MCQOPTIONS
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MCQOPTIONS
This section includes 129 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.
| 1. |
The expected capital gain is $20 and the expected final price is $50 then the original investment will be |
| A. | 30 |
| B. | −$30 |
| C. | 70 |
| D. | −$70 |
| Answer» B. −$30 | |
| 2. |
A corporate bond is a corporation's write undertaking that it will refund a specific amount of money plus |
| A. | premium |
| B. | interest |
| C. | nothing |
| D. | security |
| Answer» C. nothing | |
| 3. |
Capital Market Line is firstly initiated by |
| A. | Mohsin |
| B. | Linter |
| C. | Markowitz |
| D. | William Sharpe |
| Answer» E. | |
| 4. |
For an investment, the weighted average time to maturity is considered as |
| A. | premium time |
| B. | standard time |
| C. | mean time |
| D. | duration |
| Answer» E. | |
| 5. |
The type of bond whose present value is lesser than that of its face value is classified as |
| A. | discount bond |
| B. | premium bond |
| C. | coupon bond |
| D. | interest bonds |
| Answer» B. premium bond | |
| 6. |
In zero coupon bonds, the increase in duration with respect to maturity must be at |
| A. | decreasing rate |
| B. | increasing rate |
| C. | alarming rate |
| D. | inelastic rate |
| Answer» B. increasing rate | |
| 7. |
Total portfolio hazard is |
| A. | equal to systematic risk plus diversifiable risk |
| B. | equal to systematic risk plus unavoidable risk |
| C. | equal to avoidable risk plus diversifiable risk |
| D. | equal to systematic risk plus no diversifiable risk |
| Answer» B. equal to systematic risk plus unavoidable risk | |
| 8. |
Asset allocation is procedure of scattering your assets between numerous different kinds of investments to |
| A. | highest risk |
| B. | moderate risk |
| C. | lessen risk |
| D. | no risk |
| Answer» D. no risk | |
| 9. |
Political constancy is chief aspect concerning |
| A. | exchange risk |
| B. | systematic risk |
| C. | non-systematic risk |
| D. | country risk |
| Answer» E. | |
| 10. |
A price weighted index is an arithmetic mean of |
| A. | future prices |
| B. | current prices |
| C. | quarter prices |
| D. | none of these |
| Answer» C. quarter prices | |
| 11. |
Which type of market efficiency declares that current security prices totally reflect all information, equally public and private |
| A. | Weak |
| B. | Semi-strong |
| C. | Strong |
| D. | none of these |
| Answer» D. none of these | |
| 12. |
The constant growth model would not be used in the condition if growth rate is |
| A. | greater than dividend paid |
| B. | equal to realized rate of return |
| C. | less than realized rate of return |
| D. | greater than realized rate of return |
| Answer» E. | |
| 13. |
Hold two securities as an alternative of will not decrease hazard occupied by an investor if two securities are |
| A. | perfectively positive correlated |
| B. | perfectively negative correlated |
| C. | no correlation |
| D. | all of answer correct |
| Answer» B. perfectively negative correlated | |
| 14. |
Bondholders usually accept interest payments each |
| A. | 1 year |
| B. | six months |
| C. | 2 months |
| D. | 2 years |
| Answer» C. 2 months | |
| 15. |
The constant growth rate is 6.5% and an expected dividend yield is 3.4% then an expected rate of return would be |
| A. | 0.099 |
| B. | 22.1 |
| C. | 0.031 |
| D. | 1.912 |
| Answer» B. 22.1 | |
| 16. |
The paid dividend is $20 and the dividend yield is 40% then the current price would be |
| A. | 0.6 |
| B. | 60 |
| C. | 50 |
| D. | 0.02 |
| Answer» D. 0.02 | |
| 17. |
An actual rate of return is subtracted from expected growth rate then it is divided from dividend stockholders expect use for calculating |
| A. | dividend growth model |
