15 Financial Management MCQs with Answers
Test your financial management knowledge with these 15 MCQs. Learn about the basics of financial management, including capital structure, working capital, break-even point, time value of money, risk-return tradeoff, and more.
Which of the following is NOT a financial decision?
- (a) How much to borrow
- (b) How much to invest
- (c) How much to spend
- (d) What to eat for lunch
- Answer: (d)
The primary goal of financial management is to:
- (a) Maximize profits
- (b) Minimize costs
- (c) Maximize shareholder wealth
- (d) Minimize risk
- Answer: (c)
The capital structure of a company refers to its:
- (a) Debt-to-equity ratio
- (b) Asset mix
- (c) Management team
- (d) Product line
- Answer: (a)
The working capital of a company refers to its:
- (a) Current assets
- (b) Current liabilities
- (c) Net working capital
- (d) None of the above
- Answer: (c)
The break-even point for a company is the level of sales at which:
- (a) Total revenue equals total costs
- (b) Profit is maximized
- (c) Losses are minimized
- (d) None of the above
- Answer: (a)
The time value of money refers to the fact that:
- (a) A dollar today is worth more than a dollar tomorrow
- (b) A dollar tomorrow is worth more than a dollar today
- (c) The value of money is constant over time
- (d) None of the above
- Answer: (a)
The risk-return tradeoff refers to the fact that:
- (a) The higher the risk, the higher the return
- (b) The lower the risk, the higher the return
- (c) There is no relationship between risk and return
- (d) None of the above
- Answer: (a)
The capital asset pricing model (CAPM) is a tool that can be used to:
- (a) Estimate the cost of equity capital
- (b) Estimate the risk of a security
- (c) Estimate the return on a security
- (d) All of the above
- Answer: (d)
The dividend yield of a stock is calculated as:
- (a) Dividend per share / Market price per share
- (b) Market price per share / Dividend per share
- (c) Dividend per share / Earnings per share
- (d) Earnings per share / Dividend per share
- Answer: (a)
The P/E ratio of a stock is calculated as:
- (a) Market price per share / Dividend per share
- (b) Dividend per share / Market price per share
- (c) Market price per share / Earnings per share
- (d) Earnings per share / Market price per share
- Answer: (c)
The beta of a stock is a measure of its:
- (a) Risk
- (b) Return
- (c) Volatility
- (d) None of the above
- Answer: (a)
The Sharpe ratio is a measure of a security's:
- (a) Risk
- (b) Return
- (c) Volatility
- (d) Risk-adjusted return
- Answer: (d)
The Treynor ratio is a measure of a security's:
- (a) Risk
- (b) Return
- (c) Volatility
- (d) Risk-adjusted return
- Answer: (d)
The information ratio is a measure of a security's:
- (a) Risk
- (b) Return
- (c) Volatility
- (d) Risk-adjusted return
- Answer: (d)
The Jensen alpha of a security is a measure of its:
- (a) Risk
- (b) Return
- (c) Volatility
- (d) Risk-adjusted return
- Answer: (d)
I hope these MCQs help you learn more about financial management!
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