MCQOPTIONS
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MCQOPTIONS
This section includes 57 Mcqs, each offering curated multiple-choice questions to sharpen your Master of Commerce (MDotcom) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Intermediaries who link buyers and sellers by buying and selling securities at stated prices are called |
| A. | investment bankers. |
| B. | traders |
| C. | brokers |
| D. | dealers |
| Answer» E. | |
| 2. |
Under this method of floatation in primary market, a subscription is invited from general public to invest in the securities of a company through the issue of advertisement. |
| A. | Private placement |
| B. | Offer through prospectus |
| C. | Offer for sale |
| D. | All of the above |
| Answer» C. Offer for sale | |
| 3. |
Which of the following actions might you expect lenders to take during periods of variable and unpredictable inflation? |
| A. | Reduce the amount of lending they are prepared to do. |
| B. | Increase the average length of loans they are willing to make. |
| C. | Increase the amount of lending they are prepared to do. |
| D. | Reduce the average length of loans they are willing to make. |
| Answer» E. | |
| 4. |
The presence of in financial markets leads to adverse selection and moral hazard problems that interfere with the efficient functioning of financial markets. |
| A. | noncollateralized risk |
| B. | free-riding |
| C. | asymmetric information |
| D. | costly state verification |
| Answer» D. costly state verification | |
| 5. |
___________ is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities. |
| A. | Government Securities |
| B. | Mutual Funds |
| C. | Derivatives |
| D. | Shares |
| Answer» C. Derivatives | |
| 6. |
Any company making a public issue of value of more than Rs. is required to file a draft offer document with SEBI. |
| A. | 100 lakh |
| B. | 25 lakh |
| C. | 50 lakh |
| D. | 10 lakh |
| Answer» D. 10 lakh | |
| 7. |
It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year. |
| A. | Primary market |
| B. | Secondary market |
| C. | Capital market |
| D. | Money market |
| Answer» C. Capital market | |
| 8. |
They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high. |
| A. | Commercial papers |
| B. | Call money |
| C. | Commercial bill |
| D. | Certificate of deposit |
| Answer» E. | |
| 9. |
According to --------- theory of interest, the rate of Interest is the price of credit which is determined by the demand and supply for loanable funds. |
| A. | Loanable Fund theory |
| B. | Productivity theory |
| C. | Abstinence theory |
| D. | None of these |
| Answer» B. Productivity theory | |
| 10. |
If people are willing to lend at 7% when inflation is 2% and continue to lend the same amounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to: |
| A. | Extrapolative expectations |
| B. | Risk aversion |
| C. | Asymmetric information |
| D. | Money illusion |
| Answer» E. | |
| 11. |
In primary markets, first time issued shares to be publicly traded in stock markets is considered as |
| A. | traded offering |
| B. | public markets |
| C. | issuance offering |
| D. | initial public offering |
| Answer» E. | |
| 12. |
When the least desirable credit risks are the ones most likely to seek loans, lenders are subject to the |
| A. | moral hazard problem. |
| B. | adverse selection problem. |
| C. | shirking problem. |
| D. | free-rider problem. |
| Answer» C. shirking problem. | |
| 13. |
The type of financial security which have linked payoff to another issued security is classified as. |
| A. | linked security |
| B. | derivative security |
| C. | payable security |
| D. | non- issuing security |
| Answer» C. payable security | |
| 14. |
A person appointed by a stock broker to assist to him in the business of securities trading at trading floor of stock exchanges is |
| A. | Sub-broker |
| B. | Commission broker |
| C. | Authorised clerk |
| D. | Remisiers |
| Answer» D. Remisiers | |
| 15. |
Commodity exchanges enable producers and consumer to hedge their -----------given the uncertainty of the future. |
| A. | seasonal risk |
| B. | profit risk |
| C. | production risk |
| D. | price risk |
| Answer» E. | |
| 16. |
The facility to carry forward a transaction from one settlement period to another is called --- ------ transaction |
| A. | Hand delivery |
| B. | Badla |
| C. | Cornering |
| D. | Arbitrage |
| Answer» C. Cornering | |
| 17. |
Members of commodity market can opt to meet the security deposit requirement by way of -- --------- |