| B. | actual growth model |
| C. | constant growth model |
| D. | variable growth model |
| Answer» D. variable growth model | |
| 18. |
An expected dividend yield is subtracted from an expected rate of return which is used to calculate |
| A. | specialized growth rate |
| B. | capital gains yield |
| C. | casual growth yield |
| D. | past growth rate |
| Answer» C. casual growth yield | |
| 19. |
The constant growth rate is 8% and an expected dividend yield is 5.4% then the expected rate of return would be |
| A. | −3.4% |
| B. | 0.034 |
| C. | 0.134 |
| D. | −13.4% |
| Answer» D. −13.4% | |
| 20. |
An expected final stock price is $70 and an expected capital gain is $25 then an original investment would be |
| A. | 45 |
| B. | −$45 |
| C. | 95 |
| D. | −$95 |
| Answer» D. −$95 | |
| 21. |
The preferred stocks are also classified as |
| A. | intrinsic preference |
| B. | perpetuities |
| C. | extrinsic preference |
| D. | weak preference |
| Answer» C. extrinsic preference | |
| 22. |
Superior portfolio is not basically a collection of individually |
| A. | good portfolio |
| B. | good investments |
| C. | negative securities |
| D. | all of answer correct |
| Answer» C. negative securities | |
| 23. |
The preemptive right of the common stockholders are necessarily included in company's |
| A. | laws |
| B. | purchase chart |
| C. | corporate charter |
| D. | selling charter |
| Answer» D. selling charter | |
| 24. |
The duration which is divided by the interest rate plus one is classified as |
| A. | decreased duration |
| B. | increase duration |
| C. | modified duration |
| D. | at par duration |
| Answer» D. at par duration | |
| 25. |
In Capital Market Line every investment is |
| A. | infinitely divisible |
| B. | finitely divisible |
| C. | a & b |
| D. | all of answer correct |
| Answer» B. finitely divisible | |
| 26. |
For given change in interest rates, the percentage change in the present value of bond is classified as |
| A. | price sensitivity |
| B. | yield sensitivity |
| C. | maturity sensitivity |
| D. | premium sensitivity |
| Answer» B. yield sensitivity | |
| 27. |
The constant growth rate is 7.2% and an expected rate of return is 12.5% then expected dividend yield will be |
| A. | 0.053 |
| B. | 0.197 |
| C. | −5.3% |
| D. | 1.736 |
| Answer» B. 0.197 | |
| 28. |
The interest rate that investors receive on financial security to calculate fair value of security is classified as |
| A. | forward rate of return |
| B. | unturned rate of return |
| C. | required rate of return |
| D. | termed rate of return |
| Answer» D. termed rate of return | |
| 29. |
The second step in calculating value of stock with non-constant growth rate is to find out an |
| A. | expected intrinsic stock |
| B. | extrinsic stock |
| C. | expected price of stock |
| D. | intrinsic stock |
| Answer» D. intrinsic stock | |
| 30. |
The present value of dividends which is expected to be provided in future is classified as an |
| A. | intrinsic value of stock |
| B. | extrinsic value of stock |
| C. | intrinsic bonds |
| D. | extrinsic bonds |
| Answer» B. extrinsic value of stock | |
| 31. |
Most favourable portfolio is proficient portfolio with the |
| A. | lowest risk |
| B. | highest risk |
| C. | highest utility |
| D. | least investment |
| Answer» D. least investment | |
| 32. |
A situation in which an outside group solicit proxies to take control of the business is classified as |
| A. | outside group |
| B. | solicit process |
| C. | proxy fight |
| D. | controlled management |
| Answer» D. controlled management | |
| 33. |
The information which is reflected in current market prices with the help of past price movements is classified as |
| A. | market efficiency |
| B. | semi strong efficiency |
| C. | weak form efficiency |
