Corporate Finance Quizzes

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41. The contribution of an individual security to the risk of a well-diversified portfolio is measured by?
(A) beta
(B) variance
(C) standard deviation
(D) CAPM

42. The sensitivity of an asset to the market movements is called
(A) beta
(B) variance
(C) standard deviation
(D) CAPM

43. The average beta of all stocks in a market is
(A) –1
(B) 0
(C) 1
(D) 1.5

44. If the daily prices of a stock on 20 and 21 January are 90 and 100 respectively, then what is the daily rate of return?
(A) 9.9%
(B) 10.10%
(C) 11.11%
(D) 12.12%

45. According to the MM proposition, dividend policy is
(A) correlated
(B) underperformed
(C) relevant
(D) irrelevant

46. In portfolio analysis __________ curves play an important role.
(A) circle
(B) ellipse
(C) parabola
(D) hyperbola

47. If stock prices increases, dividend yield
(A) also increases
(B) decreases
(C) remains same
(D) increases to one and a half

48. According to residual dividend policy, a firm should pay a dividend of all left over when
(A) zero NPV projects have been funded
(B) positive NPV projects have been funded
(C) projects with IRR equal to risk-free interest rate have been funded
(D) projects with IRR greater than risk-free interest rate have been funded

49. The value of probability is always between __________ (inclusive).
(A) –1 and 0
(B) 0 and 1
(C) –1 and 1
(D) none of these

50. The value of correlation is always between __________ (inclusive).
(A) –1 and 0
(B) 0 and 1
(C) –1 and 1
(D) none of these

ANSWERS: CORPORATE FINANCE QUIZZES
41. A
42. A
43. C
44. C
45. D
46. D
47. B
48. B
49. B
50. C

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Finance Quizzes

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31. Net Present Value is calculated as
(A) cash inflow – cash outflow
(B) cash outflow – cash inflow
(C) PV of cash inflow – PV of cash outflow
(D) PV of cash outflow – PV of cash inflow

32. An investment should be accepted if its NPV is
(A) 0
(B) 1
(C) positive
(D) negative

33. The ratio between the amount of profit and investment is called the
(A) NPV
(B) opportunity cost
(C) risk premium
(D) rate of return

34. An investment should be accepted if
(A) Rate of Return > Opportunity Cost
(B) Rate of Return < Opportunity Cost
(C) Rate of Return = Opportunity Cost
(D) A, B and C are irrelevent

35. Governments and corporations issue bonds to
(A) borrow money
(B) lend money
(C) both A and B
(D) none of these

36. Regular interest payment to the bond holders is called
(A) principal
(B) coupon
(C) face value
(D) yield

37. At maturity the bond holders get back their principal. The principal is called
(A) coupon
(B) face value
(C) yield
(D) return

38. Any economic resource that can produce economic value to the holder is called
(A) asset
(B) return
(C) maturity
(D) yield

39. A collection of assets held by an investor is called
(A) corporate bond
(B) random returns
(C) risk premium
(D) portfolio

40. The risk of a well-diversified portfolio depends on the __________ of the securities included in the portfolio.
(A) specific risk
(B) market risk
(C) both A and B
(D) none of these

ANSWERS: FINANCE QUIZZES
31. C
32. C
33. D
34. A
35. A
36. B
37. B
38. A
39. D
40. B

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Corporate Finance Quiz

Corporate Finance multiple choice question (MCQs) Page-3. These quizzes are from corporate finance, personal finance, and public finance. Find answers to the questions at the bottom of the page.

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21. The mixture of debt and equity, used to finance a corporation is also known as
(A) capital structure
(B) capital budgeting
(C) investing
(D) treasury

22. The present value of $100 expected in two years from today at a discount rate of 5% is
(A) $105
(B) $110.7
(C) $95
(D) $90.7

23. What will be value of $100 after two years, if the interest rate during this period is 5%?
(A) $105
(B) $107.5
(C) $110.25
(D) $95

24. Investors require higher return on
(A) levered equity
(B) unlevered equity
(C) both levered and unlevered
(D) bond equity

25. In a well-functioning capital market if the firm pays no taxes then what is better about borrowing?
(A) Borrowing is not a good idea in this case
(B) No difference who (firm or shareholders) borrows
(C) It is better that the firm borrows
(D) It is better that the shareholders borrow

26. Corporations can return cash to their shareholders by
(A) paying cash dividends
(B) stock repurchase
(C) both A and B
(D) none of these

