Financial Management and Corporate Finance MCQ
Important points to remember about Financial Management MCQ
- Financial management involves planning, organizing, directing, and controlling financial activities to achieve the financial goals of an organization.
- Finance managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies for long-term financial goals.
- Financial assets include cash, stocks, bonds, and mutual funds. All options listed are types of financial assets.
- Financial management primarily involves making financial decisions, such as investment decisions, financing decisions, and dividend decisions.
- The primary goal of financial management is to maximize the wealth of the owners or shareholders of the company.
- Determining the capital structure, which includes deciding on the proportion of equity and debt financing, is one of the objectives of financial planning.
Financial Management and Corporate Finance MCQ with Answers
Here below we provide 20+ Financial Management and Corporate Finance MCQ along with answers and explanations.
1. What is financial management?
A. Financial Management is a study of planning, designing, directing and managing the economic activities such as the utilization of capital and acquisition of the firm.
B. Financial management is strategic planning, organising, directing, and controlling of financial undertakings in an organisation or an institute.
C. Both A and B
D. Only B
Answer: C. Both A and B
Explanation: Financial management involves planning, organizing, directing, and controlling financial activities to achieve the financial goals of an organization. Both options A and B describe different aspects of financial management.
2. Which are financial assets?
A. Cash,
B. stocks,
C. bonds and mutual funds
D. All of these
Answer: D. All of these
Explanation: Financial assets include cash, stocks, bonds, and mutual funds. All options listed are types of financial assets.
3. What is the task of finance manager?
A. Financial managers are responsible for the financial health of an organization.
B. They produce financial reports, direct investment activities.
C. Develop strategies and plans for the long-term financial goals of their organization
D. All of these
Answer: D. All of these
Explanation: Finance managers are responsible for the financial health of an organization. They produce financial reports, direct investment activities, and develop strategies for long-term financial goals.
4. The core work link of financial management is_______
A. financial forecast
B. financial decision
C. financial budget
D. Financial Control
Answer: B. financial decision
Explanation: Financial management primarily involves making financial decisions, such as investment decisions, financing decisions, and dividend decisions.
5. The concept of Financial management is________
A. Profit maximization
B. All features of obtaining and using financial resources for company operations
C. Organization of funds
D. Effective Management of every company
Answer: B. All features of obtaining and using financial resources for company operations
Explanation: Financial management encompasses all aspects of obtaining and utilizing financial resources effectively for company operations, including financial planning, investment, and financing decisions.
6. The disadvantage of maximizing the rate of return on capital as a financial objective is________
A. Does not reflect the level of profitability of capital
B. Risk factors and time value are not considered
C. Nor can the short-term behavior of enterprises be avoided
D. Both B and C
Answer: D. Both B and C
Explanation: Maximizing the rate of return on capital may not consider risk factors or the long-term behavior of enterprises, which are essential considerations in financial management.
7. Taking shareholder wealth maximization as the general goal of financial management has the advantages of__________
A. Taking into account the time factor of earnings
B. Can overcome short-term behavior
C. Consider the risk-return relationship
D. All of these
Answer: D. All of these
Explanation: Maximizing shareholder wealth considers the time factor of earnings, avoids short-term behavior, and considers the risk-return relationship.
8. What is the primary goal of financial management?
A. To minimise the risk
B. To maximise the owner’s wealth
C. To maximise the return
D. To raise profit
Answer: B. To maximise the owner’s wealth
Explanation: The primary goal of financial management is to maximize the wealth of the owners or shareholders of the company.
9. Which are main functions of financial management?
A. Decisions And Control.
B. Financial Planning.
C.Resource Allocation.
D. All of these
Answer: D. All of these
Explanation: The main functions of financial management include decisions and control, financial planning, and resource allocation.
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10. CAPM stands for_________
A. Capital asset pricing model.
B. Capital amount printing model.
C. Capital amount pricing model.
D. Capital asset printing model.
Answer: A. Capital asset pricing model.
Explanation: CAPM stands for Capital Asset Pricing Model, a method used to determine expected returns on assets.
11. Objectives of financial planning are________
A. determining capital structure
B. framing loan policies
C. determining cash requirement
D. determining finance ratio
Answer: A. determining capital structure
Explanation: Determining the capital structure, which includes deciding on the proportion of equity and debt financing, is one of the objectives of financial planning.
12. Profit maximization cannot be a corporate financial goal for a reason_______
A. Does not consider the time when the profit is obtained
B. Does not consider the relationship between profit and invested capital
C. Does not consider the size of profit and risk
D. All of these
Answer: D. All of these
Explanation: Profit maximization does not consider various factors such as the timing of profits, the relationship between profit and invested capital, or the size of profit in relation to risk.
