Free Finance MCQs Mock Test Online with Answers

Q1 : ___________ is concerned with the acquisition, financing, and management of assets with some overall goal in mind.

A: Financial management B: Profit maximization C: Agency theory D: Social responsibility

Q2 : The type of preferred stock whose dividend payments are never paid to stock holders and are not considered in arrears is classified as ____________?

A: non-participating preferred stock B: participating preferred stock C: non-cumulative preferred stock D: cumulative preferred stock

Q3 : The intrinsic value of call option is considered as in the money if ___________?

A: stock price > exercise price B: stock price treasury price C: treasury price < bond price D: None of These

Q4 : 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

Q5 : In commercial banks, the subordinate debentures and subordinate notes are considered as ___________?

A: stated rates B: banks debentures C: banks liabilities D: banks deposits

Q6 : The under writer spread is subtracted from gross proceeds to calculate ___________?

A: Gross proceeds B: cumulative proceeds C: non-cumulative proceeds D: net proceeds

Q7 : Annual cash dividends divided by annual earnings; or alternatively, dividends per share divided by earning per share is termed as:

A: Earning per share ratio B: Proposed dividend ratio C: Dividend payout ratio D: Expected dividend ratio

Q8 : The type of voting in which the owner having half voting shares can elect board of directors is called __________?

A: directors voting B: half voting C: straight voting D: owners voting

Q9 : According to futures contract, the long position states the ___________?

A: purchase of forward contracts B: purchase of future contract C: sale of futures contract D: sales of forward contracts

Q10 : 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

Q11 : The buying price of stock is $35 and it can be sold for $30 whereas the dividend paid is $6 then return on stock is ____________?

A: 0.3667 B: 0.4667 C: 0.2667 D: 0.2667

Q12 : The group of dealers and brokers in financial institutions also include ____________?

A: money and security brokers B: capital brokers C: mortgage brokers D: expansionary brokers

Q13 : The type of option that gives the right to buyer to sell the underlying option at specific exercise price is considered as _____________?

A: call option B: put option C: European option D: Australian option

Q14 : The type of index in which the current values of stock are added together and divided by the value of stock on base date, is classified as __________?

A: value weighted index B: herring weighted index C: primary market index D: stock market index

Q15 : A major facet of financial management involves providing the financing necessary to support:

A: Liabilities B: Debts C: Loans D: Assets

Q16 : The government regulates financial markets for two reasons which are __________?

A: increase information available to investor B: ensure the soundness of financial system C: create a sound atmosphere D: Both A and B

Q17 : The deposits that are required in future contract and considered as guarantee, that the conditions of contracts would be fulfilled is classified as ___________?

A: initial margin B: futures margin C: conditional margin D: non-conditional margin

Q18 : The composite value of traded stocks group of secondary markets is classified as ___________?

A: stock index B: stock market index C: limited liability index D: primary index

Q19 : Agency theory suggests that managers(the agents), particularly those of large , publically-owned firms, may have different objectives from those of the:

A: Workers B: Subordinates C: Shareholders D: Employees

Q20 : The risk arises from trading of assets because of change in asset prices and exchange rates is classified as ____________?

A: asset risk B: trade risk C: market risk D: exchange risk

Q21 : The loan which is made available for businesses or individuals to buy land, home or other property is classified as ___________?

A: secondary loan B: primary loan C: mortgages D: swapped mortgages

Q22 : The type of negotiable certificate of deposits is usually classified as ___________?

A: primary instrument B: bearer instrument C: term instrument D: interim instrument

Q23 : If the intrinsic value of an option is $450 and the price of an option is $560 then the time value of an option is __________?

A: 110 B: 1010 C: 450 D: 560

Q24 : The government issues treasury bills at the discounted rate from ____________?

A: face value B: book value C: premium value D: federal value

Q25 : The type of financial markets in which the corporations issues new funds to raise funds is classified as ____________?

A: flow market B: primary markets C: secondary markets D: funding markets

Q26 : The difference between purchase price of treasury bills and the face value of treasury bills is considered as __________?

A: premium B: discount C: return D: mean value

Q27 : The stock holder who does not have any voting rights in the corporation is considered as ____________?

A: sub class voter B: preferred stockholder C: common stock holder D: cumulative voter

Q28 : 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

Q29 : When maturities of liabilities and assets are mismatched and risk incurred by financial intermediaries then this risk is classified as _____________?

A: interest rate risk B: channel rate risk C: economic risk D: issuance risk

Q30 : The risk stating the assets are sold at low prices because of sudden surge in withdrawals of liabilities is classified as ___________?

A: payment risk B: liquidity risk C: income risk D: balance risk

Q31 : An individual authorized by another person, called the principle, to act on the latter’s on behalf is known as an/a:

A: Agent B: Servant C: Subordinate D: Assistant

Q32 : The difference between the intrinsic value of option and the price of option is classified as _____________? 0

A: spot value of option B: time value of US treasury C: time value of option D: time value of bond

Q33 : The investment decision is the most important of the firm’s three major decisions, when it comes to:

A: Value creation B: Value addition C: Value proposition D: Value deletion

Q34 : 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

Q35 : The type of contract which involves the exchange of assets that will occur in future at the price settled daily, is classified as _____________?

