NTS MCQ Quiz Hub

1. The following are the examples of financial assets except?
Stocks
Bank loan
Bond
Raw material

2. The sale of financial assets is also referred to as the
Capital decision
CFO decision
Financing decision
Investment decision

3. The construction of new manufacturing plant is also referred to as the
Capital decision
CFO decision
Finacing decision
Investment decision

4. According to the Efficient Market Hypothesis, which from the following is NOT true?
Analysis predicts price pattern
No money machines
No arbitrage opportunities
Security prices reflect true underlying value of assets

5. According to the weak form of market efficiency __________ past information is included in the stock price.
no
all
marginal
only a few

6. We say about a particular investment that it is risky, because
it is dangerous
it has low returns
its returns are uncertain
its raw material is unavailable

7. In Finance, risk is calculated by calculating the
mean
variance
standard deviation
kurtosis

8. The sale of bonds by a country or a corporation is referred to as the
Investment decision
financing decision
offering loan
capital structure

9. The cost of an item is $100. The seller has a mark-up of 20%. What is the selling price?
$80
$100
$120
$140

10. A firms investment decision is also called the
financing decision
capital budgeting decision
liquidity decision
none of these

11. Conflicts between shareholders and managers interest is called
management problem
area of the board of directors
risk
agency problem

12. In the principle-agent framework
managers are the principals
directors are the principals
shareholders are the principals
shareholders are the agents

13. The risk that can be eliminated by diversification is called
specific risk
security risk
market risk
beta

14. Which from the following is the safest investment?
Treasury bills
Government bond
Corporate bond
Stocks

15. The spread of possible outcomes of an investment returns is measured by
variance
standard deviation
skewness
kurtosis

16. Risk is best judged in
portfolio context
individual security context
both of these
none of these

17. In a well-functioning markets two investments that offer the same payoff must have the same
beta
return
risk
price

18. The mixture of debt and equity, used to finance a corporation is also known as
capital structure
capital budgeting
investing
treasury

19. The present value of $100 expected in two years from today at a discount rate of 5% is
$105
$110.7
$95
$90.7

20. What will be value of $100 after two years, if the interest rate during this period is 5%?
$105
$107.5
$110.25
$95

21. Investors require higher return on
levered equity
unlevered equity
both levered and unlevered
bond equity

22. In a well-functioning capital market if the firm pays no taxes then what is better about borrowing?
Borrowing is not a good idea in this case
No difference who (firm or shareholders) borrows
It is better that the firm borrows
It is better that the shareholders borrow

23. Corporations can return cash to their shareholders by
paying cash dividends
stock repurchase
both A and B
none of these

24. Which from the following is true about stock repurchases?
Repurchases are more flexible
Repurchases are tax-advantaged
both A and B
none of these

25. What should be the goal of a corporation?
to maximize the profit of the shareholders
to maximize the value of the corporation
both A and B
to take care of the interests of the management

26. The money a investor receive for taking on a risk is called
Risk premium
risk free rate
option value
arbitrage

27. An asset that pays a fixed amount of cash each year for a specified number of years is called
perpetuity
dividend
liquidity
annuity

28. Net Present Value is calculated as
cash inflow - cash outflow
cash outflow - cash inflow
PV of cash inflow - PV of cash outflow
PV of cash outflow - PV of cash inflow

29. An investment should be accepted if its NPV is
0
1
positive
negative

30. The ratio between the amount of profit and investment is called the
NPV
opportunity cost
risk premium
rate of return

31. An investment should be accepted if
Rate of Return > Opportunity Cost
Rate of Return < Opportunity Cost
Rate of Return = Opportunity Cost
A, B and C are irrelevant

32. Governments and corporations issue bonds to
borrow money
lend money
both A and B
none of these

33. Regular interest payment to the bond holders is called
principal
coupon
face value
yield

34. At maturity the bond holders get back their principal. The principal is called
coupon
face value
yield
return

35. Any economic resource that can produce economic value to the holder is called
asset
return
maturity
yield

36. A collection of assets held by an investor is called
corporate bond
random returns
risk premium
portfolio

37. The risk of a well-diversified portfolio depends on the __________ of the securities included in the portfolio.
specific risk
market risk
both A and B
none of these

38. The contribution of an individual security to the risk of a well-diversified portfolio is measured by?
beta
variance
standard deviation
CAPM

39. The sensitivity of an asset to the market movements is called
beta
variance
standard deviation
CAPM

40. The average beta of all stocks in a market is
1
0
1
1.5