Corporate Finance Quiz

Corporate Finance Quiz Page-2. The following MCQs are from the theory of Finance, that is Public Finance, Corporate Finance and Personal Finance. View answers to the questions at bottom of the page.

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  1. Generally, a corporation is owned by the
    1. Managers
    2. Board of Directors
    3. Stock holders
    4. stake holders
    1. II only
    2. I and II
    3. III only
    4. III and IV

  2. A firm's investment decision is also called the
    1. financing decision
    2. capital budgeting decision
    3. liquidity decision
    4. none of these

  3. Conflicts between shareholders and managers' interest is called
    1. management problem
    2. area of the board of directors
    3. risk
    4. agency problem

  4. In the principle-agent framework
    1. managers are the principals
    2. directors are the principals
    3. shareholders are the principals
    4. shareholders are the agents

  5. The risk that can be eliminated by diversification is called
    1. specific risk
    2. security risk
    3. market risk
    4. beta

  6. The risk that cannot be eliminated by diversification is called
    1. specific risk
    2. security risk
    3. market risk
    4. beta

  7. Which from the following is the safest investment?
    1. Treasury bills
    2. Government bond
    3. Corporate bond
    4. Stocks

  8. The spread of possible outcomes of an investment returns is measured by
    1. variance
    2. standard deviation
    3. skewness
    4. kurtosis

  9. Risk is best judged in
    1. portfolio context
    2. individual security context
    3. both of these
    4. none of these

  10. In a well-functioning markets two investments that offer the same payoff must have the same
    1. beta
    2. return
    3. risk
    4. price

ANSWERS: CORPORATE FINANCE QUIZ

  1. C
  2. B
  3. D
  4. C
  5. A
  6. C
  7. A
  8. B
  9. A
  10. D