Finance MCQs

Option A: Country risk

Option B: Diversifiable risk

Option C: Equity risk premium

Option D: Market risk premium

Correct Answer: Equity risk premium ✔

Option A: Component cost is used

Option B: Common stock value is used

Option C: Cost of capital is used

Option D: Asset valuation is used

Correct Answer: Cost of capital is used ✔

Option A: Stock market

Option B: Investors

Option C: Capitalist

Option D: Exchange index

Correct Answer: Investors ✔

Option A: Term structure

Option B: Market premium

Option C: Risk premium

Option D: Cost of debt

Correct Answer: Cost of debt ✔

Option A: Estimate future growth

Option B: Estimate option future value

Option C: Estimate option present value

Option D: Estimate growth ratio

Correct Answer: Estimate future growth ✔

Option A: Increase in cost of debt

Option B: Increase capital structure

Option C: Decrease in cost of debt

Option D: Decrease capital structure

Correct Answer: ✔

Option A: Debt rate

Option B: Investment return

Option C: Interest rate

Option D: Cost of equity

Correct Answer: Cost of equity ✔

Option A: Consumer credit loans

Option B: Commercial markets

Option C: Residential markets

Option D: Mortgage markets

Correct Answer: Consumer credit loans ✔

Option A: Municipal bonds

Option B: Corporate bonds

Option C: U.S treasury bonds

Option D: Mortgages

Correct Answer: Corporate bonds ✔

Option A: Liquid markets

Option B: Short-term markets

Option C: Capital markets

Option D: Money markets

Correct Answer: Capital markets ✔

A. Short-term
B. Long-term
C. Intermediate term

Correct Answer: Short-term ✔

Option A: Debt rate

Option B: Investment return

Option C: Discount rate

Option D: Interest rate

Correct Answer: Interest rate ✔

Option A: Agency governance

Option B: Hiring governance

Option C: Corporate governance

Option D: External governance

Correct Answer: Corporate governance ✔

Option A: Financial instruments

Option B: Capital assets

Option C: Primary assets

Option D: Competitive instruments

Correct Answer: Financial instruments ✔

Option A: Controlled corporate business

Option B: Corporation

Option C: Limited corporate business

Option D: Unlimited corporate business

Correct Answer: Corporation ✔

Option A: Stock laws

Option B: By laws

Option C: Liability laws

Option D: Corporate laws

Correct Answer: By laws ✔

Option A: 8.57 times

Option B: 8.57%

Option C: 0.11 times

Option D: 11%

Correct Answer: 8.57 times ✔

Option A: Graphical analysis

Option B: Preference analysis

Option C: Common size analysis

Option D: Returning analysis

Correct Answer: Common size analysis ✔

Option A: 0.07%

Option B: 7.14%

Option C: 0.05 times

Option D: 7.15 times

Correct Answer: 7.14% ✔

Option A: $22,275

Option B: 15.71%

Option C: 1.93%

Option D: 1.925 times

Correct Answer: 15.71% ✔

Option A: Low dividends paid

Option B: High risk prospect

Option C: High growth prospect

Option D: High marginal rate

Correct Answer: High growth prospect ✔

Option A: Positive rate of return

Option B: Negative rate of return

Option C: External rate of return

Option D: Internal rate of return

Correct Answer: Internal rate of return ✔

Option A: Optimal capital budget

Option B: Minimum capital budget

Option C: Maximum capital budget

Option D: Greater capital budget

Correct Answer: Optimal capital budget ✔

Option A: Positive

Option B: Negative

Option C: Zero

Option D: One

Correct Answer: Positive ✔

Option A: Zero economic value added

Option B: Percent economic value added

Option C: Negative economic value added

Option D: Positive economic value added

Correct Answer: Negative economic value added ✔

Option A: Payback period

Option B: Forecasted period

Option C: Original period

Option D: Investment period

Correct Answer: Payback period ✔

Option A: Capital budgeting

Option B: Cost budgeting

Option C: Book value budgeting

Option D: Equity budgeting

Correct Answer: Capital budgeting ✔

Option A: Negative

Option B: Zero

Option C: Positive

Option D: Independent

Correct Answer: Zero ✔

Option A: Less project returns

Option B: Greater project return

Option C: Shorter payback period

Option D: Greater payback period

Correct Answer: Shorter payback period ✔

Option A: Relative outflow

Option B: Relative inflow

Option C: Relative cost

Option D: Relative profitability

Correct Answer: Relative profitability ✔

Option A: Optimal rationing

Option B: Capital rationing

Option C: Marginal rationing

Option D: Transaction rationing

Correct Answer: Capital rationing ✔

Option A: Non-normal cash flow

Option B: Normal cash flow

Option C: Normal costs

Option D: Non-normal costs

Correct Answer: Non-normal costs ✔

Option A: Greater than two

Option B: Equal to

Option C: Less than one

Option D: Greater than one

Correct Answer: Greater than one ✔

Option A: Technical equity

Option B: Defined future value

Option C: Project net present value

