JAIIB Exam 2025 – AFM Important Questions MCQs Quiz-19

03/04/2025

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JAIIB Exam 2025 AFM Important Questions MCQs Quiz-19

JAIIB Exam Quiz 2025: The JAIIB exam is scheduled for 2025 by IIBF. Here, we are providing JAIIB AFM MCQ-based quizzes on a regular basis. You can attempt the quizzes regularly to prepare for the upcoming JAIIB exam. The quizzes will be provided module-wise and unit-wise. You can attempt the JAIIB AFM quizzes from the links below and improve your preparation by practicing regularly. These quizzes will help you boost your score in the JAIIB exam and guide you to clear the exam on your first attempt.

Q.1 What is one of the main advantages of a sole proprietorship?
A) Limited liability for the owner
B) Easy access to large amounts of capital
C) Minimum regulations and simplicity of operation
D) Separate legal identity from the owner

Q.2 Under the Indian Partnership Act, 1932, which of the following statements is correct regarding a partnership firm?
A) A partnership firm has a separate legal identity distinct from its partners.
B) Registration of a partnership firm is mandatory for its legal existence.
C) A company cannot be a partner in a partnership firm.
D) A partnership firm is an association of persons who agree to share profits and have unlimited liability.

Q 3 What is the maximum number of partners allowed in a partnership firm as per the Companies Act, 2013, and The Companies (Miscellaneous) Rules, 2014?
A) 10
B) 20
C) 50
D) Unlimited

Q.4 Which of the following is NOT a characteristic of a Limited Liability Partnership (LLP) in India?
A) LLP is registered with the Ministry of Corporate Affairs.
B) LLP has a separate legal entity distinct from its partners.
C) One partner in an LLP is liable for the acts of another partner.
D) LLP combines elements of both partnerships and limited liability companies.

Q.5 . Which of the following statements about a Hindu Undivided Family (HUF) as a business organization is correct?
A) HUF exists worldwide and is not restricted to India.
B) The business of an HUF is managed by the senior-most female member.
C) HUF is considered a separate entity for income tax purposes.
D) HUF is not recognized as a legal entity under Indian law.

Q.6 Which of the following is NOT a primary objective of financial management?
A) Ensuring an adequate and timely supply of funds
B) Maximizing short-term profits at any cost
C) Deciding on an optimal capital structure
D) Implementing an appropriate financial risk-management system

Q.7 Which of the following principles of finance explains that money available today is worth more than the same amount in the future due to its earning potential?
A) Liquidity and Return
B) Diversification
C) Time Value of Money
D) Reducing Asset-Liability Mismatch

Q.8 What does the Opportunity Cost of Money principle imply in financial decision-making?
A) Money should always be kept in liquid form for emergencies.
B) Investing in one asset means forgoing potential returns from another investment.
C) The cost of capital is irrelevant when making investment decisions.
D) Old assets should never be replaced, regardless of their return.

Q.9 Which of the following is NOT one of the four basic blocks of the modern approach to corporate finance?
A) Planning
B) Decision Making
C) Budget Deficit Management
D) Controlling

Q.10 Which of the following best describes the Risk-Return Tradeoff in financial management?
A) Higher risk always guarantees higher returns.
B) Lower risk investments always provide better returns than high-risk investments.
C) To achieve higher returns, a firm must be willing to take on higher risks.
D) Risk and return are unrelated in financial decision-making.

Q.11 Which of the following correctly represents the formula for the Required Rate of Return?
A) Required Rate of Return = Risk-free Return × Risk Premium
B) Required Rate of Return = Risk-free Return + Risk Premium
C) Required Rate of Return = Risk Premium – Risk-free Return
D) Required Rate of Return = Risk-free Return ÷ Risk Premium

Q.12 Which of the following best represents the core idea of Stakeholder Theory?
A) Aligning the interests of all groups affected by the organization
B) Maximizing shareholder wealth at all costs
C) Prioritizing employee benefits over investor returns
D) Focusing solely on financial profitability

Q.13 Which of the following best describes the main focus of agency theory in business?
A) Ensuring maximum profits for managers
B) Reducing conflicts of interest between agents and principals
C) Increasing the autonomy of employees in decision-making
D) Eliminating the role of shareholders in business operations

Q.14 Which of the following best describes the relationship between finance and economics?
A) Finance and economics are entirely independent fields with no overlap.
B) Economics is a branch of finance that focuses on business operations.
C) Finance is a branch of economics that deals with managing funds and financial systems.
D) Finance and economics are the same, dealing only with moneyrelated matters

Q.15 Under the Companies Act, 2013, what is the minimum percentage of average net profits that certain companies in India are required to spend on Corporate Social Responsibility (CSR)?
A) 1% of net profits
B) 2% of average net profits from the past three years
C) 5% of total revenue
D) 10% of net profits

Q.16 Which of the following is not a common type of agency problem in a company?
A) Shareholders vs. Management
B) Shareholders vs. Customers
C) Shareholders vs. Bondholders
D) Controlling Shareholders vs. Minority Shareholders

Q.17 Which of the following statements best differentiates business ethics from social responsibility?
A) Business ethics focus on the community, while social responsibility focuses on shareholders.
B) Business ethics govern a company’s conduct, while social responsibility focuses on its impact on society.
C) Business ethics are legally enforced, while social responsibility is voluntary.
D) Business ethics apply only to employees, while social responsibility applies only to customers.

Q.18 In financial management, an agency problem arises primarily due to:
A) The inability of firms to generate profits
B) A conflict of interest between shareholders and managers
C) The lack of financial resources in an organization
D) The absence of a formal management structure