Finance Questions

Finance Questions Page-9. The following Multiple Choice Questions (MCQs) are from the theory of Finance, that is Public Finance, Corporate Finance and Personal Finance. View answers to the questions at the bottom of the page.

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  1. Which from the following statements is incorrect?
    1. A European option can only be exercised at expiry
    2. An American option can only be exercised at expiry
    3. A European option is a right but not obligation
    4. An American option is a right but not obligation

  2. An agreement on a telephone or email to buy/sell an asset at an agreed future time for an agreed price is called

    1. spot contract
    2. forward contract
    3. future contract
    4. swap

  3. When forward contract is traded on an exchange, it is called
    1. spot contract
    2. future contract
    3. call option
    4. put option

  4. On 1 January you enter a contract to buy 1 million barrel of oil for $80 per barrel to be delivered on 1 March. The price on 1 March is $82 per barrel. Your gain is

    1. $200
    2. $20000
    3. $200000
    4. $2000000

  5. Allocating stock in popular new issues to manager of their important corporate clients is called

    1. subscription
    2. under-performance
    3. rights
    4. spinning

  6. Which from the following issues has the lowest total direct cost?
    1. straight bonds
    2. corporate stocks
    3. all issues have same cost
    4. none of these

  7. An option that allows the underwriter to increase the number of shares bought by 15% is called

    1. spread
    2. spinning
    3. whiteshoe
    4. greenshoe

  8. A four year zero-coupon bond has 6% yield. What is its duration in years?

    1. 4
    2. 5
    3. 6
    4. 7

  9. Changes in interest rates have a __________ impact on the prices of long-term bonds than the short-term bonds.

    1. greater
    2. smaller
    3. both have same impact
    4. interest rate does not matter

  10. An investment of $9,000 today will yield $10,000 after one year. What is the Net Present Value if the interest rate is 10%?

    1. $71
    2. $81
    3. $91
    4. $101

ANSWERS: FINANCE QUESTIONS

  1. B
  2. B
  3. B
  4. D
  5. D
  6. A
  7. D
  8. A
  9. A
  10. C