are particularly interesting to shortterm creditors?
A. Liquidity Ratios
B. Long-term Solvency Ratios
C. Profitability Ratios
D. Market Value Ratios
Right Answer: Liquidity Ratios
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0
0
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The Board of Directors sets company-wide policy and advices the CEO and other senior executies, who manage the company’s?
A. Managerial activities
B. Year-to-Year activities
C. Day-to-Day activities
D. Financial activities
Right Answer: Day-to-Day activities
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Which of the following relationships holds TRUE if a bond sells at a discount?
A. Bond Price < Par Value and YTM > coupon rate
B. Bond Price > Par Value and YTM > coupon rate
C. Bond Price > Par Value and YTM < coupon rate D. Bond Price < Par Value and YTM < coupon rate
Right Answer: Bond Price < Par Value and YTM > coupon rate
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Profitability index (PI) rule is to take an investment, if the index exceeds?
A. -1
B. 0
C. 1
D. 2
Right Answer: 1
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Rule of 72 as a short cut method is explained by the formula?
A. 72 divided by the annual interest rate
B. Annual interest rate dividend by 72
C. 72 divided by (annual interest rate multiplied by discount factor)
D. None of these
Right Answer: 72 divided by the annual interest rate
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Which of the following ratios is NOT from the set of Asset Management Ratios?
A. Inventory Turnover Ratio
B. Receivable Turnover
C. Capital Intensity Ratio
D. Return on Assets
Right Answer: Capital Intensity Ratio
Total 1 Votes:
0
1
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All the constituencies with a stake in the fortunes of the company are termed as?
A. Stakeholders
B. Directors
C. Chief executives
D. Subordinates
Right Answer: Stakeholders
Total 1 Votes:
0
1
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Profit maximization is the maximizing a firm’s Earning?
A. Before Tax
B. After Tax
C. Both A and B
D. None of Them
Right Answer: After Tax
Total 0 Votes:
0
0
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Which of the following is the cheapest source of financing available to a firm?
A. Bank loan
B. Commercial papers
C. Trade credit
D. None of the given options.
Right Answer: Trade credit
Total 0 Votes:
0
0
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Cash flow from assets involves which of the following component(s)?
A. Operating cash flow
B. Capital spending
C. Change in net working capital
D. All of the given options
Right Answer: All of the given options
Total 0 Votes:
0
0
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The system by which companies are managed and controlled is known as?
A. Management System
B. Strategic System
C. Corporate Governance
D. Internal System
Right Answer: Corporate Governance
Total 0 Votes:
0
0
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A firm has paid out Rs. 150,000 as dividends from its net income of Rs. 250,000. What is the retention ratio for the firm?
A. 12%
B. 25%
C. 40%
D. 60%
Right Answer: 40%
Total 0 Votes:
0
0
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Corporate governance encompasses the relationship among a company’s?
A. Shareholders and board of director
B. Board of directors and senior management
C. Shareholders and senior management
D. Shareholders, board of directors and senior management
Right Answer: Shareholders, board of directors and senior management
Total 0 Votes:
0
0
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__refers to the extent to which fixed-income securities (debt and preferred stock) are used in a firm’s capital structure?
A. Financial risk
B. Portfolio risk
C. Operating risk
D. Market risk
Right Answer: Financial risk
Total 0 Votes:
0
0
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Which of the following strategy belongs to restrictive policy regarding size of investments in current assets?
A. To maintain a high ratio of current assets to sales
B. To maintain a low ratio of current assets to sales
C. To less short-term debt and more long-term debt
D. To more short-term debt and less long-term debt
Right Answer: To maintain a low ratio of current assets to sales
Total 0 Votes:
0
0
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Agency theory suggests that managers(the agents), particularly those of large , publically-owned firms, may have different objectives from those of the?
A. Workers
B. Subordinates
C. Shareholders
D. Employees
Right Answer: Shareholders
Total 0 Votes:
0
0
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Which of the following set of ratios relates the market price of the firm’s common stock to selected financial statement items?
A. Liquidity Ratios
B. Leverage Ratios
C. Profitability Ratios
D. Market Value Ratios
Right Answer: Market Value Ratios
Total 0 Votes:
0
0
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