MCQOPTIONS
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MCQOPTIONS
This section includes 175 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.
| 101. |
The type of financial security whose payoff is linked to any other security is called |
| A. | strong security |
| B. | semi-strong security |
| C. | derivate security |
| D. | non-derivate security |
| Answer» D. non-derivate security | |
| 102. |
The Black Scholes model consider the factors which affects an option price, the factors are |
| A. | spot price of asset |
| B. | exercise price and exercise date of option |
| C. | price volatility |
| D. | all of the above |
| Answer» E. | |
| 103. |
The type of liability in which the stockholders losses are counted for only the invested amount in the firm is classified as |
| A. | counted liability |
| B. | invested liability |
| C. | unlimited liability |
| D. | limited liability |
| Answer» E. | |
| 104. |
Worldwide trade is |
| A. | Buying goods from abroad |
| B. | Selling good to abroad |
| C. | Paying Foreign Currency |
| D. | All of answers are correct |
| Answer» E. | |
| 105. |
An Acquisition is |
| A. | More risky than other foreign investment techniques |
| B. | Less risky than other foreign investment techniques |
| C. | A way to share control over foreign operations |
| D. | A way to share risk of a new foreign investment |
| Answer» B. Less risky than other foreign investment techniques | |
| 106. |
Market in which currencies buy and sell and their prices settle on is called the |
| A. | Eurocurrency market |
| B. | international capital market |
| C. | international bond market |
| D. | foreign exchange market |
| Answer» E. | |
| 107. |
The types of corporate stock that are traded in exchange markets are |
| A. | common stock |
| B. | preferred stock |
| C. | quoted stock |
| D. | both a and b |
| Answer» E. | |
| 108. |
In 1944 international accord is recognized as |
| A. | Breton Wood Agreement |
| B. | Exchange Agreement |
| C. | International Trade |
| D. | Fisher Effect |
| Answer» B. Exchange Agreement | |
| 109. |
The intrinsic value of call option is considered as in the money if |
| A. | stock price > exercise price |
| B. | stock price < exercise price |
| C. | bond price > treasury price |
| D. | treasury price < bond price |
| Answer» B. stock price < exercise price | |
| 110. |
The intrinsic value of call option is considered as out of the money, if |
| A. | bond price > treasury price |
| B. | treasury price < bond price |
| C. | stock price > exercise price |
| D. | stock price < exercise price |
| Answer» E. | |
| 111. |
The position which occurs because of selling floor and buying cap is classified as |
| A. | floating collar |
| B. | fixed collar |
| C. | currency collar |
| D. | collar |
| Answer» E. | |
| 112. |
A firm that purpose to connect sellers and buyers of foreign currency-denominated bank deposits is entitled |
| A. | a wholesaler |
| B. | a broker |
| C. | a bank |
| D. | an investor |
| Answer» C. a bank | |
| 113. |
Which of following causes do investors employ foreign exchange market |
| A. | currency hedging |
| B. | currency speculation |
| C. | currency conversion |
| D. | all of above |
| Answer» E. | |
| 114. |
The particular place at which the transactions of New York stock exchange occurs is classified as |
| A. | trading post |
| B. | issuance post |
| C. | silence post |
| D. | sellers post |
| Answer» B. issuance post | |
| 115. |
International capital market |
| A. | limits available set of lending opportunities |
| B. | increases overall portfolio risk for investors |
| C. | allows investors to reduce risk by holding international securities whose price move independently |
| D. | is easily accessible to everyone |
| Answer» D. is easily accessible to everyone | |
| 116. |
If the price of an option is $475 and the time value of money is $375 then the intrinsic value of an option is |
| A. | 375 |
| B. | 100 |
| C. | 475 |
| D. | 850 |
| Answer» C. 475 | |
| 117. |
The form of market efficiency in which stock current prices reflect the volume information and historic prices of company is classified as |