Option D: Equity net present value

Correct Answer: Project net present value ✔

Option A: Negative numbers

Option B: Positive numbers

Option C: Hurdle number

Option D: Relative number

Correct Answer: Negative numbers ✔

Option A: Rise in marginal cost of capital

Option B: Fall in marginal cost of capital

Option C: Rise in transaction cost of capital

Option D: Rise in transaction cost of capital

Correct Answer: Rise in marginal cost of capital ✔

Option A: Short maturity bonds

Option B: High maturity bonds

Option C: High premium bonds

Option D: High inflated bonds

Correct Answer: Short maturity bonds ✔

Option A: Depreciated bond

Option B: Interest bond

Option C: Zero coupon bond

Option D: Appreciation bond

Correct Answer: Zero coupon bond ✔

Option A: High liquidity premium

Option B: High inflation premium

Option C: High default premium

Option D: High yield premium

Correct Answer: High liquidity premium ✔

Option A: Nominal rate

Option B: Premium rate

Option C: Quoted rate

Option D: Both a and c

Correct Answer: Both a and c ✔

Option A: Junk bonds

Option B: Outstanding bonds

Option C: Standing bonds

Option D: Premium bonds

Correct Answer: Outstanding bonds ✔

Option A: Issued security

Option B: Treasury bonds

Option C: U.S bonds

Option D: Return security

Correct Answer: Treasury bonds ✔

Option A: Bond value

Option B: Per value

Option C: State value

Option D: Par value

Correct Answer: Par value ✔

Option A: Original maturity

Option B: Permanent maturity

Option C: Artificial maturity

Option D: Valued maturity

Correct Answer: Original maturity ✔

Option A: Municipal bonds

Option B: Corporation bonds

Option C: Default bonds

Option D: Zero bonds

Correct Answer: Municipal bonds ✔

Option A: Mature issue

Option B: Earning issue

Option C: New issue

Option D: Recent issue

Correct Answer: New issue ✔

Option A: Provision

Option B: Guarantee

Option C: Warrants

Option D: Convertibles

Correct Answer: Warrants ✔

Option A: Required rate of redemption

Option B: Required rate of earning

Option C: Required rate of return

Option D: Required option

Correct Answer: Required rate of return ✔

Option A: Equal to return rate

Option B: Seasoned price

Option C: Below its par value

Option D: Above its par value

Correct Answer: Below its par value ✔

Option A: Zero risk bonds

Option B: Zero bonds

Option C: Foreign bonds

Option D: Government bonds

Correct Answer: Foreign bonds ✔

Option A: Capital gain yield interest yield

Option B: Return yield + stable yield

Option C: Return yield + unstable yield

Option D: Par value + market value

Correct Answer: Capital gain yield interest yield ✔

Option A: Below its par value

Option B: Above its par value

Option C: Equal to return rate

Option D: Seasoned price

Correct Answer: Above its par value ✔

Option A: Yield to maturity

Option B: Yield to call

Option C: Yield to earning

Option D: Yield to investors

Correct Answer: Yield to call ✔

Option A: Reinvestment premium

Option B: Investment risk premium

Option C: Maturity risk premium

Option D: Defaulter’s premium

Correct Answer: Maturity risk premium ✔

Option A: Payment interest

Option B: Par interest

Option C: Coupon interest

Option D: Yearly interest rate

Correct Answer: Coupon interest ✔

Option A: Remains same

Option B: Becomes stable

Option C: Becomes change

Option D: Becomes low

Correct Answer: Remains same ✔

Option A: Organized markets

Option B: Trade markets

Option C: Counter markets

Option D: Bond markets

Correct Answer: Bond markets ✔

Option A: Income bonds

Option B: Callable bonds

Option C: Premium bonds

Option D: Default free bonds

Correct Answer: Callable bonds ✔

Option A: Convertible bonds

Option B: Stock bonds

Option C: Shared bonds

Option D: Common bonds

Correct Answer: Convertible bonds ✔

Option A: Rising bet rate

Option B: Floating rate debt

Option C: Market rate debt

Option D: Stable debt rate

Correct Answer: Floating rate debt ✔

Option A: classified bond

Option B: Discount bond

Option C: Compound bond

Option D: Consideration earning

Correct Answer: Discount bond ✔

Option A: Provision protection

Option B: Provision protection

Option C: Deferred protection

Option D: Call protection

Correct Answer: Call protection ✔

Option A: Required interest rate

Option B: Quoted risk-free interest rate

Option C: Liquidity risk-free interest rate

Option D: Premium risk-free interest rate

Correct Answer: Quoted risk-free interest rate ✔

Option A: State value

Option B: Par value

Option C: Bond value

Option D: Per value

Correct Answer: Par value ✔

Option A: Premium face value

Option B: Premium bond

Option C: Premium stock

Option D: Premium warrants

Correct Answer: Premium bond ✔

Option A: Seasoned par value

Option B: More than its par value

Option C: Seasoned par value

Option D: At par value

Correct Answer: More than its par value ✔

Option A: Never changes

Option B: Increases

Option C: Decreases

