Introduction to Financial Management MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Introduction to Financial Management, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Introduction to Financial Management MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Introduction to Financial Management mcq questions that explore various aspects of Introduction to Financial Management problems. Each MCQ is crafted to challenge your understanding of Introduction to Financial Management principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Introduction to Financial Management MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Introduction to Financial Management. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Introduction to Financial Management knowledge to the test? Let's get started with our carefully curated MCQs!

Introduction to Financial Management MCQs | Page 2 of 12

Discover more Topics under IC 89 Management Accounting

Q11.
What factors does the procurement of funds decision in financial management involve?

a.

Only cost of capital

b.

Only sources of funds

c.

Only terms and conditions of repayment

d.

Sources of funds, terms and conditions of repayment, cost of capital, and control

Discuss
Answer: (d).Sources of funds, terms and conditions of repayment, cost of capital, and control Explanation:Procurement of funds decision in financial management involves considering sources of funds, terms and conditions of repayment, cost of capital, and control.
Q12.
Why are equity shares considered the best source of funding from a risk point of view?

a.

They have fixed rate of interest

b.

They are entitled to entire divisible profits

c.

They are less expensive

d.

They have tax advantages

Discuss
Answer: (b).They are entitled to entire divisible profits Explanation:Equity shares are considered the best source of funding from a risk point of view because they are entitled to entire divisible profits.
Q13.
What makes debentures a cheaper source of funds compared to shares?

a.

Fixed rate of interest

b.

Tax advantage

c.

Entitlement to divisible profits

d.

High cost of capital

Discuss
Answer: (b).Tax advantage Explanation:Debentures are a cheaper source of funds compared to shares due to fixed rate of interest and tax advantage.
Q14.
In the context of financial management, what does the finance manager need to consider in decisions on procurement of funds?

a.

Only cost

b.

Only control

c.

Only risk

d.

Cost, control, and risk

Discuss
Answer: (d).Cost, control, and risk Explanation:In decisions on procurement of funds, the finance manager needs to consider cost, control, and risk.
Q15.
What are the major routes for raising funds from foreign sources in financial management?

a.

Equity and debentures

b.

FDI and FII

c.

Retention and distribution of profits

d.

Cost, control, and risk

Discuss
Answer: (b).FDI and FII Explanation:Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) are the major routes for raising funds from foreign sources in financial management.
Q16.
What does the finance manager need to identify, analyze, and decide in the context of cross-border capital?

a.

Sources of finance

b.

Finance-mix

c.

Internal financing

d.

Sources of finance, finance-mix, and internal financing

Discuss
Answer: (d).Sources of finance, finance-mix, and internal financing Explanation:The finance manager needs to identify, analyze, and decide the sources of finance, finance-mix, and internal financing in the context of cross-border capital.
Q17.
What risk factors does the finance manager need to consider in fund procurement decisions for projected investment decisions?

a.

Only high inflations

b.

Only declining consumers' demand

c.

Only fiscal and financial sector imbalances

d.

All of the above

Discuss
Answer: (d).All of the above Explanation:The finance manager needs to consider risk factors such as high inflations, declining consumers' demand, fiscal and financial sector imbalances, and other potential risk factors in fund procurement decisions for projected investment decisions.
Q18.
What can slow down the economy growth rate and pull down corporate profitability in financial management?

a.

Abnormal hike in interest rates

b.

Fixed rate of interest

c.

Tax advantage

d.

Low p/e ratios

Discuss
Answer: (a).Abnormal hike in interest rates Explanation:Abnormal hike in interest rates can slow down the economy growth rate and pull down corporate profitability in financial management.
Q19.
How does the finance manager handle abnormal hike in interest rates in financial management?

a.

By increasing corporate profitability

b.

By decreasing the economy growth rate

c.

By considering possible and potential risk factors

d.

By ignoring the risk factors

Discuss
Answer: (c).By considering possible and potential risk factors Explanation:The finance manager handles abnormal hike in interest rates by considering possible and potential risk factors in fund procurement decisions for projected investment decisions.
Q20.
What is the responsibility of the financial manager in allocation of funds decisions?

a.

Identifying situations that require more funds

b.

Ensuring proper use of funds

c.

Both a and b

d.

None of the above

Discuss
Answer: (c).Both a and b Explanation:The financial manager's responsibility in allocation of funds decisions includes identifying situations that require more funds and ensuring proper use of funds.
Page 2 of 12