| A. | weak form of market efficiency |
| B. | strong form of market efficiency |
| C. | semi-strong form market efficiency |
| D. | expensive form market efficiency |
| Answer» B. strong form of market efficiency | |
| 118. |
Consider buying the put option, if the price is lower at the expiration date of option then the |
| A. | liquidity will be higher |
| B. | loss will be higher |
| C. | profit will be lower |
| D. | profit will be higher |
| Answer» E. | |
| 119. |
The type of trade members who take position for short period of time or sometimes for only few minutes are classified as |
| A. | scalpers |
| B. | explorers |
| C. | temporary position holders |
| D. | professional position holders |
| Answer» B. explorers | |
| 120. |
The process in which the group of investment banks distribute the securities is classified as |
| A. | task groups |
| B. | syndicate |
| C. | investment groups |
| D. | securitize groups |
| Answer» C. investment groups | |
| 121. |
The call option considering interest rates and have multiple exercise dates is classified as |
| A. | floor |
| B. | cap |
| C. | swaps multiplier |
| D. | notion multiplier |
| Answer» C. swaps multiplier | |
| 122. |
The votes for each stock holder were multiplied to number of elected directors, to calculate |
| A. | number of cumulative class |
| B. | number of votes assigned |
| C. | number of elective candidates |
| D. | number of common stock shares |
| Answer» C. number of elective candidates | |
| 123. |
The residual claims, limited rights, limited liability and dividend payments on discrete basis are considered as |
| A. | characteristics of fundamental stock |
| B. | characteristics of claimed stock |
| C. | characteristics of common stock |
| D. | characteristics of preferred stock |
| Answer» D. characteristics of preferred stock | |
| 124. |
Comparative edge is specializing actions in which they are |
| A. | More efficient |
| B. | Less Efficient |
| C. | Somewhat efficient |
| D. | Least Efficient |
| Answer» B. Less Efficient | |
| 125. |
In the syndicate, the leading bank which negotiates the transaction to issuing bank on behalf of the syndicate is called |
| A. | originating house |
| B. | non originating house |
| C. | investment house |
| D. | non securitize house |
| Answer» B. non originating house | |
| 126. |
The preferred stock is considered as hybrid security because it includes |
| A. | representation of ownership interest |
| B. | fixed periodic payment |
| C. | higher liquidity |
| D. | both a and b |
| Answer» E. | |
| 127. |
The type of contract which involves the future exchange of assets at a specified price is classified as |
| A. | future contracts |
| B. | present contract |
| C. | spot contract |
| D. | forward contract |
| Answer» E. | |
| 128. |
In interest rate swap transaction, the party who pays the floating payments of interest is considered as |
| A. | notion buyer |
| B. | notion seller |
| C. | swap buyer |
| D. | swap seller |
| Answer» E. | |
| 129. |
A swap that is used to evade the risk of exchange rate exists because of currency mismatching is classified as |
| A. | floating swaps |
| B. | fixed swaps |
| C. | currency swaps |
| D. | notion swaps |
| Answer» D. notion swaps | |
| 130. |
The situation in which the large portion of majority is borrowed from the broker of investor is classified as |
| A. | future investment |
| B. | forward investment |
| C. | leveraged investment |
| D. | non-leveraged investment |
| Answer» D. non-leveraged investment | |
| 131. |
The price at which the stock is sold to investors by the investment banks is called |
| A. | Gross proceeds |
| B. | cumulative proceeds |
| C. | non-cumulative proceeds |
| D. | net proceeds |
| Answer» B. cumulative proceeds | |
| 132. |
The right of stockholders of firm that new shares must be offered to existing stockholders first, rather than new stock holders is classified as |
| A. | non-offered rights |
| B. | preemptive rights |
| C. | existing rights |
| D. | securitize rights |
| Answer» C. existing rights | |
| 133. |
