Financial Management MCQ on Equity Valuation

Financial Management MCQ on Equity Valuation

Financial Management MCQ on Equity Valuation

1. The shares of well-established, financially strong and big companies having remarkable

Record of dividends and earnings are known as:

(a) Growth shares

(b) Blue chip shares

(c) Income shares

(d) Cyclical shares

Ans- (b) Blue chip shares

2. The shares of the companies having high dividend payout ratios are:

(a) Income shares

(b) Cyclical shares

(c) Growth shares

(d) Defensive shares

Ans-(a) Income shares

3. The smallest unit of capital is known as:

(a) Debenture

(b) Share

(c) Bond

(d) Deposit

Ans-(b) Share

4. The valuation of equity by the discounted cash flow techniques depends on:

(a) Expected dividends

(b) Cash flows

(c) Earnings

(d) All of these

Ans-(d) All of these

5. The Market of initial public offerings where any new share is issued known as:

(a) Secondary market

(b) Money market

(c) Primary market

(d) None of these

Ans- (c) Primary market

6. The techniques used by fundamental analysts to valuate the equity shares is/are:

(a) Asset based techniques

(b) Comparable techniques

(c) Present value techniques

(d)All of these

Ans-(d)All of these

7. The model that assumes the normal rate of growth over an indefinite time horizon is assumed is:

(a) H model of equity valuation

(b) Gordon Model

(c) Free cash flow models

(d) None of these

Ans- (b) Gordon Model

8. Which models generally applied by the fundamental analysts to valuate the equity share are:

(a) Relative valuation models

(b) Dividend valuation models

(c) Both of these

(d) None of these

Ans- (c) Both of these

9. The balance sheet valuation is a:

(a) Nominal approach

(b) Futuristic approach

(c) Historical approach.

(d) None of these

Ans-(c) Historical approach

10. The discounted cash flow is which of the following approach?

(a) Backward approach

(b) Forward approach

(c) Earnings approach

(d) Risk approach

Ans-(b) Forward approach

11. The model that derive the value of stock from the pricing of comparable assets is called


(a) Composite valuation model

(b) Relative valuation model

(c) Growth valuation model

(d) All of these

Ans-(b) Relative valuation model

12. The current dividends are assumed to be equal to future dividends in case of:

(a) Variable growth

(b) Perpetuity

(c) Constant growth

(d) None of these

Ans- (b) Perpetuity

13. The comparison of various facets of the same firm over a period of time is called as

(a) Cross sectional analysis

(b) Technical analysis

(c) Time series analysis

(d) None of these

Ans-(c) Time series analysis

14. The constant divided growth model is propounded by which of the following?

(a) Fama

(b) William Sharpe

(c) Gordon

(d) Miller

Ans-(a) Fama

Also Read Financial Management MCQ

  1. Financial Management MCQ-Fundamentals
  2. FM MCQ on Time Value of Money
  3. Financial Management MCQ on Risk and Return
  4. Financial Management MCQ on Equity Valuation
  5. Financial Management MCQ on Valuation of Bonds

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