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MCQs for Class 12 Business Studies Chapter 9: Find attached a PDF download link for important MCQ-type questions for Class 12 Business Studies Chapter 9, Financial Management. This chapter is presented in Part 2 of the Business Studies NCERT textbook. This list of MCQ-type questions and answers has been prepared by our subject matter experts, keeping in mind CBSE’s Revised curriculum in mind.
Every year CBSE releases its Sample Paper and Exam Pattern for running academic sessions. Students are advised to prepare for Board Examinations on the basis of these resources since they are based on the latest curriculum. For your assistance, we have provided the links for all these essential resources in this article. Also, click on the links below to check MCQs for chapters of Class 12 Business Studies Part 1.
MCQs for CBSE Class 12 Business Studies Part 1:
MCQs for Class 12 Business Studies Chapter 1
MCQs for Class 12 Business Studies Chapter 2
MCQs for Class 12 Business Studies Chapter 3
MCQs for Class 12 Business Studies Chapter 4
MCQs for Class 12 Business Studies Chapter 5
MCQs for Class 12 Business Studies Chapter 6
MCQs for Class 12 Business Studies Chapter 7
MCQs for Class 12 Business Studies Chapter 8
Related:
CBSE Class 12 Business Studies Revised Syllabus 2023-2024 (PDF)
CBSE Class 12 Business Studies Sample Paper 2023-2024(PDF)
1.Avik is the finance manager of Mars Ltd. In the current year, the company earned high profits. However, Avik thinks that it is better to declare a smaller dividend as he is unsure about the earning potential of the company in the coming years. Avik’s choice of dividend decision is based on which of the factor affects it?
(a) Amount of earnings
(b) Stability in earnings
(c) Stability of dividends
(d) Growth opportunities
Answer. b) Stability in earnings
2.The cheapest source of finance is:
(a) Debenture
(b) Equity share capital
(c) Preference shares
(d) Retained earnings
Answer. a) Debenture
3.Higher debt-equity ratio results in:
(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS
Answer. c) Higher degree of financial risk
4.Financial planning arrives at :
(a) Minimising external borrowing by resorting to equity issues
(b) Entering that the firm always have significantly more fund than required so that there is no paucity of funds
(c) Ensuring that the firm faces neither a shortage nor a glut of unusable funds.
(d) Doing only what is possible with the funds that the firm has at its Disposal
Answer. c) Ensuring that the firm faces neither a shortage nor a glut of unusable funds
5.Long-term investment decisions are also called as
(a) Working capital decisions
(b) Capital budgeting decisions
(c) Dividend decision
(d) Financing decisions
Answer. b) Capital budgeting decisions
6.Debts financing is better than equity if
(a) Company has a strong cash flow
(b) Company has a weak cash flow
(c) Cash flow position does not matter
(d) None of the above
Answer. a) Company has a strong cash flow
7.Financial risk of a company increases because of
(a) High operating cost
(b) High fixed cost charges
(c) High rate of dividends
(d) High debt-equity ratio
Answer. d) High debt-equity ratio
8.Current assets are those assets that get converted into cash:
(a) Within six months
(b) Within one year
(c) Between one and three years
(d) Between three and five years
Answer. b) Within one year
9.Bharti Ltd. is a leading mobile company. It is planning to acquire Queen Ltd. (its close competitor) business worth `1,000 crores. Which financial decision is involved in it?
(a) Investment
(b) Financing
(c) Dividend
(d) None of these
Answer. a) Investment
10.Assertion (A) Business finance refers to the money required for carrying out business activities.
Reason (R) Financing decisions involve careful selection of assets, in which funds are to be invested.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer. c) Assertion is true but reason is false
11.Assertion (A) Primary aim of financial management is to maximise shareholder’s wealth.
Reason (R) Company’s funds belong to the shareholders and the return earned by them determines their market value and price.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer. a) Both Assertion and Reason are true and Reason is the correct explanation of Assertion
12.The fund-raising exercise also costs something. This cost is called
(a) Fixed cost
(b) Flotation cost
(c) Bearing cost
(d) Variable cost
Answer. b) Flotation cost
13.VNG Agro Food Ltd. is a famous multinational company. Mr. SK Nagi is its finance manager. He is trying to increase the market value of capital invested by the equity shareholders. He already knew it could be possible only when the price of the shares increases and the price of shares increases only if financing, investment, and dividend decisions are taken optimally. He did the same and achieved success. Which objective of financial management has been referred to here?
(a) Maximizing the wealth of equity shareholders
(b) Effective utilisation of funds
(c) Ensures the safety of funds
(d) Avoiding idle finance
Answer. a) Maximizing the wealth of equity shareholders
14.Other things remaining the same, an increase in the tax rate on corporate profits will:
(a) Make the debt relatively cheaper
(b) Make the debt relatively dearer
(c) Have no impact on the cost of debt
(d) We can’t say
Answer. a) Make the debt relatively cheaper
15.Higher debt-equity ratio results in:
(a) Lower financial risk
(b) Higher degree of operating risk
(c) Higher degree of financial risk
(d) Higher EPS
Answer. c) Higher degree of financial risk
To download these questions and answers, click on the link below.
Also find:
CBSE Class 12 Syllabus 2023-24 (All Subjects)
CBSE Class 12 Sample Papers 2023-24 (All Subjects)
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