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Quiz 16
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Q.1
An option that gives investors right to sell a stock at predefined price is classified as
put option
call option
money back options
out of money options
Q.2
Value of stock is Rs 250 and call option obligation is Rs 100 then current value of portfolio would be
Rs 125.00
Rs 150.00
Rs 350.00
Rs 2.50
Q.3
Type of options that permit bond holder to buy stocks at stated price are classified as
provision
guarantee
warrants
convertibles
Q.4
When price of bond is calculated below its par value, it is classified as
classified bond
discount bond
compound bond
consideration earning
Q.5
Required rate of return in calculating bond's cash flow is also classified as
going rate of return
yield
earning rate
Both A and B
Q.6
Yield of interest rate which is below than coupon rate, this yield is classified as
yield to maturity
yield to call
yield to earning
yield to investors
Q.7
An inflation rate including in quoted interest rate on security, is inflation rate
expected over security life
expected at deferred call
at bond issuance
expected at time of maturity
Q.8
Long-term equity anticipation security is usually classified as
short-term options
long-term options
short money options
yearly call
Q.9
According to exercise value and option price, market value of option will be zero when
stock price is maximum
option price is zero
stock price is zero
stock price is minimum
Q.10
An excess of actual price of option over an exercise value of option is classified as
time value options
actual options
estimated options
optional pricing
Q.11
At last day when European and American option can be exercised is classified as
European date
American date
expiration date
money date
Q.12
Rate of return (in percentages) is consists of
capital gain yield interest yield
return yield + stable yield
return yield + instable yield
par value + market value
Q.13
Reinvestment risk of bonds is usually higher on
income bonds
callable bonds
premium bonds
default free bonds
Q.14
Type of bonds that are issued by foreign governments or foreign corporations are classified as
zero risk bonds
zero bonds
foreign bonds
government bonds
Q.15
Specific day at which bond value is repaid can be considered as
valued date
repayment date
payment date
maturity date
Q.16
An interest rate which is used in calculation of cash flows of bonds is called
required rate of redemption
required rate of earning
required rate of return
required option
Q.17
Market in which bonds are traded over-the-counter than in an organized exchange is classified as
organized markets
trade markets
counter markets
bond markets
Q.18
Coupon payment is calculated with help of interest rate, then this rate considers as
payment interest
par interest
coupon interest
yearly interest rate
Q.19
An effect of interest rate risk and investment risk on a bond's yield is classified as
reinvestment premium
investment risk premium
maturity risk premium
defaulter's premium
Q.20
Bonds issued by local and state governments with default risk are
municipal bonds
corporation bonds
default bonds
zero bonds
Q.21
Indexed bonds that are issued by linking payments to inflation are classified as
treasury inflation protected securities
premium protected securities
risk protected securities
liquidity protected securities
Q.22
Bonds having zero default risk are classified as
U.S bonds
return security
issued security
treasury bonds
Q.23
Rate of interest which is usually discussed by investors whenever rate of return is discussed is classified as
yield to maturity
yield to return
yield to earning
yield to investors
Q.24
Tax free bonds issue for welfare by industrial agencies or pollution control agencies are classified as
agent bonds
development bonds
pollution control bonds
Both B and C
Q.25
Real risk-free interest rate in addition with an inflation premium is equal to
required interest rate
quoted risk-free interest rate
liquidity risk-free interest rate
premium risk-free interest rate
Q.26
An increasing in interest rate leads to decline in value of
junk bonds
outstanding bonds
standing bonds
premium bonds
Q.27
Bonds issued by government and backed by U.S government are classified as
issued security
treasury bonds
U.S bonds
return security
Q.28
If market interest rate fall below coupon rate then bond will be sold
below its par value
above its par value
equal to return rate
seasoned price
Q.29
Type of bond in which payments are made on basis of inflation index is classified as
borrowed bond
purchasing power bond
surplus bond
deficit bond
Q.30
A bond whose price will rise above its face value is classified as
premium face value
premium bond
premium stock
premium warrants
Q.31
Price of an outstanding bond increases when market rate
never changes
increases
decreases
earned
Q.32
An average inflation rate which is expected over life of security is classified as
inflation premium
off season premium
nominal premium
required premium
Q.33
Bond which is issued in market and few days are passed of its issuance is classified as
instable bond
outstanding bond
standing bond
stable bond
Q.34
Type of bond which pays interest payment only when it earns is classified as
income bond
interest bond
payment bond
earning bond
Q.35
If coupon rate is less than going rate of interest then bond will be sold
seasoned par value
more than its par value
seasoned par value
at par value
Q.36
Type of provision which allows an orderly retirement of an issued bond which is classified as
whole call provision
super fund provision
floating fund provision
sinking fund provision
Q.37
Bonds issued by small companies tend to have
high liquidity premium
high inflation premium
high default premium
high yield premium
Q.38
Right held with corporations to call issued bonds for redemption is considered as
artificial provision
call provision
redeem provision
original provision
Q.39
Bond that has been issued in very recent timing is classified as
mature issue
earning issue
new issue
recent issue
Q.40
Value generally promises to pay at maturity date and a firm borrows is considered as bonds
bond value
per value
state value
par value
Q.41
Maturity date decides at time of issuance of bond and legally permissible is classified as
original maturity
permanent maturity
artificial maturity
valued maturity
Q.42
Bonds with deferred call have protection which is classified as
provision protection
provision protection
deferred protection
call protection
Q.43
Legal document in which rights of issuing corporation and bondholder's state is classified as
legal rights classification
indenture
ownership statement
guarantee statement
Q.44
Price of an outstanding bond decreases when market rate is
increased
decreased
earned
never changed
Q.45
Coupon rate of bond is also called
nominal rate
premium rate
quoted rate
both a and c
Q.46
Bond's promised rate of return is also considered as
yield to earning
yield to investors
yield to maturity
yield to return
Q.47
A premium which reflects possibility of issuer who does not pay principal amount of bonds is called
seasoned risk premium
nominal risk premium
default risk premium
quoted risk premium
Q.48
Type of bonds that pays no coupon payment but provides little appreciation are classified as
depreciated bond
interest bond
zero coupon bond
appreciation bond
Q.49
In call provision, it is stated that company will pay to issue an amount
higher than par value
lower than par value
equal to par value
zero to par value
Q.50
An interest yield = 7.9% and capital gains yield = 2.5% then total rate of return is
10.00%
3.16%
0.31%
5.40%
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