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Business & Finance MCQs

Prepare for competitive exams with our comprehensive Business & Finance MCQs, designed for students of commerce and candidates appearing in recruitment tests. These multiple-choice questions cover financial management, accounting, auditing, business law, corporate governance, investment analysis, banking, cost of capital, stock markets, marketing, human resource management, and business communication. Highly beneficial for aspirants of PPSC, FPSC, CSS, NTS, SPSC, BPSC, KPSC, ETEA, AJKPSC, as well as banking sector exams, commerce lecturer tests, and business-related university assessments (B.Com, M.Com, MBA, ACCA, CA).

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1 Finance MCQs

A cash flow that starts negative, then becomes positive, and later remains positive is called ____________?

  • Normal costs
  • Non-normal costs
  • Non-normal cash flow
  • Normal cash flow
0 Comments
Correct Answer: C. Non-normal cash flow

Explanation:

When a project or investment has a cash flow pattern that changes sign more than ... Read More Details

2 Finance MCQs

In estimating the value of cash flows, the compounded future value is called its ____________?

  • Terminal value
  • Existed value
  • Quit value
  • Relative value
0 Comments
Correct Answer: A. Terminal value

Explanation:

The compounded future value of cash flows represents the amount that ... Read More Details

3 Finance MCQs

In capital budgeting, the technique based on discounted cash flows is called ____________?

  • Net Present Value (NPV) method
  • Net Future Value method
  • Net Capital Budgeting method
  • Net Equity Budgeting Method
0 Comments
Correct Answer: A. Net Present Value (NPV) method

Explanation:

The Net Present Value (NPV) method is a capital budgeting technique that uses ... Read More Details

4 Finance MCQs

An increase in marginal cost of capital and capital rationing are complications of ____________?

  • Maximum capital budget
  • Greater capital budget
  • Optimal capital budget
  • Minimum capital budget
0 Comments
Correct Answer: C. Optimal capital budget

Explanation:

When a company tries to maintain an optimal capital budget, it faces challenges ... Read More Details

5 Finance MCQs

If the initial cost is $6,000 and the profitability index (PI) is 5.6, the present value (PV) of cash flows is ____________?

  • 25,000
  • 28,000
  • 33,600
  • 30,000
0 Comments
Correct Answer: C. 33,600

Explanation:

The formula for Profitability Index (PI) is:


PI=Present Value of Cash FlowsInitial CostPI = ... Read More Details

6 Finance MCQs

In large expansion programs, increased risk and flotation costs can cause ____________?

  • Rise in marginal cost of capital
  • Fall in marginal cost of capital
  • Rise in transaction cost of capital
  • Fall in transaction cost of capital
0 Comments
Correct Answer: C. Rise in transaction cost of capital

Explanation:

When a company undertakes large expansion programs, it often faces higher risk and ... Read More Details

7 Finance MCQs

The cash inflows of a project, which represent its revenues, are shown as ____________?

  • Hurdle number
  • Relative number
  • Negative numbers
  • Positive numbers
0 Comments
Correct Answer: D. Positive numbers

Explanation:

Cash inflows represent the revenues or returns generated by a project, such as sales receipts ... Read More Details

8 Finance MCQs

If the present value of future cash flows is $4,150 and the initial cost is $1,300, the profitability index (PI) is ____________?

  • 0.0319
  • 5,450
  • 0.31 times
  • 3.19
0 Comments
Correct Answer: D. 3.19

Explanation:

The profitability index is calculated as:
PI = Present Value of future ... Read More Details

9 Finance MCQs

A project whose cash flows do not depend on other projects is called ____________?

  • Project net gain
  • Independent projects
  • Dependent projects
  • Net value projects
0 Comments
Correct Answer: B. Independent projects

Explanation:

An independent project is one that can be accepted or rejected without affecting ... Read More Details

10 Finance MCQs

Net Present Value (NPV), Profitability Index (PI), Payback, and Discounted Payback are methods used to ____________?

  • Evaluate cash flow
  • Evaluate projects
  • Evaluate budgeting
  • Evaluate equity
0 Comments
Correct Answer: B. Evaluate projects

Explanation:

Net Present Value (NPV), Profitability Index (PI), Payback, and Discounted Payback are capital ... Read More Details

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