Option D: Earned

Correct Answer: Decreases ✔

Option A: Income bond

Option B: Interest bond

Option C: Payment bond

Option D: Earning bond

Correct Answer: Income bond ✔

Option A: Inflation premium

Option B: Off season premium

Option C: Nominal premium

Option D: Required premium

Correct Answer: Inflation premium ✔

Option A: At bond issuance

Option B: Expected in future

Option C: Expected at time of maturity

Option D: Expected at deferred call

Correct Answer: Expected in future ✔

Option A: Required rate of return

Option B: Required option

Option C: Required rate of redemption

Option D: Required rate of earning

Correct Answer: Required rate of return ✔

Option A: Standing bonds

Option B: Outdated bonds

Option C: Dated bonds

Option D: Seasoned bonds

Correct Answer: Seasoned bonds ✔

Option A: Higher

Option B: Lower

Option C: Variable

Option D: Stable

Correct Answer: Lower ✔

Option A: Current yield

Option B: Maturity yield

Option C: Return yield

Option D: Earning yield

Correct Answer: Current yield ✔

Option A: Divisible payment

Option B: Coupon payment

Option C: Par payment

Option D: Per period payment

Correct Answer: Coupon payment ✔

Option A: Reinvestment risk

Option B: Interest rate risk

Option C: Investment risk

Option D: Both A and B

Correct Answer: Both A and B ✔

Option A: Inflated trading

Option B: Default free trading

Option C: Less frequently traded

Option D: Frequently traded

Correct Answer: Less frequently traded ✔

Option A: Reduction in income

Option B: Increment in income

Option C: Matured income

Option D: Frequent income

Correct Answer: Reduction in income ✔

Option A: Corporation bonds

Option B: Default bonds

Option C: Risk bonds

Option D: Zero risk bonds

Correct Answer: Corporation bonds ✔

Option A: Project net gain

Option B: Independent projects

Option C: Dependent projects

Option D: Net value projects

Correct Answer: Independent projects ✔

Option A: Evaluate cash flow

Option B: Evaluate projects

Option C: Evaluate budgeting

Option D: Evaluate equity

Correct Answer: Evaluate projects ✔

Option A: Hurdle number

Option B: Relative number

Option C: Negative numbers

Option D: Positive numbers

Correct Answer: Positive numbers ✔

Option A: Normal costs

Option B: Non-normal costs

Option C: Non-normal cash flow

Option D: Normal cash flow

Correct Answer: Non-normal cash flow ✔

Option A: Be accepted

Option B: Not be accepted

Option C: Have capital acceptance

Option D: Have return rate acceptance

Correct Answer: Be accepted ✔

Option A: Terminal value

Option B: Existed value

Option C: Quit value

Option D: Relative value

Correct Answer: Terminal value ✔

Option A: Negative economic value added

Option B: Positive economic value added

Option C: Zero economic value added

Option D: Percent economic value added

Correct Answer: Positive economic value added ✔

Option A: Minimum life

Option B: Present value life

Option C: Economic life

Option D: Transaction life

Correct Answer: Economic life ✔

Option A: Present value of equity

Option B: Future value of equity

Option C: Present value cash flow

Option D: Future value of cash flow

Correct Answer: Present value cash flow ✔

Option A: Negative index

Option B: Exchange index

Option C: Project index

Option D: Profitability index

Correct Answer: Profitability index ✔

Option A: 5 years

Option B: 3.5 years

Option C: 4 years

Option D: 4.5 years

Correct Answer: 5 years ✔

Option A: Valued relationship

Option B: Economic relationship

Option C: Direct relationship

Option D: Inverse relationship

Correct Answer: Direct relationship ✔

Option A: Negative projects

Option B: Relative projects

Option C: Evaluate projects

Option D: Earned projects

Correct Answer: Evaluate projects ✔

Option A: Higher net present value

Option B: Lower net present value

Option C: Zero net present value

Option D: All of above

Correct Answer: Higher net present value ✔

Option A: Positive

Option B: Independent

Option C: Negative

Option D: Zero

Correct Answer: Positive ✔

Option A: Return on assets

Option B: Return on multiplier

Option C: Return on turnover

Option D: Return on stock

Correct Answer: Return on assets ✔

Option A: Comparison

Option B: Analysis

Option C: Bench marking

Option D: Return analysis

Correct Answer: Bench marking ✔

Option A: Low dividends paid

Option B: High risk prospect

Option C: High growth prospect

Option D: High marginal rate

Correct Answer: High growth prospect ✔

Option A: Marginal ratios

Option B: Equity ratios

Option C: Return ratios

Option D: Market value ratios

Correct Answer: Market value ratios ✔

Option A: Long-term bonds

Option B: Short-term bonds

Option C: Internal term bonds

Option D: External term bonds

Correct Answer: Long-term bonds ✔

Option A: Du DuPont equation

Option B: Turnover equation

Option C: Preference equation

Option D: Common equation

Correct Answer: Du DuPont equation ✔