10/3/2016

QuizMantra:FinancialManagementMCQ/FinanceMCQ(FinanceQuiz7)

FinancialManagementMCQ/FinanceMCQ(FinanceQuiz7)
1. A 90day Tbill futures expires in 100 days. Spot price of the 190day Tbill is $98. A 100day riskfree interest rate is
3.5%p.a.Theyieldonthisfuturescontractis
[A]2.25%
[B]2.45%
[C]3.35%
[D]4.35%
4.35%
2.Whichofthefollowingistrueaboutacallableswap?
[A]Thefixedratereceiverhastherighttoterminatetheswapatanytimebeforeitsmaturity
[B]Thefixedratepayerhastherighttoextendtheswapbeyondmaturity
[C]Thefixedratepayerhastherighttoterminatetheswapatanytimebeforeitsmaturity
[D]Bothfixedratepayerandreceiverhavetherighttoterminatetheswapatanytimebeforeitsmaturity
Thefixedratepayerhastherighttoterminatetheswapatanytimebeforeitsmaturity
3.Inasingleperiodbinomialoptionpricingmodel,theunderlyingstockiscurrentlysellingforRs.80andwillriseorfallby
15%overthenextperiod.AcalloptionwithanexercisepriceofRs.95wouldhaveapremiumof
[A]Zero
[B]Rs.3
[C]Rs.5
[D]Rs.8
Zero
4. Goetzmann AG, an integrated steel producer in Germany, is worst hit by recession wave. In 2001, the entire company
wasbrokenintoeightnewentitiesandGoetzmannceasedtoexist.Thistechniqueofrestructuringiscalled
[A]Spinoff
[B]Splitoff
[C]Splitup
[D]Divesture
Splitup
5. When a firm is a target of hostile tender offer, the target firm invites other friendly bidder. This strategy of takeover
defenseiscalled
[A]Poisonpills
[B]Crownjewels
[C]Whiteknights
[D]Goldenparachute
Whiteknights
6.Whichofthefollowingmoneymarketinstrumentshasamaturityperiodvaryingfrom2to15days?
[A]Callmoney
[B]CommercialPaper
[C]Noticemoney
[D]TreasuryBill
Noticemoney
7.Whichofthefollowingwilldecreasewithanincreaseintheinterestrate?
[A]FutureValueInterestFactor
[B]FutureValueInterestFactorForAnnuity
[C]CapitalRecoveryFactor
[D]PresentValueInterestFactorforaperpetualannuity
PresentValueInterestFactorforaperpetualannuity
8.Whichofthefollowingistrue?
[A]AchangeinYTMaffectsbondswithalowerYTMmorethanitdoesbondswithahigherYTM
[B]Giventhematurity,forequalsizedincreasesordecreasesintheYTM,pricemovementsarenotsymmetrical
[C]Whentherequiredrateofreturnisgreaterthanthecouponrate,thevalueofthebondismorethanitsparvalue
[D]BondspriceisdirectlyproportionaltoitsYTM
Giventhematurity,forequalsizedincreasesordecreasesintheYTM,pricemovementsarenotsymmetrical
9.Whichofthefollowingstatementsis/aretrue?
I.Betaofasecurityincreaseswithanincreaseinthevarianceofmarketreturns.
II.Betaofasecurityincreaseswithadecreaseinstandarddeviationofthesecuritysreturn.
III.Betaofasecurityincreaseswithanincreaseinthevalueofthecorrelationcoefficientbetweenthesecuritysreturnand1/2
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QuizMantra:FinancialManagementMCQ/FinanceMCQ(FinanceQuiz7)

III.Betaofasecurityincreaseswithanincreaseinthevalueofthecorrelationcoefficientbetweenthesecuritysreturnand
marketreturn.
[A]Only(I)above
[B]Only(II)above
[C]Only(III)above
[D]Both(I)and(II)above
Only(III)above
10.WhichofthefollowingisnottrueaboutCommercialPapers(CPs)?
[A]CPsarenegotiablebyendorsementanddelivery
[B]TheminimummaturityperiodofCPsis15days
[C]CPsareunsecuredinnature
[D]CPscannotbeissuedatadiscounttofacevalue
CPscannotbeissuedatadiscounttofacevalue
11.WhichofthefollowingassumptionsassociatedwithCapitalAssetPricingModel(CAPM)is/arenottrue?
I.Thegreatertheperceivedriskofaportfolio,thehigheristhereturnexpectedbyariskaverseinvestor.
II.Allindividualsagreeonthenatureofreturnandriskassociatedwitheachinvestment.
III.Thechoiceofbuyingassetsisaffectedbytaxes.
[A]Only(I)above
[B]Only(II)above
[C]Only(III)above
[D]Both(I)and(II)above
Only(III)above
12.Whichofthefollowingisanexampleofadiversifiablerisk?
[A]Abilityofacompanytoobtainadequatesupplyofrawmaterials
[B]Changesinthetaxstructure
[C]Reductioninthepurchasingpowerofmoney
[D]Recessionintheeconomy
Abilityofacompanytoobtainadequatesupplyofrawmaterials
13.Whoamongthefollowingcategoriesofpeopletrytoobtainriskfreeprofitsbysimultaneouslybuyingandsellingsimilar
instrumentsindifferentmarkets?
[A]Arbitrageurs
[B]Speculators
[C]Factors
[D]Brokers
Arbitrageurs
14.Thesinkingfundfactoristheinverseof
[A]CapitalRecoveryFactor
[B]FutureValueInterestFactor
[C]FutureValueInterestFactorforAnnuity
[D]PresentValueInterestFactorforAnnuity
FutureValueInterestFactorforAnnuity
15.Considerthefollowingdata
Annualcreditpurchase=Rs.72,72,000
Openingbalanceofaccountspayable=Rs.17,66,400
Closingbalanceofaccountspayable=Rs.29,20,000
Theaveragepaymentperiodassuming360daysinayearis
[A]36days
[B]66days
[C]96days
[D]116days

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