| A. | Cash |
| B. | Bank Guarantee |
| C. | Fixed Deposit Receipts |
| D. | All of the above |
| Answer» E. | |
| 18. |
It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. |
| A. | Commercial bill |
| B. | Commercial papers |
| C. | Call money |
| D. | None of the above |
| Answer» B. Commercial papers | |
| 19. |
It serves as an intermediary between the investor and the depository who is authorised to maintain the accounts of dematerialised shares. |
| A. | Depository Participant |
| B. | Depository |
| C. | Stock exchange |
| D. | None of the above |
| Answer» B. Depository | |
| 20. |
According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will: |
| A. | Decrease output and employment |
| B. | Increase risk aversion |
| C. | Reduce the demand for money |
| D. | Raise interest rates |
| Answer» E. | |
| 21. |
Type of swaps in which fixed payments of interest are exchanged by two counterparties for floating payments of interest are called |
| A. | float-fixed swaps |
| B. | interest rate swaps |
| C. | indexed swaps |
| D. | counter party swaps |
| Answer» C. indexed swaps | |
| 22. |
The process of holding the entire supply of a particular security with a view to dictating terms is called |
| A. | Cornering |
| B. | Wash sales |
| C. | Rigging |
| D. | Arbitrage |
| Answer» B. Wash sales | |
| 23. |
The main sources of financing for businesses, in order of importance, are |
| A. | financial intermediaries, issuing bonds, issuing stocks. |
| B. | issuing bonds, issuing stocks, financial intermediaries. |
| C. | issuing stocks, issuing bonds, financial intermediaries. |
| D. | issuing stocks, financial intermediaries, issuing bonds. |
| Answer» B. issuing bonds, issuing stocks, financial intermediaries. | |
| 24. |
_______ is a link between savers & borrowers, helps to establish a link between savers & investors |
| A. | Marketing |
| B. | Financial market |
| C. | Money market |
| D. | None of these |
| Answer» C. Money market | |
| 25. |
When securities are allotted to institutional investors & some selected individuals is referred to as _________. |
| A. | Initial public offer |
| B. | Offer through prospectus |
| C. | Private placement |
| D. | Offer for sale |
| Answer» D. Offer for sale | |
| 26. |
In primary markets, property of shares which made it easy to sell newly issued security is considered as |
| A. | increased liquidity |
| B. | decreased liquidity |
| C. | money flow |
| D. | large funds |
| Answer» B. decreased liquidity | |
| 27. |
It is a legally enforceable document which is issued by a stock broker within 24 hours of the execution of a trade order. |
| A. | PAN number |
| B. | Unique Order Code |
| C. | Contract Note |
| D. | None of the above |
| Answer» D. None of the above | |
| 28. |
represent claims for the payment of a sum of money sometimes in the future and/or a periodic payment in the form of interest or dividend. |
| A. | Physical asset |
| B. | Fixed asset |
| C. | Financial asset |
| D. | All the above |
| Answer» D. All the above | |
| 29. |
When the potential borrowers who are the most likely to default are the ones most actively seeking a loan, _ is said to exist. |
| A. | asymmetric information |
| B. | adverse selection |
| C. | moral hazard |
| D. | fraud |
| Answer» C. moral hazard | |
| 30. |
The mandatory detail that an investor has to provide to the broker at the time of opening a demat account is |
| A. | Date of birth and address |
| B. | PAN number |
| C. | Residential status (Indian/NRI) |
| D. | Bank account details. |
| Answer» C. Residential status (Indian/NRI) | |
| 31. |
Which of the following sequences lists financial assets from lowest expected return to highest expected return? |
| A. | Bonds, stocks, derivatives. |
| B. | Bonds, derivatives, stocks. |
| C. | Stocks, bonds, derivatives. |
| D. | Derivatives, stocks, bonds. |
| Answer» B. Bonds, derivatives, stocks. | |
| 32. |
Which of the following types of financial assets represents a creditor relationship with an entity? |
| A. | Stocks. |
| B. | Options. |
| C. | Futures. |
| D. | Bonds. |
| Answer» E. | |
| 33. |
If intrinsic value of an option is $450 and price of an option is $560 then time value of an option is |
| A. | $110 |
| B. | $1,010 |
| C. | $450.00 |
| D. | $560 |
| Answer» B. $1,010 | |
| 34. |
__________would encompass fees received by the bank, but not revenues coming from interest charges on loans. |
| A. | Net interest margin |
