MCQOPTIONS
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MCQOPTIONS
This section includes 657 Mcqs, each offering curated multiple-choice questions to sharpen your Testing Subject knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
The inverse relationship between price change and interest rate change is represented by |
| A. | negative discount |
| B. | negative duration |
| C. | positive duration |
| D. | positive discount |
| Answer» C. positive duration | |
| 2. |
Investments would grade uppermost with regard to protection is |
| A. | government bonds |
| B. | common stock |
| C. | preferred stock |
| D. | real estate |
| Answer» B. common stock | |
| 3. |
The preferred stock dividends must be paid on common stock and must have |
| A. | fixed amount of dividends |
| B. | fixed amount of shares |
| C. | variable amount of dividends |
| D. | variable amount of shares |
| Answer» B. fixed amount of shares | |
| 4. |
Expected worth is the |
| A. | inverse of standard deviation |
| B. | correlation between a security |
| C. | same as discrete probability distribution |
| D. | weighted average of all possible outcomes |
| Answer» E. | |
| 5. |
A closed-end fund is a mutual fund in which shares issue just when fund is |
| A. | organized |
| B. | unorganized |
| C. | copied |
| D. | random behaviour showing |
| Answer» B. unorganized | |
| 6. |
Financial hazard is most related with |
| A. | the use of equity financing by corporations |
| B. | the use of debt financing by corporations |
| C. | equity investments held by corporations |
| D. | debt investment held by corporations |
| Answer» C. equity investments held by corporations | |
| 7. |
Standard deviation determine |
| A. | systematic risk of a security |
| B. | unsystematic risk of security |
| C. | total risk of security |
| D. | the premium of security |
| Answer» D. the premium of security | |
| 8. |
If an expected final stock price is $85 and an original investment is $70 then the value of expected capital gain would be |
| A. | 15 |
| B. | −$15 |
| C. | 155 |
| D. | −$155 |
| Answer» B. −$15 | |
| 9. |
The beginning price is $25 and the capital gains yield is 5% then the capital gain would be |
| A. | 50 |
| B. | 1.25 |
| C. | 50 times |
| D. | 23.75 |
| Answer» C. 50 times | |
| 10. |
An expected dividend yield is added into expected growth rate to calculate |
| A. | dividend return |
| B. | expected rate of return |
| C. | expected capital |
| D. | invested capita |
| Answer» C. expected capital | |
| 11. |
An efficient market hypothesis states in which all public or private information is reflected in current market prices is classified as |
| A. | market efficiency |
| B. | semi strong efficiency |
| C. | weak form efficiency |
| D. | strong form efficiency |
| Answer» E. | |
| 12. |
The after-the-fact rate of return often consider as realized or actual can be denoted |
| A. | s hat r |
| B. | r bar s |
| C. | r hat s |
| D. | s bar r |
| Answer» C. r hat s | |
| 13. |
The type of bonds that pay coupon interest are classified as |
| A. | forward bond |
| B. | payment bonds |
| C. | coupon bond |
| D. | interest bonds |
| Answer» D. interest bonds | |
| 14. |
In expected rate of return for constant growth, the dividends are expected to grow but with the |
| A. | constant rate |
| B. | variable rate |
| C. | yielding rate |
| D. | returning yield |
| Answer» B. variable rate | |
| 15. |
The paid dividend with dividend yield 25% is $5 then the cost price would be |
| A. | 0.3 |
| B. | 30 |
| C. | 0.2 |
| D. | 20 |
| Answer» E. | |
| 16. |
The value of future dividends after the horizon date is classified as |
| A. | hypothesis value |
| B. | horizon value |
| C. | terminal value |
| D. | both b and c |
| Answer» E. | |
| 17. |
The type of bond for which the bonds present value is greater than bonds face value is classified as |
| A. | coupon bond |
