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Finance MCQs with Explanations

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231FinanceMedium

Partners who are only liable for their own part of investment are considered as___________________?

AGeneral partners

BLimited partners

CCorporate partners

DVenture partners

Correct answer

B. Limited partners

Explanation

Limited partners is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

232FinanceMedium

Long-term equity anticipation security is usually classified as__________?

ALong-term options

BShort-term options

CYearly call

DShort money options

Correct answer

A. Long-term options

Explanation

Long-term options is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

233FinanceMedium

When real rate is high, all the interest rates tend to be ___________?

ANone of These

BConstant

CHigher

DLower

Correct answer

C. Higher

Explanation

Higher is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

234FinanceMedium

The conflict of interest between stockholders and management is known as:

AManagement conflict

BInterest conflict

CAgency cost

DAgency problem

Correct answer

D. Agency problem

Explanation

Agency problem is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

235FinanceMedium

Difference between actual return on stock and predicted return is considered as___________?

AActual error

BPrediction error

CProbability error

DRandom error

Correct answer

D. Random error

Explanation

Random error is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

236FinanceMedium

The effect of purchasing power or inflation on present value is important because _________?

AIt increases the real value of cash flows received in the future

BIt has no effect on real value of cash flow received in the future

CIt reduces the real value of cash flows received in the future

DNone of these

Correct answer

C. It reduces the real value of cash flows received in the future

Explanation

It reduces the real value of cash flows received in the future is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

237FinanceMedium

The number of years forecasted to recover an original investment is classified as ___________?

Aforecasted period

Boriginal period

Cpayback period

Dinvestment period

Correct answer

C. payback period

Explanation

payback period is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

238FinanceMedium

The main trading markets of Eurobonds are ___________?

AAustralian markets

BLondon and Luxembourg

CAsian banks counters

DSwiss banks counters

Correct answer

B. London and Luxembourg

Explanation

London and Luxembourg is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

239FinanceMedium

When the market’s required rate of return for a particular bond is much less than its coupon rate, the bond is selling at:

ADiscount

BPremium

CPar

DCannot be determined without more information

Correct answer

B. Premium

Explanation

If the bond’s price is higher than its par value, it will sell at a premium because its interest rate is higher than current prevailing rates..

240FinanceMedium

The suppliers and demanders of the long term investment funds work closely in ____________?

Aopen end markets

Bclassical set markets

Cbond markets

Dclose end markets

Correct answer

C. bond markets

Explanation

bond markets is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.

The effect of purchasing power or inflation on present value is important because _________?

AIt increases the real value of cash flows received in the future

BIt has no effect on real value of cash flow received in the future

CIt reduces the real value of cash flows received in the future

DNone of these

Correct answer

C. It reduces the real value of cash flows received in the future

Explanation

It reduces the real value of cash flows received in the future is the correct answer. Review the question and compare it with the other choices to remember this fact for future exams.