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: Cost of equity can be estimated using
A) Bond yield
B) Capital Asset Pricing Model
C) Debt-to-equity ratio
D) Risk-free rate only
✅ Correct Answer: B
Explanation: CAPM is commonly used to determine the expected return required by equity investors.
Q: A treasury bill is issued for
A) Dividend payment
B) Inflation adjustment
C) Government short-term funding
D) Long-term borrowing
✅ Correct Answer: C
Explanation: Treasury bills are short-term securities used by governments to meet temporary funding needs.
Q: The main purpose of credit rating is to
A) Calculate interest rates
B) Determine share value
C) Assess credit risk
D) Evaluate employees
✅ Correct Answer: C
Explanation: Credit rating agencies evaluate the risk of default associated with issuers or debt instruments.
Q: A hedge fund uses strategies like
A) Buy and hold
B) Leveraged and short positions
C) Passive indexing
D) Fixed interest investments
✅ Correct Answer: B
Explanation: Hedge funds employ aggressive strategies including leverage, arbitrage, and derivatives.
Q: A company with high operating leverage is sensitive to
A) Tax changes
B) Interest rate changes
C) Sales volume changes
D) Dividend fluctuation
✅ Correct Answer: C
Explanation: High operating leverage means fixed costs are high, making profits sensitive to sales changes.