| D. | strong form efficiency |
| Answer» D. strong form efficiency | |
| 34. |
The real rate of return, risk and expected inflation are the primary determinants of |
| A. | minimum rate of return |
| B. | accepted return |
| C. | expected return |
| D. | real risk free rate |
| Answer» B. accepted return | |
| 35. |
Dollar-cost averaging allows investors to stay away from trouble of buying high and selling |
| A. | least |
| B. | high |
| C. | low |
| D. | highest |
| Answer» D. highest | |
| 36. |
In zero coupon bonds, the impact of lower duration on maturity is that |
| A. | maturity will be higher |
| B. | maturity will be lower |
| C. | maturity will be zero |
| D. | maturity will be elastic |
| Answer» B. maturity will be lower | |
| 37. |
The growth rate which is predicted by marginal investors for dividends is classified as |
| A. | expected growth rate |
| B. | annual growth rate |
| C. | past growth rate |
| D. | unexpected growth rate |
| Answer» B. annual growth rate | |
| 38. |
An expected dividend yield is 7.5% and an expected rate of return is 15.5% then the constant growth rate will be |
| A. | 0.22 |
| B. | 0.08 |
| C. | 0.23 |
| D. | 0.0206 |
| Answer» C. 0.23 | |
| 39. |
A stock which is issued to meet specific needs of the company is considered as |
| A. | classified stock |
| B. | specific stock |
| C. | needed stock |
| D. | meeting stock |
| Answer» B. specific stock | |
| 40. |
The cash flow which is available for all the investors of the company is classified as |
| A. | extrinsic stock |
| B. | intrinsic stock |
| C. | investing cash |
| D. | free cash flow |
| Answer» E. | |
| 41. |
Investors should be agreeing to invest in riskier investments merely |
| A. | if return is short |
| B. | if there are no safe alternatives except for holding cash |
| C. | if expected return is adequate for risk level |
| D. | if there are true speculators |
| Answer» D. if there are true speculators | |
| 42. |
The stock in large companies and own by people who are not active in management is classified as |
| A. | self-held stock |
| B. | privately held stock |
| C. | publicly held stock |
| D. | enactive held stock |
| Answer» D. enactive held stock | |
| 43. |
The value of stock is $900 and the required rate of return is 30% then the preferred dividend will be |
| A. | 270 |
| B. | 27000 |
| C. | 90 |
| D. | 90 |
| Answer» B. 27000 | |
| 44. |
Trustee is a self-governing organization that operates as bondholders |
| A. | partner |
| B. | guardian |
| C. | broker |
| D. | representative |
| Answer» E. | |
| 45. |
In zero coupon bonds, the impact of higher duration on maturity is that |
| A. | maturity will be zero |
| B. | maturity will be elastic |
| C. | maturity will be higher |
| D. | maturity will be lower |
| Answer» E. | |
| 46. |
The capital gain is $3 and the capital gains yield is 6% then the beginning price will be |
| A. | 18 |
| B. | 0.18 times |
| C. | 50 |
| D. | 0.5 |
| Answer» D. 0.5 | |
| 47. |
The first step in calculating value of stock with non-constant growth rate is to |
| A. | estimate expected dividend |
| B. | actual expected dividend |
| C. | estimate number of share |
| D. | estimate intrinsic shares |
| Answer» B. actual expected dividend | |
| 48. |
The more the coupon payment or promised interest payment |
| A. | the higher its duration |
| B. | the lower its duration |
| C. | zero duration |
| D. | One year duration |
| Answer» C. zero duration | |
| 49. |
Non-systematic risk is furthermore identified as |
| A. | no diversifiable risk |
| B. | market risk |
| C. | random risk |
| D. | company specific risk |
| Answer» E. | |
| 50. |
Choice of correlation coefficient is between |
| A. | 0 to 1 |
| B. | 0 to 2 |
| C. | -1 to +1 |
| D. | -1 to 3 |
| Answer» D. -1 to 3 | |