13. Financial manager would not supervise on the following area________
A. cost analyst
B. working capital advisor
C. financial accounting and auditing
D. cash flow advisor
Answer: C. financial accounting and auditing
Explanation: Financial accounting and auditing are typically separate functions from financial management, although financial managers may rely on these functions for reporting and compliance.
14. Financial management attaches great importance to the level of stock prices, because of its________
A. Represents the public's evaluation of the company's value
B. Reflects the relationship between capital and profitability
C. Reflect the size of earnings per share and risk
D. Reflects the degree to which financial management objectives have been achieved
E. All of these
Answer: E. All of these
Explanation: Stock prices reflect public evaluation of the company's value, the relationship between capital and profitability, earnings per share, risk, and the achievement of financial management objectives.
15. Financial management is mainly concerned with________
A. All aspects of acquiring and utilizing financial resources for firms activities
B. Arrangement of funds
C. Efficient Management of every business
D. Profit maximisation
Answer: A. All aspects of acquiring and utilizing financial resources for firms activities
Explanation: Financial management encompasses all aspects of acquiring and utilizing financial resources effectively for firm activities, including financial planning, investment, and financing decisions.
16. Financial management deals with_________
A. Investments
B. Financing decisions
C. Profit Maximization
D. Arrangement of Loss
Answer: B. Financing decisions
Explanation: Financial management involves making decisions related to financing, such as raising capital through equity or debt.
17. Financial Planning helps in_________
A. Managing Business
B. Managing Human Resources
C. Forecasting Business Situations
D. All of the above
Answer: C. Forecasting Business Situations
Explanation: Financial planning involves forecasting future business situations to make informed financial decisions.
18. The long-run objective of financial management is to________.
A. maximize earnings per share
B. maximize the value of the firm's common stock
C. maximize return on investment
D. maximize market share
Answer: B. maximize the value of the firm's common stock
Explanation: The long-run objective of financial management is to maximize the value of the firm's common stock, which benefits shareholders.
19. Financial management process deals with_________
A. Investments
B. Financing decisions
C. Both a and b
D. None of the above
Answer: B. Financing decisions
Explanation: The financial management process primarily deals with financing decisions, such as raising capital through various sources.
20. Financial management mainly focuses on_________
A. Efficient management of every business
B. Brand dimension
C. Arrangement of funds
D. All elements of acquiring and using means of financial resources for financial activities
Answer: D. All elements of acquiring and using means of financial resources for financial activities
Explanation: Financial management focuses on all aspects of acquiring and using financial resources effectively for financial activities in an organization.
21. What is a financial statement?
A) A document used for personal budgeting
B) A report that presents the financial performance and position of a company
C) A legal document filed with the government
D) A document outlining corporate social responsibility initiatives
Answer: B) A report that presents the financial performance and position of a company
Explanation: Financial statements are formal records of the financial activities and position of a business, which include the balance sheet, income statement, cash flow statement, and statement of changes in equity.
22. What does management refer to in the context of business?
A) Supervising employees
B) Strategic decision-making and resource allocation
C) Managing financial resources only
D) Implementing marketing strategies
Answer: B) Strategic decision-making and resource allocation
Explanation: Management involves planning, organizing, coordinating, and controlling resources to achieve organizational goals effectively and efficiently.
23. What is financial management primarily about?
A) Controlling expenses
B) Maximizing profits
C) Efficient allocation of financial resources
D) Conducting market research
Answer: C) Efficient allocation of financial resources
Explanation: Financial management focuses on managing the financial resources of an organization to achieve its objectives effectively and efficiently.
24. What does the financial function involve within an organization?
A) Human resources management
B) Marketing strategies
C) Managing financial resources and risks
D) Product development
Answer: C) Managing financial resources and risks
Explanation: The financial function involves managing financial resources, such as capital budgeting, financing decisions, and risk management.
25. What is the main goal of financial management?
A) Maximizing shareholder wealth
B) Minimizing employee turnover
C) Achieving customer satisfaction
D) Increasing market share
Answer: A) Maximizing shareholder wealth
Explanation: The primary goal of financial management is to maximize shareholder wealth by making decisions that increase the value of the firm's stock.
26. What are the main functions of financial management?
A) Production and operations management
B) Human resource management
C) Financial planning, financing, and decision-making
D) Sales and marketing
Answer: C) Financial planning, financing, and decision-making
Explanation: The main functions of financial management include financial planning, which involves budgeting and forecasting, financing decisions, and investment decisions to maximize shareholder wealth.