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: A decrease in interest rates generally leads to
A) Decreased stock value
B) Higher bond prices
C) Lower bond prices
D) No change in bond prices
✅ Correct Answer: B
Explanation: When interest rates fall, existing bonds with higher rates become more attractive, raising their prices.
Q: The financial statement that shows a firm's financial position on a specific date
A) Balance Sheet
B) Income Statement
C) Cash Flow Statement
D) Trial Balance
✅ Correct Answer: A
Explanation: The balance sheet provides a snapshot of assets, liabilities, and equity at a specific point in time.
Q: A dividend declared but not yet paid is treated as
A) Liability
B) Asset
C) Revenue
D) Expense
✅ Correct Answer: A
Explanation: Until paid, dividends declared are obligations, thus recorded as liabilities.
Q: Return on equity is a measure of
A) Operational efficiency
B) Shareholder profitability
C) Market share
D) Liquidity
✅ Correct Answer: B
Explanation: Return on equity evaluates how effectively a company generates profits from shareholders' capital.
Q: Companies prefer debt over equity when
A) Cost of equity is lower
B) Interest payments are tax-deductible
C) Interest rates are high
D) Retained earnings are abundant
✅ Correct Answer: B
Explanation: Interest on debt is tax-deductible, making debt financing attractive despite financial risk.