Corporate Finance MCQ Multiple Choice Questions

Q: 91. What is "cost of debt"?

Correct Answer is: The discount rate used to calculate the present value of future cash flows

Q: 92. What does the "capital asset pricing model" (CAPM) help determine?

Correct Answer is: The profitability of a company's capital projects

Q: 93. What does "debt covenants" refer to?

Correct Answer is: The repayment schedule of a company’s debt

Q: 94. What is the "tax shield" effect of debt?

Correct Answer is: The benefit of lower interest rates due to higher debt

Q: 95. What is the "return on investment" (ROI) formula?

Correct Answer is: Gross income / Total sales

Q: 96. What does "dividend reinvestment" (DRIP) allow shareholders to do?

Correct Answer is: Sell their dividends on the open market

Q: 97. What is the "total debt ratio"?

Correct Answer is: Short-term debt / Total assets

Q: 98. Which of the following is the most significant disadvantage of using debt financing?

Correct Answer is: The complexity of issuing bonds

Q: 99. What is the "equity multiplier"?

Correct Answer is: Net income / Shareholder equity

Q: 100. What does "financial leverage" allow a company to do?

Correct Answer is: Increase the company's cash flow from operations

91. What is "cost of debt"?

The total amount a company pays to service its debt
The interest rate a company pays on its borrowings
The cost of equity plus debt
The discount rate used to calculate the present value of future cash flows

92. What does the "capital asset pricing model" (CAPM) help determine?

The cost of debt
The expected return on an investment based on its risk
The value of an asset based on future earnings
The profitability of a company's capital projects

93. What does "debt covenants" refer to?

Legal restrictions placed on a company to protect bondholders
The debt obligations a company has to meet
The company's preferred method of issuing bonds
The repayment schedule of a company’s debt

94. What is the "tax shield" effect of debt?

The tax reduction benefit due to interest expense deductions
The increase in a company's dividends due to interest payments
The reduction in capital gains tax due to debt financing
The benefit of lower interest rates due to higher debt

95. What is the "return on investment" (ROI) formula?

Net income / Total assets
Operating income / Total assets
Net income / Total investment
Gross income / Total sales

96. What does "dividend reinvestment" (DRIP) allow shareholders to do?

Purchase additional shares using their dividends
Receive dividends in cash
Convert dividends into preferred stock
Sell their dividends on the open market

97. What is the "total debt ratio"?

Total liabilities / Total assets
Long-term debt / Total equity
Current liabilities / Total liabilities
Short-term debt / Total assets

98. Which of the following is the most significant disadvantage of using debt financing?

Increased ownership control for shareholders
The fixed obligation of interest payments
The dilution of ownership rights
The complexity of issuing bonds

99. What is the "equity multiplier"?

Total equity / Total debt
Total assets / Total equity
Debt / Total assets
Net income / Shareholder equity

100. What does "financial leverage" allow a company to do?

Use equity to reduce risks
Use debt to magnify returns to shareholders
Minimize debt and increase equity
Increase the company's cash flow from operations

Corporate Finance MCQ Multiple Choice Questions - Page 4 for Practice

Corporate Finance MCQ Questions for Practice

91. What is "cost of debt"?

92. What does the "capital asset pricing model" (CAPM) help determine?

93. What does "debt covenants" refer to?

94. What is the "tax shield" effect of debt?

95. What is the "return on investment" (ROI) formula?

96. What does "dividend reinvestment" (DRIP) allow shareholders to do?

97. What is the "total debt ratio"?

98. Which of the following is the most significant disadvantage of using debt financing?

99. What is the "equity multiplier"?

100. What does "financial leverage" allow a company to do?

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Corporate Finance MCQ Multiple Choice Questions - Page 4 for Practice

Corporate Finance MCQ Questions for Practice

91. What is "cost of debt"?

92. What does the "capital asset pricing model" (CAPM) help determine?

93. What does "debt covenants" refer to?

94. What is the "tax shield" effect of debt?

95. What is the "return on investment" (ROI) formula?

96. What does "dividend reinvestment" (DRIP) allow shareholders to do?

97. What is the "total debt ratio"?

98. Which of the following is the most significant disadvantage of using debt financing?

99. What is the "equity multiplier"?

100. What does "financial leverage" allow a company to do?

Your Score

Related Quiz Topics

Recent Articles

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