A: spot contract B: forward contract C: future contracts D: present contract

Q36 : The reduction of risk by holding large number of securities in portfolio of assets is classified as __________? 0

A: diversification B: selling ability C: reduction ability D: director ability

Q37 : The sum of capital gains and dividend payments which are paid to stock holders on periodic basis is equal to ___________?

A: return to common stockholders B: return to stock holder C: return on premium bonds D: return to preferred stock

Q38 : The process of selling and buying of stocks and bonds is classified as ____________?

A: s-trade B: b-trade C: e-trade D: stock trade

Q39 : The mortgages used to purchase the townhouses and apartment complexes are classified as ___________?

A: multi mortgage B: multifamily dwelling mortgages C: sovereign dwelling mortgages D: primary dwelling mortgages

Q40 : Corporate governance encompasses the relationship among a company’s:

A: Shareholders and board of director B: Board of directors and senior management C: Shareholders and senior management D: Shareholders, board of directors and senior management

Q41 : If the financial intermediaries are appointed by the funds suppliers then these intermediaries are classified as ____________?

A: supplier monitor B: funds monitor C: delegated monitor D: allocation monitor

Q42 : The financial instruments of public markets include _____________?

A: transfer funds B: bearer bonds C: shares D: bonds

Q43 : The institutions that facilitate channeling of funds and all the related functions are classified as ___________?

A: financial institutions B: payable institutions C: non-financial institutions D: derivative institutions

Q44 : The form of market efficiency which states that prices of stock reflects the public and private information of the firm is classified as ___________? 0

A: weak form of market efficiency B: strong form of market efficiency C: semi-strong form market efficiency D: expensive form market efficiency

Q45 : The transfer of financial instruments from suppliers of funds to users of funds without any intermediary in between is classified as _____________?

A: global transfer B: pension transfer C: direct transfer D: indirect transfer

Q46 : 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

Q47 : The transactions that came into being when borrowing and lending of excess money occurs, are considered as _________?

A: annual funds transaction B: liable funds transactions C: federal funds transaction D: functional funds transaction

Q48 : The major liabilities of the commercial banks are ___________?

A: junk bonds B: deposits C: loans D: swap bonds

Q49 : The markets in which transactions are done through computers and telephone without any specific location are classified as _____________?

A: past counter market B: future counter market C: over the counter markets D: capital counter market

Q50 : The type of voting in which all the directors in voting lists are voted at same time is classified as ___________?

A: cumulative voting B: non-cumulative voting C: dual class voting D: limited voting

Q51 : The institutions classified as depository ones and have loans as their major assets are classified as __________?

A: commercial banks B: commercial mortgages C: credit mortgages D: credit derivative

Q52 : The type of risk in which the value of liabilities and assets is affected by the exchange rate is classified as ____________?

A: economic rates B: foreign exchange risk C: selling rate D: buying rates

Q53 : The operating tool used by Federal Reserve to influence the supply of bank to control demand and supply of repurchase agreements is classified as ____________?

A: selling window B: buying window C: premium window D: discount window

Q54 : The Board of Directors sets company-wide policy and advices the CEO and other senior executies, who manage the company’s:

A: Managerial activities B: Year-to-Year activities C: Day-to-Day activities D: Financial activities

Q55 : The financial intermediaries offering savings plan to individuals and funds are exempted from taxation are considered as _____________?

A: trading funds B: penalty funds C: pension funds D: global funds

Q56 : 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

Q57 : 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

Q58 : The rates of certificate of deposits are mostly negotiated between ___________?

A: bank and COD buyer B: bank and stock market C: stock market and COD buyer D: indirect negotiations of buyers

Q59 : The liquidity status of certificate of deposit which is more negotiable is considered as __________?

A: certified liquidity B: term liquidity C: more liquid D: less liquid

Q60 : The interest rate paid on the traded Eurodollars is called as __________?

A: London intra bank offered rate B: London interbank offered rate C: Euro interbank offered rate D: Demand intra bank rate

Q61 : The non-competitive bidders get the allocation of treasury bills on __________?

A: federal basis B: last basis C: firstly basis D: preferential basis

Q62 : The difference between net proceeds and gross proceeds is called __________?

A: non-participating spread B: participating spread C: under writer spread D: over writer spread

Q63 : The financial instruments are traded in money markets and then traded in __________?

A: money markets B: capital markets C: debt markets D: economic markets

Q64 : The exchange rate of foreign currency fluctuate day to day because of __________?

A: demand and supply B: increased maturity C: decreased maturity D: instrument availability

Q65 : The feature of stock which allows stock holders to buy the shares below than market price is called __________?

