Financial Management BBA 205 MCQs


1. Investment can be defined.
A) Person’s dedication to purchasing a house or flat
B) Use of capital on assets to receive returns
C) Usage of money on a production process of products and services
D) Net additions made to the nation’s capital stocks
Answer: B
2. 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
3. What is the primary goal of financial management?
A) To minimize the risk
B) To maximize the return
C) To maximize the owner’s wealth
D) To raise profit
Answer: B
4. GST is a consumption of goods and service tax based on.
A) Development
B) Dividend
C) Destiny
D) Duration
E) Destination
Answer: E
5. The finance manager is accountable for.
A) Earning capital assets of the company
B) Effective management of a fund
C) Arrangement of financial resources
D) Proper utilization of funds
Answer: C
6. The market value of a share is responsible for.
A) The investment market
B) The government
C) Shareholders
D) The respective companies
Answer: A
7. The capital budget is associated with.
A) Long terms and short terms assets
B) Fixed assets
C) Long terms assets
D) Short term assets
Answer: C
8. 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
9. What does financial leverage measured?
A) No change with EBIT and EPS
B) The sensibility of EBIT with % change with respect to output
C) The sensibility of EPS with % change in the EBIT level
D) % variation in the level of production
Answer: C
10. From the below-mentioned items which are financial assets?
A) Machines
B) Bonds
C) Stocks
D) B and C
Answer: B
11-The following is(are) the type(s) of capital budgeting decision(s)
a.       Diversification
b.      Replacements
c.       Expansion
d.      All of the above
(Ans: d)

12-The following is(are) the external source(s) of cash
a.       Long terms loans
b.      Short term borrowings
c.       Issue of new shares
d.      All of the above
(Ans: d)

13-  The only feasible purpose of financial management is

a) Wealth Maximization
b) Sales Maximization
c) Profit Maximization
d) Assets maximization

ANSWER: a) Wealth Maximization
14- Financial management process deals with

a) Investments
b) Financing decisions
c) Both a and b
d) None of the above


ANSWER: b) Financing decisions
15- Finance Function comprises

a) Safe custody of funds only
b) Expenditure of funds only
c) Procurement of finance only
d) Procurement & effective use of funds

ANSWER: d) Procurement & effective use of funds


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