Finance MCQs
Finance MCQs cover financial management, investment analysis, markets, and corporate finance. Ideal for MBA, CFA, and competitive exams like PPSC, FPSC, NTS, and SBP, they build concepts, analytical skills, speed, and accuracy through real-world scenarios.
Q: The Sharpe ratio is used to evaluate
A) Creditworthiness
B) Absolute returns
C) Return per unit of risk
D) Liquidity position
✅ Correct Answer: C
Explanation: Sharpe ratio helps assess investment performance by comparing returns with the risk taken.
Q: An efficient portfolio lies on the
A) Security market line
B) Capital market line
C) Efficient frontier
D) Budget line
✅ Correct Answer: C
Explanation: Efficient frontier represents optimal portfolios offering the highest return for a given risk.
Q: Leverage affects
A) Inflation
B) Market size
C) Profit sensitivity
D) Interest rates
✅ Correct Answer: C
Explanation: Leverage magnifies both gains and losses, increasing the sensitivity of profits to changes in sales.
Q: The function of the secondary market is to
A) Facilitate trading of existing securities
B) Control inflation
C) Determine tax rates
D) Raise new capital
✅ Correct Answer: A
Explanation: Secondary markets allow investors to buy and sell previously issued securities.
Q: The financial instrument with fixed maturity and regular interest is a
A) Bond
B) Warrant
C) Option
D) Share
✅ Correct Answer: A
Explanation: Bonds are debt instruments with specified maturity and fixed interest payments.