MCQOPTIONS
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MCQOPTIONS
This section includes 271 Mcqs, each offering curated multiple-choice questions to sharpen your Financial Management/Financial Markets knowledge and support exam preparation. Choose a topic below to get started.
| 151. |
If the coupon rate is less than going rate of interest then the bond will be sold |
| A. | seasoned par value |
| B. | more than its par value |
| C. | seasoned par value |
| D. | at par value |
| Answer» C. seasoned par value | |
| 152. |
In the call provision, it is stated that company will pay to issue an amount |
| A. | higher than par value |
| B. | lower than par value |
| C. | equal to par value |
| D. | zero to par value |
| Answer» B. lower than par value | |
| 153. |
The coupon rate of the bond is also called |
| A. | nominal rate |
| B. | premium rate |
| C. | quoted rate |
| D. | both a and c |
| Answer» E. | |
| 154. |
An bond whose price will rise above its face value is classified as |
| A. | premium face value |
| B. | premium bond |
| C. | premium stock |
| D. | premium warrants |
| Answer» C. premium stock | |
| 155. |
The type of bond in which the payments are made on the basis of inflation index is classified as |
| A. | borrowed bond |
| B. | purchasing power bond |
| C. | surplus bond |
| D. | deficit bond |
| Answer» C. surplus bond | |
| 156. |
An interest yield = 7.9% and capital gains yield = 2.5% then the total rate of return is |
| A. | 0.1 |
| B. | 0.0316 |
| C. | 0.0031 |
| D. | 0.054 |
| Answer» B. 0.0316 | |
| 157. |
The real risk-free rate is applicable when it is expected that there will be |
| A. | high inflation |
| B. | low inflation |
| C. | no inflation |
| D. | none of above |
| Answer» E. | |
| 158. |
The unsecured bonds which are designated for only notes payable or all other debts are classified as |
| A. | designated bonds |
| B. | payable bonds |
| C. | ordinate bonds |
| D. | subordinated bonds |
| Answer» E. | |
| 159. |
The type of bond which pays interest payment only when it earns is classified as |
| A. | income bond |
| B. | interest bond |
| C. | payment bond |
| D. | earnings bond |
| Answer» B. interest bond | |
| 160. |
An average inflation rate which is expected over the life of security is classified as |
| A. | inflation premium |
| B. | off season premium |
| C. | nominal premium |
| D. | required premium |
| Answer» B. off season premium | |
| 161. |
The bond which is offered below its face value is classified as |
| A. | present value bond |
| B. | original issue discount bond |
| C. | coupon issued bond |
| D. | discounted bond |
| Answer» C. coupon issued bond | |
| 162. |
The price of an outstanding bond increases when the market rate |
| A. | never changes |
| B. | increases |
| C. | decreases |
| D. | earned |
| Answer» D. earned | |
| 163. |
According to top rating agencies S&P the double-B and other lower grade bonds are classified as |
| A. | development bonds |
| B. | junk bonds |
| C. | compounded bonds |
| D. | discounted bonds |
| Answer» C. compounded bonds | |
| 164. |
The protective covenant devised in the market to reduce event risk and to control debt cost is classified as |
| A. | super poison covenant |
| B. | super poison put |
| C. | super poison call |
| D. | super poison redemption |
| Answer» C. super poison call | |
| 165. |
The difference between bond's yield and any other security yield having same maturities is considered as |
| A. | maturity spread |
| B. | bond spread |
| C. | yield spread |
| D. | interest spread |
| Answer» C. yield spread | |
| 166. |
The call provision practiced by the company which states that call price will be paid is classified as |
| A. | super refund provision |
| B. | super put redemption |
| C. | make-whole call provision |
| D. | super call provision |
| Answer» D. super call provision | |
| 167. |
An unsecured bond that provides no lien against property as security for the bond obligation is classified as |
| A. | secured bond |
| B. | debenture |
| C. | obligation bond |
| D. | specific bond |
| Answer» C. obligation bond | |
| 168. |
The outstanding bonds are also classified as |
| A. | standing bonds |
| B. | outdated bonds |
| C. | dated bonds |
| D. | seasoned bonds |
| Answer» E. | |
| 169. |
The bonds that have high liquidity premium usually have |
| A. | inflated trading |
| B. | default free trading |
| C. | less frequently traded |
| D. | frequently traded |
| Answer» D. frequently traded | |
| 170. |
The rate denoted as r* is best classified as |
| A. | real risk-free interest rate |
| B. | real-risk free nominal rate |
| C. | real-risk free quoted rate |
| D. | real-risk free nominal premium |
| Answer» B. real-risk free nominal rate | |
| 171. |
The reinvestment risk of bonds is higher on |
| A. | short maturity bonds |
| B. | high maturity bonds |
| C. | high premium bonds |
| D. | high inflated bonds |
| Answer» B. high maturity bonds | |
| 172. |
The treasury notes that provide returns tied to inflation rate are classified as |
| A. | clean price bonds |
| B. | discount index bonds |
| C. | premium index bonds |
| D. | inflation index bonds |
| Answer» E. | |
| 173. |
An effect of interest rate risk and investment risk on a bond's yield is classified as |
| A. | reinvestment premium |
| B. | investment risk premium |
| C. | maturity risk premium |
| D. | defaulter's premium |
| Answer» D. defaulter's premium | |
| 174. |
The rate of return on non-callable bonds is $680 and value of issuer option is $450 then the return on callable bond is |
| A. | 230 |
| B. | 0.0152 |
| C. | 1.52 |
| D. | 1130 |
| Answer» E. | |
| 175. |
The bonds that are backed by cash flow from project and are sold to finance particular project are classified as |
| A. | finance bonds |
| B. | revenue bonds |
| C. | financing bonds |