A: shares offering B: price offering C: rights offering D: stock offering

Q66 : The markets which reallocate liquid funds in relatively fixed amounts are classified as ___________?

A: capital markets B: debt markets C: secondary markets D: primary markets

Q67 : In the Eurodollar market, the increase in demand of Euro dollars result in ____________?

A: increase in LIBOR B: decrease in LIBOR C: increase in KIBOR D: decrease in KIBOR

Q68 : 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

Q69 : The principal investors of US treasury bills which are issued by US treasury do not include _____________?

A: mutual funds B: extensive funds C: corporations D: brokers and dealers

Q70 : The underwriter spread of stock is added to net proceeds to calculate the value of ___________?

A: over writer spread B: Gross proceeds C: participation proceeds D: non participation proceeds

Q71 : The economic period in which the banks have excess funds is classified as _____________?

A: functional time line B: contract timing C: contraction period D: expansionary periods

Q72 : Correct measure of risk of stock is called?

A: Alpha B: Beta C: Variance D: Market relevance

Q73 : The type of trading member who takes position every day and also liquidate it on the same day is classified as __________?

A: day traders B: broker traders C: non-position traders D: commercial traders

Q74 : The negotiable deposit certificate are traded in ____________?

A: secondary markets B: primary markets C: direct markets D: indirect markets

Q75 : The form of market efficiency which considers the speed with which the information at public level is impounded in the prices of stock is classified as ____________?

A: semi-strong form market efficiency B: expensive form market efficiency C: weak form of market efficiency D: strong form of market efficiency

Q76 : The commercial paper issued with low interest rate thus the commercial paper are categorized as ___________?

A: payables rating B: commercial rating C: poor credit rating D: better credit rating

Q77 : The selling price is added in to repurchase agreement paid interest to calculate ____________?

A: direct price of security B: repurchase price of securities C: purchase price of security D: transaction price of security

Q78 : The federal funds are loans borrowed and lent on ____________?

A: single payment basis B: monthly payment basis C: semiannual payment basis D: annual payment basis

Q79 : The type of preferred stock whose payments are missed and must be paid before paying dividends of common stock is classified as ___________?

A: non participating preferred stock B: participating preferred stock C: non-cumulative preferred stock D: cumulative preferred stock

Q80 : The money market where debt and stocks are traded and maturity period is more than a year is classified as __________? 0

A: shorter term markets B: capital markets C: counter markets D: long-term markets

Q81 : 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

Q82 : The deposit issued by bank are usually negotiable and have specific maturity date and interest rate, hence it is classified as _____________?

A: indirect certificate B: direct certificate C: negotiable certificate D: deposit certificate

Q83 : The intrinsic value of option is subtracted from exercise price of an option to calculate ____________?

A: forward price of asset B: price of underlying asset C: future price of asset D: spot price of asset

Q84 : The call option considering interest rates and have multiple exercise dates is classified as ____________?

A: floor B: cap C: swaps multiplier D: notion multiplier

Q85 : For a particular security transaction, the agreement is classified as ‘reverse repo’ with the point of view of ____________?

A: security liability B: security buyer C: security seller D: security function

Q86 : The risk faced by financial institutions in which advancement of technology does not produce savings in cost is classified as ___________?

A: savings risk B: advance risk C: cost risk D: technology risk

Q87 : The orders that are transacted at best available price are classified as _________?

A: post order B: available order C: transacted order D: market order

Q88 : If the 175 days T-bill have the maturity of one year with the value of $8000 and face value is $10000 then reported discount yield is _____________?

A: 0.525 B: 0.4114 C: 0.4214 D: 0.4514

Q89 : The situation in which the claims by financial institutions is more considerable for investors then the claims issued by corporations, is classified as _____________? 0

A: asset transformers B: liability transformers C: issuing transformers D: claiming transformers

Q90 : The type of institutions that write securities, engage in brokerage and security trading are considered as _____________? 0

A: trading institutions B: activity institutions C: investment banks D: mortgage banks

Q91 : The intrinsic value of call option is _____________?

A: stock price ⁄ exercise price B: stock price – exercise price C: stock price + exercise price D: stock price x exercise price

Q92 : 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

Q93 : The gross proceeds of stock is $37000 and the underwriter spread is $25000 ?

A: 25000 B: 37000 C: 12000 D: 62000

Q94 : The services provided by financial institutions as providing financing to any specific sector of economy such as real estate business are classified as _____________?

A: business allocation B: sector allocation C: economic allocation D: credit allocation

Q95 : 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

Q96 : Consider the buying of put option, the probability that a buyer would have negative payoff increases with the ___________?

A: increase in stock price B: decrease in stock price C: increase in maturity duration D: decrease in maturity duration

Q97 : The price of underlying asset is added into intrinsic value of option to calculate ___________?

A: forward price of option B: exercise price of option C: book value of option D: spot price of option

Q98 : 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

Q99 : 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

Q100 : 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

Free Finance MCQs Mock Test Online with Answers

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