Here we are going to explain some important MCQs for Business Finance which is useful for UGC NET Commerce as well as Management Subjects.

Business Finance MCQs – UGC NET | Commerce | Management

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 a 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 the 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, the 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:
1. C
2. D
3. D
4. C
5. D
6. A
7. B
8. C
9. C
10. B

11. Generally, a corporation is owned by the
    I. Managers
    II. Board of Directors
    III. Stockholders
    IV. stakeholders
    (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 are 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 of the following is the safest investment?
    (A) Treasury bills
    (B) Government bond
    (C) Corporate bond
    (D) Stocks
18. The spread of possible outcomes of 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 market, two investments that offer the same payoff must have the same
    (A) beta
    (B) return
    (C) risk
    (D) price

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

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