| B. | Spread |
| C. | Non interest income |
| D. | Non interest expense |
| Answer» C. Non interest income | |
| 35. |
Which of the following provides income that is fully exempt from taxation for the individual investor? |
| A. | Municipal bonds. |
| B. | Preferred stocks. |
| C. | Treasury notes. |
| D. | Treasury bills. |
| Answer» B. Preferred stocks. | |
| 36. |
When the lender and the borrower have different amounts of information regarding a transaction,__________ |
| A. | asymmetric information |
| B. | adverse selection |
| C. | moral hazard |
| D. | fraud |
| Answer» B. adverse selection | |
| 37. |
Which of the following is not an institutional credit rating agency in Indian financial system? |
| A. | CRISIL |
| B. | CIBIL |
| C. | CARE |
| D. | ICRA |
| Answer» C. CARE | |
| 38. |
The reason that finding the present value of a future sum of money requires us to discount it, is that: |
| A. | Inflation will reduce its purchasing power |
| B. | We can t be certain of receiving it |
| C. | We don t know when we shall receive it |
| D. | Waiting deprives us of its use |
| Answer» E. | |
| 39. |
When the borrower engages in activities that make it less likely that the loan will be repaid, is said to exist. |
| A. | asymmetric information |
| B. | adverse selection |
| C. | moral hazard |
| D. | fraud |
| Answer» D. fraud | |
| 40. |
The agreement which incurs the transaction between two parties and promise held that second party will sell security at specific maturity is classified as |
| A. | repurchasing commercial notes |
| B. | repurchase bills |
| C. | purchase agreement |
| D. | reverse repurchase agreement |
| Answer» E. | |
| 41. |
It is a number assigned to each transaction by the stock exchange and is printed on the contract note. |
| A. | PAN number |
| B. | Unique Order Code |
| C. | Contract Note |
| D. | None of the above |
| Answer» C. Contract Note | |
| 42. |
The device adopted to make profit out of the differences in prices of a security in to different markets is called..................... |
| A. | Cornering |
| B. | prise rigging |
| C. | arbitrage |
| D. | margin trading |
| Answer» D. margin trading | |
| 43. |
..................... is an unsecured short term promissory note issued by creditworthy companies? |
| A. | commercial pape |
| B. | interbank participation certificate |
| C. | Repo |
| D. | Certificate of deposit |
| Answer» B. interbank participation certificate | |
| 44. |
It is an instrument of short-term borrowing by the Government of India maturing in less than one year. |
| A. | Commercial bill |
| B. | Treasury bill |
| C. | Call money |
| D. | None of the above |
| Answer» D. None of the above | |
| 45. |
Interest rate expectations have been thought to be an important influence on bond sales because: |
| A. | government bond-holders are, by and large, are income risk averse. |
| B. | interest rates have always been very unstable. |
| C. | the bond market is dominated by people interested mainly in capital gains. |
| D. | government bond-holders hold extrapolative expectations. |
| Answer» D. government bond-holders hold extrapolative expectations. | |
| 46. |
In the loanable fund s theory of interest determination, an increase in the productivity of capital equipment should lead to: |
| A. | A reduction in the amount of saving |
| B. | More employment |
| C. | Higher interest rates |
| D. | Higher prices |
| Answer» D. Higher prices | |
| 47. |
A typical venture capital firm has a ______ number of investors who each contribute a ______ amount of money to the fund. |
| A. | large; small |
| B. | small; large |
| C. | large; large |
| D. | small; small |
| Answer» C. large; large | |
| 48. |
If the public debt can be financed without adding to inflation or causing interest rates to rise, it is said to be: |
| A. | only a burden on future generations. |
| B. | following the golden rule of the public finances. |
| C. | in primary balance. |
| D. | sustainable |
| Answer» E. | |
| 49. |
The facility to carry forward a transaction from one settlement period to another is known as ..................... transaction |
| A. | Badla |
| B. | arbitrage |
| C. | cornering |
| D. | trading inside |
| Answer» B. arbitrage | |
| 50. |
In financial transactions, the risk that there will be no profit in selling of this asset is classified as |
| A. | price risk |
| B. | profit risk |
| C. | selling risk |
| D. | financial risk |
| Answer» B. profit risk | |