Financial Management
Some Questions and Answers for the Final Examination
Financial Management
Section A: Objective Type
PART ONE:
Multiple choices:
1. The approach focused mainly on the financial problems of corporate enterprise
a. Ignored Non-Corporate Enterprise
b. Ignored Working Capital Financing
c. External Approach
d. Ignored Routine Problems
Answer: a (Ignored Non-Corporate Enterprise)
2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the
stipulated period
a. Cumulative Preference Shares
b. Non-Cumulative Preference Shares
c. Redeemable Preference Shares
d. Perpetual Shares
Answer: b (Redeemable Preference Shares)
3. This type of risk arise from changes in environmental regulations, zoning requirements,
fees, licenses and most frequently taxes
a. Political Risk
b. Domestic Risk
c. International Risk
d. Industry Risk
Answer: b (Domestic Risk)
4. It is the cost of capital that is expected to raise funds to finance a capital budget or
investment proposal
a. Future cost
b. Specific cost
c. Spot cost
d. Book cost
Answer: a (Future Cost)
,5. This concept is helpful in formulating a sound & economical capital structure for a firm
a. Financial Performance Appraisal
b. Investment Evaluation
c. Designing Optimal Corporate Capital Structure
d. None
Answer: c (Designing Optimal Corporate Capital Structure)
6. It is the minimum required rate of return needed to justify the use of capital
a. From Investors
b. Firms Point
c. Capital Expenditure Point
d. Cost Of Capital
Answer: b (Firms Point)
7. It arises when there is a conflict of interest among owners, debenture holders and the
management
a. Seasonal Variation
b. Degree Of Competition
c. Industry Life Cycle
d. Agency Costs
Answer: d (Agency Costs)
8. Some guidelines on shares & debentures issued by the government that are very
important for the constitution of the capital structure are
a. Legal Requirement
b. Purpose Of Finance
c. Period Of Finance
d. Requirement Of Investors
Answer: a (Legal Requirement)
9. It is that portion of an investments total risk that results from change in the financial
integrity of the investment
a. Bull-bear market risk
b. Default risk
c. International risk
d. Liquidity risk
Answer: b (Default Risk)
, 10. –––––– measure the systematic risk of a security that cannot be avoided through
diversification
a. Beta
b. Gamma
c. Probability Distribution
d. Alpha
Answer: a (Beta)
PART TWO:
Some Questions and Answers for the Final Examination
Financial Management
Section A: Objective Type
PART ONE:
Multiple choices:
1. The approach focused mainly on the financial problems of corporate enterprise
a. Ignored Non-Corporate Enterprise
b. Ignored Working Capital Financing
c. External Approach
d. Ignored Routine Problems
Answer: a (Ignored Non-Corporate Enterprise)
2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the
stipulated period
a. Cumulative Preference Shares
b. Non-Cumulative Preference Shares
c. Redeemable Preference Shares
d. Perpetual Shares
Answer: b (Redeemable Preference Shares)
3. This type of risk arise from changes in environmental regulations, zoning requirements,
fees, licenses and most frequently taxes
a. Political Risk
b. Domestic Risk
c. International Risk
d. Industry Risk
Answer: b (Domestic Risk)
4. It is the cost of capital that is expected to raise funds to finance a capital budget or
investment proposal
a. Future cost
b. Specific cost
c. Spot cost
d. Book cost
Answer: a (Future Cost)
,5. This concept is helpful in formulating a sound & economical capital structure for a firm
a. Financial Performance Appraisal
b. Investment Evaluation
c. Designing Optimal Corporate Capital Structure
d. None
Answer: c (Designing Optimal Corporate Capital Structure)
6. It is the minimum required rate of return needed to justify the use of capital
a. From Investors
b. Firms Point
c. Capital Expenditure Point
d. Cost Of Capital
Answer: b (Firms Point)
7. It arises when there is a conflict of interest among owners, debenture holders and the
management
a. Seasonal Variation
b. Degree Of Competition
c. Industry Life Cycle
d. Agency Costs
Answer: d (Agency Costs)
8. Some guidelines on shares & debentures issued by the government that are very
important for the constitution of the capital structure are
a. Legal Requirement
b. Purpose Of Finance
c. Period Of Finance
d. Requirement Of Investors
Answer: a (Legal Requirement)
9. It is that portion of an investments total risk that results from change in the financial
integrity of the investment
a. Bull-bear market risk
b. Default risk
c. International risk
d. Liquidity risk
Answer: b (Default Risk)
, 10. –––––– measure the systematic risk of a security that cannot be avoided through
diversification
a. Beta
b. Gamma
c. Probability Distribution
d. Alpha
Answer: a (Beta)
PART TWO:
