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100+ Free CA Inter Paper 6: FM & SM Practice Questions

Prepare for the CA Intermediate Paper 6: Financial Management and Strategic Management exam with instant access — no signup required.

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Key Facts: CA Inter Paper 6: FM & SM Exam

100

Total Marks

ICAI New Scheme 2023

50 + 50

FM + SM Marks Split

ICAI Paper 6 Syllabus

3 hrs

Exam Duration

ICAI

70:30

Descriptive : MCQ

ICAI Exam Pattern

40% / 50%

Paper / Group Pass Mark

ICAI Regulations

9 + 5

FM + SM Chapters

ICAI Study Material

CA Intermediate Paper 6 (Group II) is a 100-mark, 3-hour exam split into Section A Financial Management (50 marks) and Section B Strategic Management (50 marks). The pattern is roughly 70% descriptive and 30% compulsory objective (MCQ) questions, and there is no negative marking on the MCQs. FM is numerical, covering scope and objectives, financing, ratio analysis, cost of capital, capital structure and leverages, capital budgeting, dividends, and working capital. SM is conceptual, covering introduction to strategic management, external and internal analysis, strategic choices, and strategy implementation and evaluation. The passing standard is 40% in the paper and 50% aggregate in the group.

Sample CA Inter Paper 6: FM & SM Practice Questions

Try these sample questions to test your CA Inter Paper 6: FM & SM exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1According to the modern approach taught in ICAI CA Inter FM, the primary objective of financial management is best described as which of the following?
A.Maximisation of accounting profit
B.Maximisation of total sales revenue
C.Minimisation of the firm's tax liability
D.Maximisation of shareholders' wealth
Explanation: The wealth maximisation objective focuses on maximising the net present value (market value) of the firm to its shareholders, accounting for the timing of cash flows, risk, and the time value of money. ICAI treats this as superior to profit maximisation.
2Which of the following is the most valid criticism of the profit maximisation objective when compared with wealth maximisation?
A.It always increases the share price
B.It is impossible to measure profit
C.It overstates the firm's working capital
D.It ignores the time value of money and risk
Explanation: Profit maximisation is criticised because the term 'profit' is vague, it ignores the timing of returns (time value of money), and it ignores the risk associated with future earnings. Wealth maximisation corrects these defects.
3The conflict of interest between management (agents) and shareholders (principals) that gives rise to monitoring and bonding costs is known as the:
A.Agency problem
B.Liquidity trap
C.Window dressing
D.Trading on equity
Explanation: The agency problem arises because managers, acting as agents, may pursue their own interests rather than maximising owners' wealth. The resulting monitoring, bonding, and residual losses are collectively called agency costs.
4Which function is NOT one of the three broad finance functions (decisions) discussed in CA Inter Financial Management?
A.Investment decision
B.Financing decision
C.Dividend decision
D.Recruitment decision
Explanation: The three key finance functions are the investment (capital budgeting) decision, the financing (capital structure) decision, and the dividend decision. Recruitment is a human resource function, not a finance function.
5The time value of money concept primarily implies that:
A.Money loses value only due to theft
B.Future cash flows are always larger
C.Inflation has no effect on money
D.A rupee today is worth more than a rupee in the future
Explanation: Time value of money states that a rupee received today is worth more than a rupee received in the future because today's rupee can be invested to earn a return. This underpins discounting and compounding in FM.
6An amount of Rs.10,000 is invested today at 10% per annum compounded annually. Its value at the end of 2 years (compound value) will be approximately:
A.Rs.12,000
B.Rs.11,000
C.Rs.10,200
D.Rs.12,100
Explanation: Future value = 10,000 x (1.10)^2 = 10,000 x 1.21 = Rs.12,100. Compounding applies interest on accumulated interest, distinguishing it from simple interest.
7Long-term sources of finance available to a company typically include all of the following EXCEPT:
A.Equity share capital
B.Debentures
C.Retained earnings
D.Trade credit
Explanation: Trade credit is a spontaneous, short-term source of finance arising from credit purchases of goods. Equity shares, debentures, and retained earnings are all long-term sources of capital.
8Which short-term instrument is an unsecured promissory note issued by large, creditworthy companies to raise funds, regulated in India by the RBI?
A.Commercial paper
B.Treasury bill
C.Certificate of deposit
D.Debenture
Explanation: Commercial paper (CP) is an unsecured money market instrument issued as a promissory note by highly rated corporates for short-term funding needs, governed by RBI guidelines in India.
9Under a lease, the party that owns the asset and grants the right of use in exchange for rentals is the:
A.Lessee
B.Bailee
C.Guarantor
D.Lessor
Explanation: The lessor is the owner of the asset who conveys the right to use it to the lessee in return for periodic lease rentals. The lessee uses the asset without owning it.
10Venture capital financing is MOST appropriately characterised as:
A.Low-risk lending against collateral
B.Short-term working capital from banks
C.Government grant financing
D.Long-term, high-risk equity funding for start-ups with growth potential
Explanation: Venture capital provides long-term equity finance to new, high-risk ventures with strong growth potential, where venture capitalists accept high risk in exchange for potentially high returns and an active role in management.

About the CA Inter Paper 6: FM & SM Exam

CA Intermediate Paper 6 under the ICAI New Scheme 2023 is a 100-mark, 3-hour exam combining Section A: Financial Management (50 marks) and Section B: Strategic Management (50 marks), assessed through about 70% descriptive and 30% case-based MCQ questions with no negative marking.

Assessment

Question count not published by the exam provider

Time Limit

3 hours

Passing Score

40% in the paper and 50% aggregate in the group, per ICAI regulations

Exam Fee

Charged as part of the CA Intermediate group/both-group examination fee set by ICAI; no separate per-paper fee. (Institute of Chartered Accountants of India (ICAI))

CA Inter Paper 6: FM & SM Exam Content Outline

50%

Section A: Financial Management

Scope and objectives of FM, types of financing, financial analysis and planning (ratio analysis), cost of capital, financing decisions (capital structure and leverages), investment decisions (capital budgeting and risk analysis), dividend decision, and management of working capital.

Section A

Cost of Capital, Capital Structure and Leverages

Cost of debt, preference, equity and retained earnings, CAPM, WACC and marginal cost; NI, NOI, traditional and MM capital structure theories; operating, financial and combined leverage; and EBIT-EPS analysis.

Section A

Investment, Dividend and Working Capital Decisions

Capital budgeting techniques (payback, NPV, IRR, PI) and risk analysis; Walter, Gordon and MM dividend theories; and working capital management including operating cycle, EOQ, receivables, factoring, and cash management.

50%

Section B: Strategic Management

Introduction to strategic management, strategic analysis of the external environment, strategic analysis of the internal environment, strategic choices, and strategy implementation and evaluation.

Section B

Strategic Analysis (External and Internal)

Vision, mission and objectives, levels of strategy, environmental scanning, PESTLE, Porter's five forces, strategic groups, SWOT/TOWS, value chain, core competence, and BCG/GE portfolio matrices.

Section B

Strategic Choices and Implementation

Ansoff and Porter generic strategies, diversification and integration, strategic alliances, structure-strategy fit, McKinsey 7S, strategic leadership and culture, BPR, TQM, supply chain, balanced scorecard, and strategy evaluation.

How to Pass the CA Inter Paper 6: FM & SM Exam

What You Need to Know

  • Passing score: 40% in the paper and 50% aggregate in the group, per ICAI regulations
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours
  • Exam fee: Charged as part of the CA Intermediate group/both-group examination fee set by ICAI; no separate per-paper fee.

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Inter Paper 6: FM & SM Study Tips from Top Performers

1Treat FM as a practice subject: rework cost of capital, leverage, capital budgeting, and working capital problems until the formulas are automatic.
2For SM, learn each framework (PESTLE, Porter's five forces, value chain, BCG, Ansoff) with a quick diagram and a one-line trigger for when to apply it.
3Use the FM 50 / SM 50 split to allocate study time evenly, since each section can independently affect your paper score.
4Practise the case-scenario MCQs without negative marking, but read each stem carefully because they test conceptual depth, not just recall.
5Maintain a formula sheet for FM and a framework sheet for SM, and revise both in the final week before the exam.
6Write full descriptive answers under timed conditions from ICAI study material, since 70% of the paper is descriptive.

Frequently Asked Questions

What is the exam pattern of CA Inter Paper 6 (FM & SM)?

CA Intermediate Paper 6 is a 100-mark, 3-hour exam under the ICAI New Scheme 2023. It is divided into Section A: Financial Management (50 marks) and Section B: Strategic Management (50 marks), with about 70% descriptive and 30% objective (MCQ) questions and no negative marking on the MCQs.

What is the passing score for CA Inter Paper 6?

Under ICAI regulations, a candidate must score at least 40% marks in the paper and 50% in aggregate across the group to pass. A score of 60 marks or more in a paper can earn an exemption that carries forward as per ICAI exemption rules.

How many chapters are in CA Inter FM and SM?

Section A Financial Management has nine chapters, from scope and objectives of FM to management of working capital. Section B Strategic Management has five chapters: introduction to strategic management, external environment analysis, internal environment analysis, strategic choices, and strategy implementation and evaluation.

Is there negative marking in the CA Inter Paper 6 MCQs?

No. ICAI states there is no negative marking for the compulsory objective (MCQ) component of the descriptive papers, including Paper 6. The MCQ portion is typically case-scenario based and accounts for about 30% of the marks.

Which scheme governs CA Inter Paper 6?

Paper 6 is part of CA Intermediate Group II under the ICAI New Scheme of Education and Training, 2023. The earlier separate papers on Enterprise Information and Strategic Management and on Financial Management and Economics for Finance were restructured into this combined FM and SM paper.

Is FM more numerical or theoretical?

Financial Management (Section A) is largely numerical and formula-based, covering cost of capital, leverages, capital budgeting, and working capital. Strategic Management (Section B) is conceptual and theory-driven, covering frameworks such as Porter's five forces, the value chain, and the BCG matrix.

How long is the CA Inter Paper 6 exam?

The exam duration is 3 hours for the full 100-mark paper covering both Section A Financial Management and Section B Strategic Management. Candidates should budget time across both the descriptive answers and the compulsory MCQ section.

Does this question bank match the real exam exactly?

Our 100-question bank is multiple-choice knowledge prep covering the complete FM and SM syllabus. The real ICAI exam is about 70% descriptive and only 30% MCQ, so use these MCQs to test concepts and formulas, then practise full-length descriptive answers from ICAI study material.