Consider the call option writing, the probability that a buyer would have positive payoff increases with the |
| A. | increase in stock price |
| B. | decrease in stock price |
| C. | increase in maturity duration |
| D. | decrease in maturity duration |
| Answer» C. increase in maturity duration | |
| 134. |
When the price of underlying asset increases then the good option is |
| A. | buy the call option |
| B. | sell the call option |
| C. | buy the put option |
| D. | sell the put option |
| Answer» B. sell the call option | |
| 135. |
The capital gain is subtracted from return to stockholders to calculate |
| A. | periodic dividend payments |
| B. | constant spot rate payment |
| C. | constant forward rate payment |
| D. | constant future rate payment |
| Answer» B. constant spot rate payment | |
| 136. |
The underwriter spread of stock is $17000 and the net proceeds of stock are $24000 then the gross proceeds are |
| A. | 41000 |
| B. | 7000 |
| C. | 17000 |
| D. | 24000 |
| Answer» B. 7000 | |
| 137. |
The amount of money involved in swap transaction is classified as |
| A. | notion principal |
| B. | swap principal |
| C. | transaction principal |
| D. | time value of swap |
| Answer» B. swap principal | |
| 138. |
The up-front fee which must be paid by the buyer to the seller is called |
| A. | call premium |
| B. | discount premium |
| C. | strike premium |
| D. | exercise premium |
| Answer» B. discount premium | |
| 139. |
The type of unit which guarantees that all the buying and selling will be made by traders of exchange is called |
| A. | trading house |
| B. | guarantee house |
| C. | clearing house |
| D. | professional house |
| Answer» D. professional house | |
| 140. |
If the time value of an option is $200 and the intrinsic value of an option is $250 then the price of option is |
| A. | 50 |
| B. | 550 |
| C. | 200 |
| D. | 250 |
| Answer» C. 200 | |
| 141. |
The pre-specified price at which the underlying asset is bought and sold is called as |
| A. | maturity price |
| B. | strike price |
| C. | exercise price |
| D. | both b and c |
| Answer» E. | |
| 142. |
The type of exchange members who only buy and sell for their personal account are classified as |
| A. | non-investment traders |
| B. | professional traders |
| C. | commercial traders |
| D. | investment traders |
| Answer» C. commercial traders | |
| 143. |
The margin which must be maintained as soon as futures contract takes place is classified as |
| A. | spot margin |
| B. | maintenance margin |
| C. | futures margin |
| D. | forwards margin |
| Answer» C. futures margin | |
| 144. |
The intrinsic value of option is $280 and the price of option is $350 then the time value of option is |
| A. | 125 |
| B. | 135 |
| C. | 280 |
| D. | 70 |
| Answer» E. | |
| 145. |
In interest rate swap transaction, the party who pays the fixed payments of interest is classified as |
| A. | notion buyer |
| B. | notion seller |
| C. | swap buyer |
| D. | swap seller |
| Answer» D. swap seller | |
| 146. |
In public corporation, the claim of fundamental ownership is called |
| A. | common stock |
| B. | fundamental stock |
| C. | corporate stock |
| D. | claimed stock |
| Answer» B. fundamental stock | |
| 147. |
The time value of an option is added into intrinsic value to calculate |
| A. | market index of an option |
| B. | depreciated value of option |
| C. | appreciated value of option |
| D. | price of an option |
| Answer» E. | |
| 148. |
The stock markets in which the already issued stocks are resold and re-bought are classified as |
| A. | red herring stock market |
| B. | preemptive stock market |
| C. | silence stock market |
| D. | secondary stock markets |
| Answer» E. | |
| 149. |
The capital gain is 9% and the return to stockholder is 18% then the periodic payments of dividends are |
| A. | 0.18 |
| B. | 0.27 |
| C. | 0.25 |
| D. | 0.09 |
| Answer» E. | |
| 150. |
The type of option that can be exercised only at the date of expiration is classified as |
| A. | European option |
| B. | Canadian option |
| C. | Australian option |
| D. | American option |
| Answer» B. Canadian option | |