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Finance MCQs

Boost your knowledge of business and financial concepts with our comprehensive Finance MCQs, designed for students, job seekers, and professionals preparing for competitive exams. These multiple-choice questions cover financial management, accounting principles, investment analysis, corporate finance, working capital, ratio analysis, cost of capital, stock markets, risk management, capital budgeting, and time value of money. Highly valuable for candidates appearing in PPSC, FPSC, CSS, NTS, SPSC, BPSC, KPSC, ETEA, AJKPSC, as well as banking exams, finance officer posts, and commerce-related university tests (B.Com, M.Com, MBA, ACCA).

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1 Finance MCQs

In cash flow analysis, two projects are compared using a common life approach, which is classified as ____________?

  • Transaction approach
  • Replacement chain approach
  • Common life approach
  • Both B and C
0 Comments
Correct Answer: D. Both B and C

Explanation:

When two projects with different lifespans are compared on a common life basis, ... Read More Details

2 Finance MCQs

Other factors held constant, a project with lesser liquidity is usually due to ____________?

  • Shorter payback period
  • Greater payback period
  • Less project return
  • Greater project return
0 Comments
Correct Answer: B. Greater payback period

Explanation:

A project with lesser liquidity means the invested funds are tied up for ... Read More Details

3 Finance MCQs

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?

  • External rate of return
  • Internal rate of return
  • Positive rate of return
  • Negative rate of return
0 Comments
Correct Answer: B. Internal rate of return

Explanation:

The Internal Rate of Return (IRR) is defined as the discount rate that ... Read More Details

4 Finance MCQs

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value (NPV) usually lead to ____________?

  • Cash flow decision
  • Cost decision
  • Same decisions
  • Different decisions
0 Comments
Correct Answer: C. Same decisions

Explanation:

For independent projects, both IRR and NPV methods generally result in ... Read More Details

5 Finance MCQs

In Internal Rate of Return (IRR), the discount rate that makes Net Present Value (NPV) zero is called ____________?

  • Positive rate of return
  • Negative rate of return
  • External rate of return
  • Internal rate of return
0 Comments
Correct Answer: D. Internal rate of return

Explanation:

The Internal Rate of Return (IRR) is the discount rate at which the ... Read More Details

6 Finance MCQs

Projects that are mutually exclusive but differ in scale or completion time are compared using ____________?

  • External return method
  • Net present value method
  • Net future value method
  • Internal return method
0 Comments
Correct Answer: B. Net present value method

Explanation:

When projects are mutually exclusive and differ in scale or completion time, the Net Present ... Read More Details

7 Finance MCQs

The graph plotted for projected Net Present Value (NPV) against capital rates is called ____________?

  • Net loss profile
  • Net gain profile
  • Net future value profile
  • Net present value profile
0 Comments
Correct Answer: D. Net present value profile

Explanation:

In capital budgeting, the graph of NPV against discount rates (or cost of ... Read More Details

8 Finance MCQs

A Modified Internal Rate of Return (MIRR) is calculated as the present value of costs and is equal to ____________?

  • PV of hurdle rate
  • FV of hurdle rate
  • PV of terminal value
  • FV of terminal value
0 Comments
Correct Answer: D. FV of terminal value

Explanation:

The Modified Internal Rate of Return (MIRR) improves upon IRR by assuming reinvestment ... Read More Details

9 Finance MCQs

The set of projects or investments that maximizes the firm’s value is called ____________?

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

Explanation:

In capital budgeting, the optimal capital budget is the combination of projects that ... Read More Details

10 Finance MCQs

The point where the Net Present Value (NPV) profile crosses the horizontal axis on a graph indicates the project’s ____________?

  • Costs
  • Cash flows
  • Internal Rate of Return (IRR)
  • External Rate of Return
0 Comments
Correct Answer: C. Internal Rate of Return (IRR)

Explanation:

On an NPV profile graph, the horizontal axis represents the discount rate, and ... Read More Details

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