Business Finance MCQs with Answer PDF

Business finance MCQs with answer are very important for students and professionals who want to learn how to manage money in companies. Business finance means raising and handling funds by business organisations to keep them running well. The financial manager plays a vital role in planning, analysing, and controlling the money activities, usually working close to the top level of the company. You can easily download the Business Finance MCQs with Answer in PDF format using the link provided below.

Basics of Business Finance

Business finance mainly has two types: debt finance and equity finance. Debt finance is when a business borrows money from someone and promises to pay it back with interest. Equity finance is when the business sells part of its ownership, called shares, to raise money from others.

Download Business Finance MCQs with Answer PDF

1. “Shareholder wealth” in a firm is represented by:
   • a) the number of people employed in the firm.
   • b) the book value of the firm’s assets less the book value of its liabilities
   • c) the amount of salary paid to its employees.
   • d) the market price per share of the firm’s common stock.
2. The long-run objective of financial management is to:
   • a) maximize earnings per share.
   • b) maximize the value of the firm’s common stock.
   • c) maximize return on investment.
   • d) maximize market share.
3. What are the earnings per share (EPS) for a company that earned Rs. 100,000 last year in after-tax profits, has 200,000 common shares outstanding and Rs. 1.2 million in retained earning at the year end?
   • a) Rs. 100,000
   • b) Rs. 6.00
   • c) Rs. 0.50
   • d) Rs. 6.50
4. A(n) would be an example of a principal, while a(n) would be an example of an agent.
   • a) shareholder; manager
   • b) manager; owner
   • c) accountant; bondholder
   • d) shareholder; bondholder
5. The market price of a share of common stock is determined by:
   • a) the board of directors of the firm.
   • b) the stock exchange on which the stock is listed.
   • c) the president of the company.
   • d) individuals buying and selling the stock.
6. The focal point of financial management in a firm is:
   • a) the number and types of products or services provided by the firm.
   • b) the minimization of the amount of taxes paid by the firm.
   • c) the creation of value for shareholders.
   • d) the dollars profits earned by the firm.
7. ___________________ of a firm refers to the composition of its long-term funds and its capital structure.
   • a) Capitalisation
   • b) Over-capitalisation
   • c) Under-capitalisation
   • d) Market capitalization
8. In the _______________, the future value of all cash inflow at the end of time horizon at a particular rate of interest is calculated.
   • a) Risk-free rate
   • b) Compounding technique
   • c) Discounting technique
   • d) Risk Premium
9. ______________ is the price at which the bond is traded in the stock exchange.
   • a) Redemption value
   • b) Face value
   • c) Market value
   • d) Maturity value
10. _____________ enhance the market value of shares and therefore equity capital is not free of cost.
    • a) Face value
    • b) Dividends
    • c) Redemption value
    • d) Book value

For quick reference, you can download the Business Finance MCQs with Answer in PDF format from the link given below. 📥