27. Which from the following is true about stock repurchases?
(A) Repurchases are more flexible
(B) Repurchases are tax-advantaged
(C) both A and B
(D) none of these

28. What should be the goal of a corporation?
(A) to maximize the profit of the shareholders
(B) to maximize the value of the corporation
(C) both A and B
(D) to take care of the interests of the management

29. The money a investor receive for taking on a risk is called
(A) risk premium
(B) risk free rate
(C) option value
(D) arbitrage

30. An asset that pays a fixed amount of cash each year for a specified number of years is called
(A) perpetuity
(B) dividend
(C) liquidity
(D) annuity

ANSWERS: CORPORATE FINANCE QUIZ
21. A
22. D
23. C
24. A
25. B
26. C
27. C
28. C
29. A
30. D

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Finance Quiz

Finance multiple choice question (MCQs) Page-2. These quizzes are from corporate finance, personal finance, and public finance. Find answers to the questions at the bottom of the page.

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11. Generally, a corporation is owned by the
I. Managers
II. Board of Directors
III. Stock holders
IV. stake holders
(A) II only
(B) I and II
(C) III only
(D) III and IV

12. A firm’s investment decision is also called the
(A) financing decision
(B) capital budgeting decision
(C) liquidity decision
(D) none of these

13. Conflicts between shareholders and managers’ interest is called
(A) management problem
(B) area of the board of directors
(C) risk
(D) agency problem

14. In the principle-agent framework
(A) managers are the principals
(B) directors are the principals
(C) shareholders are the principals
(D) shareholders are the agents

15. The risk that can be eliminated by diversification is called
(A) specific risk
(B) security risk
(C) market risk
(D) beta

16. The risk that cannot be eliminated by diversification is called
(A) specific risk
(B) security risk
(C) market risk
(D) beta

17. Which from the following is the safest investment?
(A) Treasury bills
(B) Government bond
(C) Corporate bond
(D) Stocks

18. The spread of possible outcomes of an investment returns is measured by
(A) variance
(B) standard deviation
(C) skewness
(D) kurtosis

19. Risk is best judged in
(A) portfolio context
(B) individual security context
(C) both of these
(D) none of these

20. In a well-functioning markets two investments that offer the same payoff must have the same
(A) beta
(B) return
(C) risk
(D) price

ANSWERS: FINANCE QUIZ
11. C
12. B
13. D
14. C
15. A
16. C
17. A
18. B
19. A
20. D

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Finance MCQs

Finance multiple choice question (MCQs) Page-1. These MCQs are from corporate finance, personal finance, and public finance. Find answers to the questions at the bottom of the page.

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1. Which from the following is NOT an example of intangible assets?
(A) Trademarks
(B) Patents
(C) Buildings
(D) Technical expertise

2. The following are the examples of financial assets except?
(A) Stocks
(B) Bank Loan
(C) Bond
(D) Raw material

3. The following are important functions of financial markets:
I. Source of financing
II. Provide liquidity
III. Reduce risk
IV. Source of information
(A) I and IV only
(B) II and III only
(C) I, II and III only
(D) I, II, III and IV

4. The sale of financial assets is also referred to as the
(A) Capital decision
(B) CFO decision
(C) Financing decision
(D) Investment decision

5. The construction of new manufacturing plant is also referred to as the
(A) Capital decision
(B) CFO decision
(C) Financing decision
(D) Investment decision

6. According to the Efficient Market Hypothesis, which from the following is NOT true?
(A) Analysis predicts price pattern
(B) No money machines
(C) No arbitrage opportunities
(D) Security prices reflect true underlying value of assets

7. According to the weak form of market efficiency __________ past information is included in the stock price.
(A) no
(B) all
(C) marginal
(D) only a few

8. We say about a particular investment that it is risky, because
(A) it is dangerous
(B) it has low returns
(C) its returns are uncertain
(D) its raw material is unavailable

9. In Finance, risk is calculated by calculating the
(A) mean
(B) variance
(C) standard deviation
(D) kurtosis

10. The sale of bonds by a country or a corporation is referred to as the
(A) Investment decision
(B) financing decision
(C) offering loan
(D) capital structure

ANSWERS: FINANCE MCQS
1. C
2. D
3. D
4. C
5. D
6. A
7. B
8. C
9. C
10. B

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English MCQs                           Finance MCQs                               Economics MCQs