| B. | interest bonds |
| C. | discount bond |
| D. | premium bond |
| Answer» E. | |
| 18. |
Who concern with relations between security returns |
| A. | Markowitz diversification |
| B. | random diversification |
| C. | Friedman diversification |
| D. | correlating diversification |
| Answer» B. random diversification | |
| 19. |
The investors of the coupon bond will receive cash flow very soon if the |
| A. | maturity is lower |
| B. | maturity is higher |
| C. | interest payment is higher |
| D. | interest payment is lower |
| Answer» D. interest payment is lower | |
| 20. |
The bonds that does not pay any interest rate are considered as |
| A. | interest free bond |
| B. | zero coupon bond |
| C. | price less coupon bond |
| D. | useless price bonds |
| Answer» C. price less coupon bond | |
| 21. |
The preferred dividend is $60 and the required rate of return is 20% then the value of preferred stock will be |
| A. | 40 |
| B. | 120 |
| C. | 12 |
| D. | 300 |
| Answer» E. | |
| 22. |
A main difference among real and nominal interest proceeds is that |
| A. | real returns adjust for inflation and nominal returns do not |
| B. | real returns use actual cash flows and nominal use expected cash flows |
| C. | real interest adjusts for commissions and nominal returns do not |
| D. | real returns show highest possible return and nominal returns show lowest possible returns |
| Answer» B. real returns use actual cash flows and nominal use expected cash flows | |
| 23. |
The dividend yield is 25% and the current price is $40 then the dividend yield will be |
| A. | 0.65 |
| B. | 10 |
| C. | 65 |
| D. | 15 |
| Answer» C. 65 | |
| 24. |
In expected rate of return for constant growth, the expected total rate of return is equal to |
| A. | buying pricing |
| B. | dividend yield |
| C. | rate of return |
| D. | selling pricing |
| Answer» C. rate of return | |
| 25. |
The third step in calculating value of stock with non-constant growth rate is to find |
| A. | p.v of expected dividends |
| B. | f.v of expected dividends |
| C. | p.v of intrinsic rate |
| D. | f.v of intrinsic rate |
| Answer» B. f.v of expected dividends | |
| 26. |
Markowitz efficient hypothesis initiated in |
| A. | 1958 |
| B. | 1959 |
| C. | 1961 |
| D. | 1960 |
| Answer» E. | |
| 27. |
Ambiguity introduced by way by which organization finances its investments is |
| A. | country risk |
| B. | liquidity risk |
| C. | financial risk |
| D. | business risk |
| Answer» D. business risk | |
| 28. |
An expected final stock price is $45 and an original investment is $25 then an expected capital gain will be |
| A. | 75 |
| B. | −$75 |
| C. | −$20 |
| D. | 20 |
| Answer» E. | |
| 29. |
In order to settle on compound growth rate of an investment over period, an investor determine the |
| A. | geometric mean |
| B. | calculus mean |
| C. | arithmetic mean |
| D. | arithmetic median |
| Answer» B. calculus mean | |
| 30. |
The dividend will grow at non-constant rate for N periods and the periods such as N is classified as |
| A. | growth date |
| B. | terminal date |
| C. | horizon date |
| D. | both b and c |
| Answer» E. | |
| 31. |
The calculation of formula in common stock valuation does not include |
| A. | intrinsic value |
| B. | dividend of stockholder |
| C. | number of stock issued |
| D. | expected growth rate |
| Answer» D. expected growth rate | |
| 32. |
The average rate of return which is required by all the investors of the company is classified as |
| A. | extrinsic cost of capital |
| B. | weighted average cost of capital |
| C. | mean cost of capital |
| D. | standard cost of cash |
| Answer» C. mean cost of capital | |
| 33. |
Earnings before interest, taxes, depreciation and amortization average multiple for publicly traded companies is classified as |
| A. | entity multiple |
| B. | depreciation multiple |
| C. | earnings multiple |
