Finance Mcqs

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

Using financial calculator in excel, Put, PV = 11,000, PMT, 1241.08, Rate = 5% and solve for Nper = 12 Years.

Which of the following is measured by retention ratio?

A. Operating efficiency
B. Asset use efficiency
C. Financial policy
D. Dividend policy

Retention ratio determines how much amount of net income is retained for re-investment and how much is paid as dividend..

In which type of business, all owners in gains and losses and all have unlimited liability for all business debts?

A. Sole-proprietorship
B. General Partnership
C. Limited Partnerhsip
D. Corporation

Business Finance addresses which of the following?

A. Capital budgeting
B. Capital structure
C. Working capital management
D. All of the given options

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

NWC = CA – CL
If Current ratio = 1:1, its means assets are equal to liabilities.
So, net working capital is zero..

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

All of the given areas are addressed by Business Finance.

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

The longer the time to maturity, all else being equal, increases duration. Higher duration = higher sensitivity to interest rate changes.
Interest rates higher = price lower.

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

Annuity due is paid at the end of the year that’s why its called annuity due.

You need Rs. 10,000 to buy a new television. If you have Rs. 6,000 to invest at 5 percent compounded annually, how long will you have to wait to buy the television?

A. 8.42 years
B. 10.51 years
C. 15.75 years
D. 18.78 years

Using financial calculator, Put PV =6000, Rate = 5%, FV, 10,000 and solve for Nper. 10.47 Close to the 10.51.

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

Future value is discounted back at the given interest rate to find out the current worth of the amount to be received in future..