Free Finance MCQs Mock Test Online with Answers

Q1 : The type of bonds that pay coupon interest are classified as ____________?

A: forward bond B: payment bonds C: coupon bond D: interest bonds

Q2 : The example of derivative securities is ___________?

A: return backed security B: mortgage backed security C: cash flow backed security D: interest backed security

Q3 : The stock prices of five companies are $50, $60, $55, $58 and $63 then the initial value of price weighted index is ____________?

A: 60 B: 57.2 C: 55 D: 63

Q4 : The put option considering interest rates and have multiple exercise dates is classified as __________?

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

Q5 : 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

Q6 : The difference between price of underlying asset and exercise price of option is classified as __________?

A: extrinsic value of European option B: intrinsic value of option C: extrinsic value of option D: intrinsic value of European option

Q7 : The certificate of deposits which are usually negotiable are issued by ____________?

A: banks B: financial market C: stock exchange D: business corporations

Q8 : 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

Q9 : 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

Q10 : The transaction cost of trading of financial instruments in centralized market is classified as ____________?

A: flexible costs B: low transaction costs C: high transaction costs D: constant costs

Q11 : 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

Q12 : 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

Q13 : The interest rate at which the federal funds are borrowed and can be lent is classified as ____________?

A: borrowing rate B: supplying rate C: lending rate D: federal funds rate

Q14 : The prospectus which describe the new securities are distributed before their registration is classified as ____________?

A: red herring prospectus B: white herring prospectus C: preemptive prospectus D: securitized prospectus

Q15 : Having some overall goal in mind, financial management is concerned with:

A: Acquisition of assets B: Financing of assets C: Management of assets D: All of them

Q16 : The type of traders who take position in the market of future, which is based on expectations of prices of underlying assets are classified as ___________?

A: professional traders B: non-investment traders C: position traders D: future market traders

Q17 : 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

Q18 : The limit of getting treasury bills auctioned in a treasury auction is that no bidder can get more than ___________?

A: 0.35 B: 0.3 C: 0.25 D: 0.2

Q19 : 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

Q20 : The Federal Reserve increases the money supply by ___________?

A: selling treasury bills B: buying treasury bills C: selling Swiss bills D: buying Swiss bills

Q21 : The agreement between two parties to exchange cash flows in future and the cash flows are based on underlying instruments is classified as ___________?

A: swaps B: interchange C: exchange D: index

Q22 : 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

Q23 : In the Eurodollar market, the decrease in demand of Euro dollars results in ___________?

A: increase in KIBOR B: decrease in KIBOR C: decrease in federal funds rate D: increase in federal funds rate

Q24 : The type of markets in which derivative securities are traded is classified as ___________?

A: derivative security markets B: trading markets C: classified markets D: non-trading markets

Q25 : 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

Q26 : 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

Q27 : The type of structured market through which the funds flow with the help of financial instruments such as bonds and stocks is classified as ____________?

A: financial markets B: non-financial markets C: funds market D: flow market

Q28 : The markets in which new securities are issued by the corporations to raise funds are called _____________?

A: primary markets B: secondary markets C: Gross markets D: proceeds markets

Q29 : The type of bids which states complete description about quantity of bids and prices of bids is classified as ____________?

A: markets bid B: bankers bid C: competitive bids D: non-competitive bids

Q30 : 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

Q31 : 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

Q32 : 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

Q33 : The type of preferred stock in which the dividend does not increase or decrease with the increase or decrease in profit of firm is classified as ____________?

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

Q34 : The type of preferred stock in which the dividend does not increase or decrease with the increase or decrease in profit of firm is classified as ____________?

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

Q35 : 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

Q36 : The negotiable certificate of deposit with one year maturity pays the interest ____________?

A: annually B: semiannually C: monthly D: every two weeks

Q37 : 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

Q38 : The type of instrument whoever holds it, gets the interest and principal amount is classified as ___________?

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

Q39 : The type of option that can be exercised before the date of expiration as well as on expiry date is classified as _____________?

A: Australian option B: American option C: European option D: Canadian option

Q40 : The indexes in which the price of stock of companies listed in stock market index are added together and is divided by an adjusted value are classified as ________?

A: herring indexes B: group indexes C: John indexes D: Dow Indexes

Q41 : 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

Q42 : 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

Q43 : The commercial mortgages, farm mortgages and home mortgages are categories of _____________?

A: swapped mortgages B: sovereign C: secondary mortgages D: primary mortgagees

Q44 : 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

Q45 : 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

Q46 : The retail certificate of deposits which are not traded have face value of ___________?