| D. | project bonds |
| Answer» C. financing bonds | |
| 176. |
The coupon rate of convertible bond is |
| A. | higher |
| B. | lower |
| C. | variable |
| D. | stable |
| Answer» C. variable | |
| 177. |
The financial securities issued by the local and state governments are classified as |
| A. | municipal bonds |
| B. | reserve bonds |
| C. | state bonds |
| D. | federal bonds |
| Answer» B. reserve bonds | |
| 178. |
The municipal bonds public offering is often made through the |
| A. | insurance companies |
| B. | index banking firm |
| C. | commercial banking firm |
| D. | stock exchange |
| Answer» D. stock exchange | |
| 179. |
The bonds that do not pay original coupon payment but payment is made from additional bonds are classified as |
| A. | payment in-kind bonds |
| B. | payment off-kind bonds |
| C. | kind payment |
| D. | additional bond |
| Answer» B. payment off-kind bonds | |
| 180. |
In the New York Stock exchange, the fully automated information and trading system which allows to execute orders for bonds is classified as |
| A. | secondary stock system |
| B. | primary stock system |
| C. | automated stock system |
| D. | automated bond system |
| Answer» E. | |
| 181. |
The several maturities dates are involved in the issued bonds if the company earnings are classified as |
| A. | parallel term income |
| B. | pledged |
| C. | volatile |
| D. | non-volatile |
| Answer» D. non-volatile | |
| 182. |
If market interest rate rises above the coupon rate then the bond will be sold |
| A. | equal to return rate |
| B. | seasoned price |
| C. | below its par value |
| D. | above its par value |
| Answer» D. above its par value | |
| 183. |
The bonds with the deferred call have the protection which is classified as |
| A. | provision protection |
| B. | provision protection |
| C. | deferred protection |
| D. | call protection |
| Answer» E. | |
| 184. |
The yield of interest rate which is below than coupon rate, this yield is classified as |
| A. | yield to maturity |
| B. | yield to call |
| C. | yield to earnings |
| D. | yield to investors |
| Answer» C. yield to earnings | |
| 185. |
The payment divided by the par value is classified as |
| A. | divisible payment |
| B. | coupon payment |
| C. | par payment |
| D. | per period payment |
| Answer» C. par payment | |
| 186. |
The conversion values is divided by conversion rate received on conversion on stock, to calculate |
| A. | current market price |
| B. | past market price |
| C. | future market value |
| D. | current stock value |
| Answer» B. past market price | |
| 187. |
The risk of fall in income due to fall in interest rates in future is classified as |
| A. | income risk |
| B. | investment risk |
| C. | reinvestment risk |
| D. | mature risk |
| Answer» D. mature risk | |
| 188. |
The replacement of bearer bonds with registered bonds is because of lack of |
| A. | security of indentures |
| B. | security of unregistered bonds |
| C. | security of bearer bonds |
| D. | security of registered bonds |
| Answer» D. security of registered bonds | |
| 189. |
The thin trading of municipal bonds in secondary markets is because of |
| A. | excess of information |
| B. | lack of information |
| C. | frequent information |
| D. | infrequent information |
| Answer» C. frequent information | |
| 190. |
The denomination currency choice and volatility of interest rates affect the |
| A. | maturity date of euro bond |
| B. | cost of euro bond |
| C. | issuance process of bonds |
| D. | process of printing money |
| Answer» C. issuance process of bonds | |
| 191. |
The bond which is issued in market and few days are passed of its issuance is classified as |
| A. | instable bond |
| B. | outstanding bond |
| C. | standing bond |
| D. | stable bond |
| Answer» C. standing bond | |
| 192. |
The minimum denominations of municipal bonds are |
| A. | 5000 |
| B. | 10000 |
| C. | 12000 |
| D. | 22000 |
| Answer» B. 10000 | |
| 193. |
An annual interest payment divided by current price of bond is considered as |
| A. | current yield |
| B. | maturity yield |
| C. | return yield |
| D. | earnings yield |
| Answer» B. maturity yield | |
| 194. |
The type of bond in which the coupon payment is mailed to registered bondholders and the owner is recorded by issuing company is classified as |
| A. | unregistered bonds |
| B. | indenture bonds |
| C. | trustee bonds |
| D. | registered bonds |
| Answer» E. | |
| 195. |
A premium charged by lenders for the securities that cannot be converted into cash is classified as |
| A. | required premium |
| B. | liquidity premium |
| C. | marketability premium |
| D. | both b and c |
| Answer» E. | |
| 196. |
The yield on subordinated bonds as compared to non-subordinated bonds is considered as |
| A. | highly risky and higher yields |
| B. | highly risky and lower yields |
| C. | less risky and higher yields |
| D. | less risky and lower yields |
| Answer» B. highly risky and lower yields | |
| 197. |
The marginal income tax rate is 35% and before tax rate of return is 12.5% then the after tax rate of return is |
| A. | 0.0613 |
| B. | 0.0713 |
| C. | 0.08125 |
| D. | 0.0913 |
| Answer» D. 0.0913 | |
| 198. |
The coupon rate on Treasury Inflation Protection Securities is determined by |
| A. | discount buying |
| B. | premium selling |
| C. | auction process |
| D. | direct selling |
| Answer» D. direct selling | |
| 199. |
The bonds that are considered investment rating bonds are given the rating of |
| A. | triple B rating bonds |
| B. | double B |
| C. | triple A |
| D. | double A |
| Answer» B. double B | |
| 200. |
The type of bonds that are swapped to less developed country against an outstanding loan are classified as |
| A. | Brady bonds |
| B. | swapped bonds |
| C. | developed bonds |
| D. | developing bonds |
| Answer» B. swapped bonds | |