Free Finance MCQs Mock Test Online with Answers

Q1 : 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

Q2 : The type of market in which the short term instruments are traded and purchased by economic units, is classified as __________?

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

Q3 : 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

Q4 : The bankers acceptance which is usually time draft is fully backed by ___________?

A: commercial banks B: Swiss banks C: agriculture banks D: functional banks

Q5 : 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

Q6 : The technique by which companies reduce cost of transaction services and results in increased efficiency is classified as ____________?

A: economies of cost B: economies of scale C: economies of efficiency D: economies of transaction

Q7 : 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

Q8 : 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

Q9 : The federal funds, bankers acceptance, commercial paper and repurchase agreements are classified as ____________?

A: counter instruments B: long term instruments C: money market instruments D: capital market instruments

Q10 : The interest rate of certificate of deposits is quoted using a time span of ___________?

A: 250 days a year B: 150 days a year C: 365 day a year D: 360 day a year

Q11 : 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

Q12 : The number of shares outstanding are multiplied to price of stock to calculate __________?

A: secondary market values B: current market values C: past market values D: primary market values

Q13 : The under writer spread is $47500 and the gross proceeds are $34000 then net proceeds are ____________?

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

Q14 : The government issues treasury bills at the discounted rate from ____________?

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

Q15 : 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

Q16 : The example of derivative securities is ___________?

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

Q17 : 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

Q18 : 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

Q19 : Profit maximization is the maximizing a firm’s Earning:

A: Before Tax B: After Tax C: Both A and B D: None of Them

Q20 : The risk which arises all the activities from contingent liabilities and assets is considered as ____________?

A: off balance sheet risk B: income statement risk C: balance of trade risk D: balance of payment risk

Q21 : 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

Q22 : 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

Q23 : 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

Q24 : 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

Q25 : 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

Q26 : 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

Q27 : 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

Q28 : 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

Q29 : The example of derivative securities include ______________?

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

Q30 : In financial transactions, the risk that there will be no profit in selling of this asset is classified as _____________?

A: price risk B: profit risk C: selling risk D: financial risk

Q31 : 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

Q32 : The legal document required by Securities Exchange Commission stating associated risks and detailed description of issues is classified as ______________?

A: prospectus B: stated document C: risk detailed document D: exchange commission document

Q33 : In treasury bills auction, the treasury bills are sold at ___________?

A: premium basis B: discount basis C: competitive basis D: federal basis

Q34 : 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

Q35 : The instrument used by Federal Reserve to smooth the money supply and interest rates include ____________?

A: treasury notes B: repurchase agreements C: commercial payable notes D: commercial receivable notes

Q36 : The non-competitive bidders get the allocation of treasury bills on __________?

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

Q37 : The maximum maturity days of holding commercial paper are ___________?

A: 170 days B: 270 days C: 120 days D: 5 days

Q38 : 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

Q39 : 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

Q40 : 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

Q41 : 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

Q42 : 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

Q43 : The centralized market place where agents can have efficiently and quickly transactions is classified as ____________?

A: secondary markets B: central market C: traded market D: agents market

Q44 : 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

Q45 : The type of contract which involves the immediate exchange of funds and assets is classified as __________?

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

Q46 : The Federal Reserve increases the money supply by ___________?

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

Q47 : The short term promissory notes are unsecured and not collateralized against securities, hence it is classified as ___________?

A: notes payable B: notes receivable C: commercial paper D: commercial notes

Q48 : 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

Q49 : The intrinsic value of an option is $490 and the price of underlying asset is $290 then the exercise price of an option is ___________?

A: 290 B: 780 C: 490 D: 200

Q50 : Stakeholders include:

A: Stakeholders B: Creditors and customs C: Employees and suppliers D: All of Them

Q51 : 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

Q52 : 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

Q53 : 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

Q54 : The stocks or shares that are sold to investors without transacting through financial institutions are classified as ______________?

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

Q55 : 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

Q56 : The rate which is used in major banks in United States as a rate for industrial and commercial loans is _____________?

A: London intra bank offered rate B: London interbank offered rate C: euro interbank offered rate D: demand intra bank rate

Q57 : The financial instrument which is used to raise funds for working capital is considered as ____________?

A: commercial paper B: commercial notes C: notes payable D: notes receivable

Q58 : For an investment, the weighted average time to maturity is considered as ___________?

A: premium time B: standard time C: mean time D: duration

Q59 : The type of financial security having payoffs which are connected to some securities issued some time back, is classified as ____________?

A: linked security B: previous security C: payoff security D: derivative security

Q60 : 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

Q61 : 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

Q62 : The type of bonds that pay coupon interest are classified as ____________?

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

Q63 : 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

Q64 : 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

Q65 : 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

Q66 : 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

Q67 : 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

Q68 : 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

Q69 : 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

Q70 : 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

Q71 : 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

Q72 : The most flexible and liquid source of funding for savings banks is ___________?

A: annual loan market B: federal funds market C: functional funding market D: secured funding market

Q73 : The Federal reserve, money market brokers and dealers, mutual funds and US treasury are all participants of ____________?

A: liquid markets B: money markets C: transaction markets D: functional markets

Q74 : 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

Q75 : The primary mortgages involve ____________?

A: three institutions B: single investor C: multiple investor D: multiple institutions

Q76 : The repurchase agreements usually called repos, can be traded _____________?

A: directly B: with brokers or dealers C: functional buyers D: both A and B

Q77 : The type of bidding in which the bids are met before the allocation of competitive bidders is considered as ___________?

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

Q78 : The type of risk in which payments are interrupted by the intervention of foreign governments is considered as ____________?

A: channel risk B: globalization risk C: state risk D: country risk

Q79 : In the money markets, the excess supply of funds from agents is for _____________?

A: past terms B: future terms C: long term D: short term

Q80 : Correct measure of risk of stock is called?

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

Q81 : 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

Q82 : The bids of bidder which tells that how much treasury bills bidder wants to buy is classified as ____________?

A: federal acceptance bid B: bankers’ acceptance bid C: non-competitive bids D: competitive bids

Q83 : The call option considering interest rates and have multiple exercise dates is classified as ____________?

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

Q84 : 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

Q85 : The negotiable certificate of deposit with one year maturity pays the interest ____________?

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

Q86 : The type of negotiable certificate of deposits is usually classified as ___________?

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

Q87 : 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

Q88 : The accounting entry of the institutions who borrow federal funds is as ___________?

A: income in income statement B: expense on income statement C: liability on balance sheet D: assets on balance sheet

Q89 : The type of funds that have transfer transactions between financial institutions are classified as __________?

A: federal funds B: premium funds C: discount funds D: mean funds

Q90 : 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

Q91 : 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

Q92 : The depository institutions include ___________?

A: mutual funds B: commercial banks and thrifts C: savings banks D: credit unions

Q93 : 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

Q94 : The voting ballot that is sent to stock holders by the corporation is classified as ___________

A: corporate paper B: white voting paper C: screened paper D: proxy

Q95 : 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

Q96 : The financial instruments are traded in money markets and then traded in __________?

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

Q97 : The negotiable deposit certificate are traded in ____________?

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

Q98 : 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

Q99 : 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

Q100 : The treasury bills are issued to raise significant amount of funds by ____________?

A: US treasury B: Australian treasury C: Swiss treasury D: functional treasury

Free Finance MCQs Mock Test Online with Answers

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