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

The primary goal is to maximize shareholder wealth (market value of equity), which accounts for risk, timing, and long-term value rather than just short-term profits.

Question 2

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

Accepted Answer

Production scheduling decisions

Answer

Production scheduling is an operations management function; financial management covers investment, financing, and 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

A dollar today is worth more than a dollar in the future because it can be invested now to earn returns.

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

NPV = PV of cash inflows − PV of cash outflows, discounted at the required rate of return; a positive NPV indicates value creation.

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

IRR is the specific discount rate that makes the NPV of all project cash flows equal exactly zero.

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Corporate Finance & Financial Management