Bcom Bachelor of Commerce Corporate Finance & Financial Management

Question 1

What is the primary goal of financial management in a corporation?

Accepted Answer

Maximizing shareholder wealth

Answer

Maximizing profit in the short term

Answer

Minimizing operating costs

Answer

Maximizing total sales revenue

Question 2

Which of the following is NOT a core function of financial management?

Accepted Answer

Production scheduling decisions

Answer

Investment decisions

Answer

Financing decisions

Answer

Dividend decisions

Question 3

The time value of money concept states that:

Accepted Answer

Money today is worth more than the same amount in the future

Answer

Money today is worth less than the same amount in the future

Answer

Money has equal value regardless of when it is received

Answer

Money value depends solely on inflation rates

Question 4

Net Present Value (NPV) of a project is calculated as:

Accepted Answer

Present value of cash inflows minus present value of cash outflows

Answer

Total revenues minus total costs over the project life

Answer

Future value of inflows minus future value of outflows

Answer

Total cash inflows divided by the initial investment

Question 5

The Internal Rate of Return (IRR) is best defined as:

Accepted Answer

The discount rate at which the NPV of a project equals zero

Answer

The minimum acceptable rate of return set by management

Answer

The average accounting return on the initial investment

Answer

The rate at which the company borrows from banks

Question 6

A key limitation of the Payback Period method of capital budgeting is that it:

Accepted Answer

Ignores all cash flows occurring after the payback period

Answer

Accounts for the time value of money

Answer

Is too complex to apply in practice

Answer

Always produces the same ranking as the NPV method

Question 7

Opportunity cost in financial decision-making refers to:

Accepted Answer

The return foregone by choosing one investment over the next best alternative

Answer

The interest expense on borrowed capital

Answer

The cost incurred due to production inefficiency

Answer

The tax penalty on suboptimal investment choices