| D. | amortization multiple |
| Answer» B. depreciation multiple | |
| 34. |
If generally interest rates in nation increase, a corporate bond with a fixed interest rate will usually |
| A. | increase in value |
| B. | remain unchanged |
| C. | decrease in value. |
| D. | be returned to corporation. |
| Answer» D. be returned to corporation. | |
| 35. |
An original investment is $30 and an expected capital gain is $10 then an expected final stock price will be |
| A. | 20 |
| B. | 40 |
| C. | −$40 |
| D. | −$20 |
| Answer» C. −$40 | |
| 36. |
The direct relationship between price change and interest rate change is represented by |
| A. | positive duration |
| B. | positive discount |
| C. | negative discount |
| D. | negative duration |
| Answer» B. positive discount | |
| 37. |
An expected rate of return is subtracted from capital gains yield to calculate |
| A. | expected dividend yield |
| B. | capital earnings |
| C. | casual growth |
| D. | specialized growth rate |
| Answer» B. capital earnings | |
| 38. |
Liquidity risk is: |
| A. | is risk investments bankers face |
| B. | is lower for small OTC |
| C. | is risk associated with secondary market transactions |
| D. | increases whenever interest rates increases |
| Answer» D. increases whenever interest rates increases | |
| 39. |
The change in interest rate measured in percentage for given interest rate change is classified as |
| A. | premium yield |
| B. | elasticity |
| C. | duration |
| D. | maturity yield |
| Answer» C. duration | |
| 40. |
According to the investors point of view, an expected rate of return is rate on stocks which they |
| A. | receive in future |
| B. | received in past |
| C. | yearly growth |
| D. | semi-annual growth |
| Answer» B. received in past | |
| 41. |
The capital gains yield is multiplied for beginning price to calculate |
| A. | capital gain |
| B. | growth gain |
| C. | regular yield |
| D. | variable yield |
| Answer» B. growth gain | |
| 42. |
The constant growth rate is 9.5% and an expected rate of return is 13.5% then expected dividend yield would be |
| A. | 0.23 |
| B. | 0.0142 |
| C. | 0.04 |
| D. | 1.42 |
| Answer» D. 1.42 | |
| 43. |
The current price is $40 and the dividend paid is $10 then the dividend yield will be |
| A. | 25 |
| B. | 0.25 |
| C. | 4 |
| D. | 0.04 |
| Answer» C. 4 | |
| 44. |
The paid dividend is $20 and the current price is $50 then the dividend yield will be |
| A. | 0.4 |
| B. | 40 |
| C. | 70 |
| D. | 30 |
| Answer» B. 40 | |
| 45. |
The stock in small companies, owned by few people but not actively traded is classified as |
| A. | closely held stock |
| B. | largely held stock |
| C. | attributed stock |
| D. | successful stock |
| Answer» B. largely held stock | |
| 46. |
The rate of return which considers the riskiness and an available returns on the investments is classified as |
| A. | constant dividend |
| B. | constant rate |
| C. | maximum rate of return |
| D. | minimum acceptable rate of return |
| Answer» E. | |
| 47. |
The type of stock in which dividends are tied to any particular part of a firm is classified as |
| A. | dividend stock |
| B. | firm part stock |
| C. | tied stock |
| D. | tracking stock |
| Answer» E. | |
| 48. |
The right of the common stockholders to purchase additional stock issued by company is classified as |
| A. | common right |
| B. | preemptive right |
| C. | purchase right |
| D. | selling right |
| Answer» C. purchase right | |
| 49. |
The process in which stockholders transfer the right to vote to any other person is classified as |
| A. | proxy |
| B. | transfer process |
| C. | voting process |
| D. | assigning right process |
| Answer» B. transfer process | |
| 50. |
The type of stock which have characteristics of bonds and common stock is classified as |
| A. | bonds equity |
| B. | common shares |
| C. | common stock |
| D. | preferred stock |
| Answer» E. | |