1 Managerial Finance MCQ

1. Which of the following is a strength of a 6. Management compensation plans that tie

corporation? management compensation to share price:

a. low taxes a. Performance plans

b. limited liability b. achievement plans
c. low organization costs c. Incentive plans
d. less government regulation d. Control plans

2. Which of the following is the purest and most basic 7. Plans that tie management compensation
form of corporate ownership? to measures:

a. bond a. Performance plans

b. notes b. achievement plans
c. common stock c. Incentive plans
d. preferred stock d. Control Plans

3. A financial manager must choose between three 8. Own relatively few shares and as a result
alternative investments. Each asset is expected to do not typically have sufficient means to
provide earnings over a three-year period as influence a firm’s corporate governance:
described below. Based on the wealth maximization
goal, the financial manager would : a. Institutional investors
b. Individual investors
c. Government investors
d. Non of the above

9. A firm’s corporate governance is

influenced by:

a. Internal factors
a. choose Asset 1 b. External forces
b. choose Asset 2 c. Both A and b
c. choose Asset 3 d. Non of the above
d. be indifferent between Asset 1 and Asset 2
10. are the standards of conduct or moral
4. refers to the rules, processes, and laws by which judgment that apply to persons engaged in
companies are operated, controlled, and regulated: commerce:
a. Management ethics
a. Corporate governance
b. Business ethics
b. Corporate Mechanism
c. Organizational ethics
c. Corporate restructuring
d. All of the above
d. Non of the above
11. A basic premise in managerial finance is
5. A well-defined corporate governance structure is that :
intended to benefit all corporate stakeholders by
ensuring that the firm is run: a. a trade-off exists between return and
income.
a. in a lawful and ethical fashion. b. a trade-off exists between income and
b. in accordance with best practices. risk.
c. subject to all corporate regulations. c. a trade-off exists between return and
d. All of the above risk.

With our Best Wishes : Eslam Zaghloul & Khaled Saad

2 Managerial Finance MCQ

12. ________ is concerned with the duties of the 18. The key capital market securities are:
financial manager in the business firm:
a. Bonds.
a. Financial Services b. Preferred stocks.
b. Financial Manager c. Common stocks.
c. Managerial Finance d. All of the above.
d. None of the above
19. ………typically pay interest semiannually
13. All of the following considered stakeholders (every 6 months) at a stated coupon
EXCEPT: interest rate:

A) consumers a. Corporate bonds.

B) suppliers b. Common stock.
C) employees c. Preferred stock.
D) competitors d. Stock.

14. A special form of ownership having a fixed 20. ……… is a market that enables suppliers
periodic dividend that must be paid prior to and demanders of long-term funds to
payment of any dividends to common make transactions:
stockholders:
a. Money market.
a. Bonds. b. Stock market.
b. Common stock. c. Capital market.
c. Commercial papers. d. Bond market.
d. Preferred stock.
21. ……… is created by a financial
15. From…………, the role of a capital market is to relationship between suppliers and
be an efficient market: demanders of short-term funds:

a. Firms’ perspectives. a. Money market.

b. Managements’ perspectives. b. Stock market.
c. investors’ perspectives. c. Capital market.
d. organizations' perspectives. d. Bond market.

16. From………., the role of a capital market is to be 22. Financial institutions actively participate
a liquid market: in the financial markets as …….of funds:

a. Firms’ perspectives. a. Suppliers .

b. Managements’ perspectives. b. Demanders.
c. investors’ perspectives. c. Both a and b.
d. organizations' perspectives. d. Non of the above.

17. If the market is…….., the price of a stock is an 23. Financial market in which securities are
unbiased estimate of its true value: initially issued:

a. inefficient. e. Primary market.

b. efficient. f. Secondary market.
c. liquid. g. Capital market.
d. All of the above h. Non of the above.

With our Best Wishes : Eslam Zaghloul & Khaled Saad

3 Managerial Finance MCQ

24. Financial market in which pre-owned securities 30. Most successful firms can obtain funds
(those that are not new issues) are traded: from external sources in three ways:

a. Primary market. a. financial institution.

b. Secondary market. b. financial markets.
c. Capital market. c. private placement.
d. Non of the above. d. All of the above.

25. involves the sale of a new security directly to an

investor or group of investors, such as an
insurance company or pension fund:

a. Public offering.
b. Private offering.
c. Private placement.
d. All of the above.

26. Transactions in short-term debt instruments, or

marketable securities, take place in……:

a. Money Market.
b. Capital Market.
c. Both a and b.
d. Business market.

27. Long-term securities—bonds and stocks—are

traded in ........ :

a. Money Market.
b. Capital Market.
c. Both a and b.
d. Business market.

28. Individuals as a group are the …… for financial

institutions:

a. Net demanders.
b. Net sellers.
c. Net Suppliers.
d. Non of the above.

29. Firms (or businesses) and governments are net

demanders of funds:
a. Net demanders.
b. Net sellers.
c. Net Suppliers.
d. Non of the above.

With our Best Wishes : Eslam Zaghloul & Khaled Saad

4 Managerial Finance MCQ

With our Best Wishes : Eslam Zaghloul & Khaled Saad