A: 250000 B: 100000 C: 150000 D: 200000

Q47 : The example of derivative securities include ______________?

A: swap contract B: option contract C: futures contract D: all of the above

Q48 : If the 180 days T-bill have the maturity of one year with the value of $9250 and face value is $10000 then reported discount yield is __________?

A: 0.2 B: 0.13 C: 0.14 D: 0.15

Q49 : The institutions deal in financial functions and protects corporations and individuals against accidents, theft and death are considered as ____________?

A: penalty companies B: insurance companies C: events dealers D: protecting companies

Q50 : The ownership of mortgaged property will be transferred to financial institution if the ____________?

A: borrower defaults B: borrower does not default C: borrower want less rate D: borrower want profit

Q51 : 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

Q52 : 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

Q53 : The markets in which the derivatives are traded, are classified as ___________?

A: assets backed market B: cash flow backed markets C: mortgage backed markets D: derivative securities markets

Q54 : The type of exchange members who place the buying and selling from the public are classified as __________?

A: floor broker B: roof broker C: broker of auction D: leverage investment broker

Q55 : The under writer spread is $47500 and the gross proceeds are $34000 then net proceeds are ____________?

A: 13500 B: 81500 C: 47500 D: 34000

Q56 : 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

Q57 : 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

Q58 : 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

Q59 : The security which has characteristics of common stock and bonds both at same time is classified as ___________?

A: preferred stock B: voted stock C: cumulative stock D: fundamental stock

Q60 : The principal issuer of the commercial papers are commercial banks and the major investors of principal investors includes ____________?

A: brokers and dealers B: corporations C: other financial institutions D: all of the above

Q61 : 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

Q62 : 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

Q63 : The issuers that are not involved directly in funds transferring are classified as __________?

A: individual issuers B: corporate issuers C: local issuers D: global issuers

Q64 : The companies that collect funds from companies and individuals and invest in portfolios of assets are classified as ____________?

A: activity funds B: mutual funds C: penalty funds D: financing funds

Q65 : The banks that deals with reciprocal agreements and accounts are considered as ____________?

A: correspondent banks B: non-correspondent banks C: reciprocal transactions D: functional banks

Q66 : 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

Q67 : 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

Q68 : 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

Q69 : 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

Q70 : The type of security backed by mortgage cash flows and are packed by financial instruments is classified as _____________?

A: cash mortgage B: securitized mortgage C: financial mortgage D: instrumental mortgage

Q71 : 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

Q72 : 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

Q73 : The Federal Reserve decreases the money supply by _____________?

A: selling Swiss bills B: buying Swiss bills C: selling treasury bills D: buying treasury bills

Q74 : 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

Q75 : 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

Q76 : 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

Q77 : 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

Q78 : Correct measure of risk of stock is called?

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

Q79 : 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

Q80 : The type of negotiable certificate of deposits is usually classified as ___________?

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

Q81 : 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

Q82 : The prices that are adjusted day to day to picture the current conditions of future markets are classified as __________?

A: market future prices B: market to market prices C: market to invest prices D: present market price

Q83 : 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

Q84 : 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

Q85 : The risk of financial institutions which states the mismatching asset maturities and liability maturities, is classified as _____________?

A: selling intermediation B: maturity intermediation C: direct intermediation D: indirect intermediation

Q86 : 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

Q87 : The intrinsic value of put option is ________________?

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

Q88 : 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

Q89 : The capital gains and dividends are considered as components of __________?

A: return B: equity C: spot rate contracts D: forward rate contracts

Q90 : In foreign financial markets, the growth is represented by the factors such as ____________?

A: savings in foreign countries B: investment opportunities C: accessible information D: all of the above

Q91 : 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

Q92 : The funds transferred usually for a day between financial institutions are classified as __________?

A: federal funds B: banker’s funds C: debt funds D: secured funds

Q93 : The risk arises when the technology system may got malfunction is classified as ___________?

A: system risk B: technology risk C: operational risk D: support risk

Q94 : The authority which intervenes directly or indirectly in foreign exchange markets by altering the interest rates is considered as ____________?

A: centralized instruments B: centralized stocks C: central government D: central corporations

Q95 : The market price of a firm’s stock represents the focal judgment of all market participants as to the value of the: 0

A: Particular market B: Particular firm C: Particular creditor D: Particular debtor

Q96 : The orders that are transacted at best available price are classified as _________?

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

Q97 : 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

Q98 : The international banker’s acceptance usually arises from underlying _____________?

A: letter of confirmation B: letter of transfer C: letter of credits D: letter of buying

Q99 : 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

Q100 : 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

Free Finance MCQs Mock Test Online with Answers

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