Physics MCQs                           Education MCQs                             Biology MCQs

Computer MCQs                    Current Affairs MCQs                      General Knowledge MCQs

Pakistan Affairs MCQs     Chemistry MCQs             Islamic Study MCQs

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Public Procurement

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36. Where alternative technical proposals are possible, the bidding process used is
(A) single stage one envelope procedure
(B) single stage two envelope procedure
(C) two stage bidding procedure
(D) two stage two envelope bidding procedure

37. Where the bids are to be evaluated on technical and financial grounds and price is taken into account after technical evaluation, the bidding process used is
(A) single stage one envelope procedure
(B) single stage two envelope procedure
(C) two stage bidding procedure
(D) two stage two envelope bidding procedure

38. In large and complex contracts where technically unequal proposals are likely to be encountered, or there are two or more equally acceptable technical solutions available to the procuring agency, the bidding process used is
(A) single stage one envelope procedure
(B) single stage two envelope procedure
(C) two stage bidding procedure
(D) two stage two envelope bidding procedure

39. Any bidder feeling aggrieved by any act of the procuring agency may lodge a written complaint concerning his grievances not later than _______ days after the announcement of the bid evaluation report.
(A) 7
(B) 10
(C) 15
(D) 30

40. The committee shall investigate and decide upon the complaint within _______ days of the receipt of the complaint.
(A) 15
(B) 30
(C) 45
(D) 60

ANSWERS: PUBLIC PROCUREMENT
36(D) 37(B) 38(C) 39(C) 40(A)

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Public Procurement Rules MCQs

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31. The bids for procurement opportunities shall be submitted in a/an _______ package or packages.
(A) open
(B) sealed
(C) transparent
(D) none of these

32. Where the procuring agency require the bidders to furnish a bid security, the bid security should not exceed _______ of the bid price.
(A) 5.0%
(B) 7.5%
(C) 10.0%
(D) 12.5%

33. All bids shall be opened
(A) randomly
(B) privately
(C) secretly
(D) publicly

34. There are _____ procedures of open competitive bidding.
(A) 2
(B) 3
(C) 4
(D) 5

35. The main open competitive bidding procedure is
(A) single stage one envelope bidding
(B) single stage two envelope procedure
(C) two stage bidding procedure
(D) two stage two envelope bidding procedure

ANSWERS: PUBLIC PROCUREMENT RULES MCQS
31(B) 32(A) 33(D) 34(C) 35(A)

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Public Procurement Rules

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26. All procurement opportunities over _______ rupees should be advertised in the newspaper.
(A) 0.5 million
(B) 1.5 million
(C) 1.5 million
(D) 2.0 million

27. The procurement opportunities over two million rupees should be advertised in at least _______ newspaper(s).
(A) one
(B) two
(C) three
(D) four

28. The principal method for the procurement of goods, services and works is
(A) open competitive bidding
(B) close competitive bidding
(C) FIFO
(D) LIFO

29. The bidder with the _______ evaluated bid shall be awarded the procurement contract.
(A) highest
(B) lowest
(C) average
(D) zero variance

30. Where needed the procuring agency shall require the successful bidder to furnish a performance guarantee which shall not exceed _______ of the contract amount.
(A) 5%
(B) 7.5%
(C) 10%
(D) 12.5%

ANSWERS: PUBLIC PROCUREMENT RULES
26(D) 27(B) 28(A) 29(B) 30(C)

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Accounting Multiple Choice Questions

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21. The expected disposal value of the asset (after deducting disposal costs) at the end of its expected useful life is called
(A) residual value
(B) net book value
(C) depreciation
(D) substance over form

22. The figure that appears in the statement of financial position, after the depreciation, is known as
(A) depreciation
(B) substance over form
(C) residual value
(D) net book value

23. Which from the following asset is NOT depreciated?
I. Advances
II. Land
III. Machinery
(A) I only
(B) II only
(C) I and II
(D) II and III

24. Depreciation is normally charged as
(A) payable
(B) receivable
(C) expenses
(D) advances

25. A company purchases a non-current asset in Year 1 for $90,000. The depreciation charge is $15,000. What net book value would be recorded in financial position statement (or balance sheet) at the end of Year-2?
(A) $75,000
(B) $60,000
(C) $30,000
(D) $15,000

ANSWERS: ACCOUNTING MULTIPLE CHOICE QUESTIONS
21(A) 22(D) 23(C) 24(C) 25(B)

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