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Wednesday, March 14, 2012

Finance Quiz - 5 (Finance Objective Questions)

1. Nifty index is used in _________.    
[A]Derivatives
[B]Index Funds
[C]Exchange Traded Funds (ETFs)
[D]All of the above



2. Demutualisation of stock exchanges refer to _________.    
[A]the legal structure of an exchange whereby the ownership, the management and the trading       rights at the exchange are segregated from one another
[B]the legal structure of an exchange whereby the ownership and the management at the       exchange are segregated from one another
[C]the legal structure of an exchange whereby the ownership, the management and the trading       rights at the exchange vests in one person
[D]None of the above



3. Which securities can an investor invest in?    
[A]Shares
[B]Debentures
[C]Mutual Funds
[D]All of the above



4. _____________ gives the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date.   
[A]Put Option
[B]Forward
[C]Future
[D]Call Option



5. The holders of which instrument are members of the company and have voting rights?    
[A]Treasury Bill
[B]Commercial Paper
[C]Debenture
[D]Equity



6. Rs.1,00,000 was borrowed at an interest rate of 10 percent per annum. The amount has to be repaid with interest in ten equal annual installments. Each installment is payable at the end of every year. What will be amount of each installment?
[A]Rs.16,273
[B]Rs.17,225
[C]Rs.18,750
[D]Rs.13,469



7. Which of the following is an example of systematic risk?
[A]Risk of non-availability of a major raw material to a company making aluminum bars
[B]Death of the finance manager of a company providing financial services
[C]Unexpected entry of a multi-national company in the tea industry
[D]Reduction of tax rate by the government



8. Which of the following decreases working capital?
[A]Payment of funds to the holders of commercial paper on maturity
[B]Discounting bills receivable
[C]Issue of partly convertible debentures
[D]Redemption of preference shares



9. Which of the following is not a spontaneous source of financing current assets?
[A]Accrued wages and salaries
[B]Provision for dividends
[C]Provision for taxes
[D]Cash credits/Over drafts



10. Which of the following is not a motive for non-finance companies for holding cash in the normal course of business?
[A]Transaction motive
[B]Precautionary motive
[C]Speculative motive
[D]Capital investments



11. Which of the following situations lead to the increase in volatility in the call money market?
[A]Reduction in cash reserve ratio
[B]Prepayment of term loans by a large number of borrowers
[C]Entry of the Financial Institutions (FIs) into the market
[D]Payment of large amount of advance taxes by the banks and FIs



12. Which of the following is false regarding Commercial Paper (CP)?
[A]It is issued in multiples of Rs.5 lakh
[B]It has a minimum maturity of 15 days and a maximum up to one year
[C]It has to be mandatorily underwritten
[D]The issue of a CP attracts stamp duty



13. Which of the following is not a feature of Certificate of Deposit (CD)?
[A]It is issued at a discount to face value
[B]It is issued in bearer form only
[C]It is a document of title to a time deposit
[D]It has virtually no default risk



14. A repo is a
[A]Security which is traded in the stock market
[B]Contract to buy a specific security at a future date at the price on that date
[C]Contract which gives the holder an option to buy a specific security in future at the predetermined price
[D]Contract in which one party sells a specific security to another party with an agreement to buy it back on a specified future date at a specified price



15. Which of the following is not a feature of an optimal capital structure?
[A]Profitability
[B]Liquidity
[C]Flexibility
[D]Control



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