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Finance MCQ With Answers

41 practice questions · Last updated on Jan 27, 2023

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Here is everything you need to know under finance sector interviews. This source contains most probable questions

Finance MCQ

1.What is the time value of money?

2.What does NPV stand for and what does a positive NPV indicate?

3.What is the WACC?

4.In the CAPM, what does beta measure?

5.What is the formula for the Capital Asset Pricing Model?

6.Which of these is a measure of a company's short-term liquidity?

7.What is the difference between systematic and unsystematic risk?

8.What does the IRR of a project represent?

9.What is free cash flow to the firm (FCFF)?

10.In a DCF valuation, what does the terminal value represent?

11.What does a high debt-to-equity ratio indicate?

12.What is the price-to-earnings (P/E) ratio?

13.Which of the following best describes a bond's coupon rate?

14.What happens to bond prices when market interest rates rise?

15.What is working capital management primarily concerned with?

16.What is the cash conversion cycle?

17.Which of these is an example of a derivative instrument?

18.What is diversification intended to achieve in a portfolio?

19.What does ROE measure?

20.In the DuPont analysis, ROE is decomposed into which three components?

21.What is the difference between primary and secondary markets?

22.What does a company's dividend payout ratio show?

23.Which valuation approach uses comparable listed companies' multiples?

24.What is enterprise value?

25.What is financial leverage?

26.Which of these would increase a company's WACC?

27.What does the efficient market hypothesis in its semi-strong form assert?

28.What is a rights issue?

29.Which risk arises from a company being unable to meet short-term obligations despite being profitable?

30.What does duration measure for a bond?

32.What is the payback period?

33.Which of the following is a money market instrument?

34.What is the difference between EBIT and EBITDA?

35.What is a hedge?

36.Which statement about preference shares is correct?

37.What does the Sharpe ratio measure?

38.What is the Modigliani-Miller proposition in a world without taxes?

39.Which of these is an operating expense rather than a capital expenditure?

40.What does a credit rating downgrade typically do to a company's borrowing cost?

41.What is meant by the term 'sunk cost' in investment decisions?

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