MBA Financial Markets — practice questions
110 free MCQs with worked solutions. Tap any question for the answer + explanation, or practice them all in the app.
Practice MBA Financial Markets in the app →A financial market links savers and investors, performing what is known as its:The process by which allocation of funds is done through banks or markets is called:Which is one of the four functions of a financial market?By making financial assets easy to buy and sell, markets provide:Financial markets are classified on the basis of the:Instruments with a maturity of less than one year are traded in the:The money market has:Which is a major participant in the money market?A Treasury bill is an instrument of short-term borrowing by the:Treasury bills are also known as:A 91-day Treasury bill of face value 1,00,000 bought for 96,000 earns the investor:The difference between the issue price of a treasury bill and its redemption value is called:Treasury bills are available for a minimum amount of:A short-term unsecured promissory note issued by large creditworthy companies is:Using funds raised through commercial paper to meet floatation costs of a bigger issue is called:Short-term finance repayable on demand, with maturity of one day to fifteen days, used between banks, is:The interest rate paid on call money loans is known as the:Unsecured, negotiable, short-term bearer instruments issued by commercial banks are:A bill of exchange used to finance credit sales, drawn by the seller and accepted by the buyer, becomes a:A trade bill accepted by a commercial bank is known as a:Facilities and institutional arrangements through which long-term funds are raised form the:The SENSEX, the benchmark index of the BSE, is made up of how many actively traded stocks?The art and science of managing a firm's money so that it can meet its goals is:Making sure the firm has cash on hand to pay bills as they come due is:Short-term investments that can be turned into cash easily are called:A firm sells its accounts receivable outright at a discount to raise money quickly. This is:A bank tells a firm the most it may borrow unsecured over the coming year. That agreement is a:A guaranteed version of that arrangement, where the bank commits the funds will be available, is a:A financially strong corporation issues an unsecured short-term IOU. That instrument is:Credit a seller gives a buyer between delivery and payment is called:A business loan with a maturity longer than one year is a:A long-term loan made against real estate as collateral is a:Analysing long-term projects and picking those with the best returns is:Investments in land, buildings and machinery expected to serve beyond a year are:The chance that a firm cannot make scheduled interest and principal payments on its debt is:The principle that a higher risk should bring the chance of a greater return is the:A security representing an ownership interest in a corporation is:An equity security whose dividend is fixed when it is issued is:Payments made to stockholders out of a corporation's profits are:The amount borrowed by the issuer of a bond, also called par value, is the:Bonds issued by states, cities and counties are called:New securities are sold to the public for the first time in the:Already-issued securities are bought and sold between investors in the:A firm that pools investors' money to buy a selection of securities is a:Anything that is acceptable as payment for goods and services is:Pebbles would fail as money because they are widely available. Money needs:A banana fails as money because it spoils. Money must have:Heavy gold bars are poor money because they are hard to carry. Money needs:Money must break into smaller parts so purchases of any size can be made. This is:When money makes buying and selling easier than barter, it is acting as a:When prices let buyers compare the worth of different goods, money is acting as a:Cash held in the form of coins and paper money is called:Money kept in checking accounts that can be taken out at any time forms:Deposits that pay interest but cannot be withdrawn on demand are:The measure of readily available money, made of currency plus demand deposits, is:The broader measure that adds time deposits and less accessible money is:Profit-oriented institutions that take deposits, lend and invest in securities are:Not-for-profit financial cooperatives owned by their members are:Depository institutions formed to encourage household saving and make home mortgage loans are:A bank cannot open without an operating licence known as a:Financial institutions standing between the suppliers and demanders of funds perform:Large pools of money set aside to pay retirement benefits later are:Buying and selling government bonds to speed up or slow the economy is called:The rule that member banks must keep part of their deposits in cash or at a district bank is the:The interest rate the central bank charges its member banks is the:The central bank's power to set consumer credit rules and margin requirements is called:The amount a bond issuer repays at the end of the bond's term is its:The rate used to work out the periodic interest payments on a bond is the:The regular interest payment on a bond is found by multiplying the par value by the:The date on which a bond's term comes to an end is the:The discount rate that brings a bond's future cash flows to present value is the:A bond whose coupon rate exceeds its yield to maturity will sell:A bond whose coupon rate is below its yield to maturity will sell:When the coupon rate and the yield to maturity are identical, the bond sells:The safest category of bonds described, backed fully by the United States government, is:Bonds issued by cities, states and their agencies are called:Corporate bonds carry more risk than government bonds because companies cannot:Corporate bonds that make no regular coupon payments are:Bonds that can be exchanged for a set number of common shares are:Which three firms are named as the largest bond rating providers?Bonds in the top rating bands are described as:Investment-grade bonds are especially popular because many commercial banks and pension funds:Because bonds are fixed-income investments, they are exposed to risks that can hurt their:A bond paying 8% on a par value of 1,000 makes an annual coupon payment of:A bond paying 5% on a par value of 1,000 makes an annual coupon payment of:If a 1,000 par bond pays 6% annually in two equal instalments, each payment is:Coupon rates are always expressed in which terms, even when payments are more frequent?The yield column of a bond table shows the return an investor gets if the bond is:A share trading at 24 with earnings per share of 4 has a price to earnings ratio of:That ratio of 6 means investors are willing to pay how much for each unit of earnings?A share trading at 50 with earnings per share of 5 has a ratio of:A share trading at 90 with earnings per share of 6 has a ratio of:A ratio worked out with actual past earnings is described as a:A ratio built on projected future earnings is described as a:A common interpretation is that firms with high price to earnings ratios should be:By the same argument, stocks with low ratios should be:Analysing one company's ratio in isolation tells an analyst:The ratio comparing a company's market value with its book value is the:The multiple comparing market value with operating cash flow is the:The equity multiple used mainly when comparing cash returns across investment types is:The most common equity multiple in stock valuation, because it is simple to calculate, is the:A measurement of the total value of a company, used in merger decisions, is:Equity that offers preferential claims in ownership is:Unlike bonds, preferred stock has no:The word preferred refers to those shareholders receiving dividends before:Many firms issue preferred stock that can later be exchanged for ordinary shares. That is a:The steady dividend on preferred stock makes it seem more like:Because that dividend stream is constant, preferred stock is well valued using the:The three forms of market efficiency identified are strong, semi-strong and:In the weakest of those forms, prices already reflect all: