All Free Management Sciences MCQs with Answers

• A. 260
• B. 560
• C. 40
• D. 300

Explanation: For a call option, intrinsic value is the amount by which the stock price exceeds the exercise price: $300 − $260 = $40.

• A. counted liability
• B. invested liability
• C. unlimited liability
• D. limited liability

Explanation: Limited liability restricts shareholders' maximum loss to the amount they invested in the company.

• A. cumulative voting
• B. non-cumulative voting
• C. dual class voting
• D. limited voting

Explanation: Cumulative voting is used when shareholders vote in an election involving the full set of board positions, with votes capable of being…

• A. sub class voter
• B. preferred stockholder
• C. common stock holder
• D. cumulative voter

Explanation: Preferred stock commonly carries priority dividends and liquidation claims but no ordinary voting rights.

• A. traders gathered auction
• B. close outcry auction
• C. specified auction
• D. open outcry auction

Explanation: In an open outcry auction, traders communicate bids and offers vocally on the trading floor.

• A. preferred stock
• B. voted stock
• C. cumulative stock
• D. fundamental stockBusiness Finance

Explanation: Preferred stock combines features of common stock and bonds: it usually pays a fixed dividend like a bond, while representing ownership…

• A. weak form of market efficiency
• B. strong form of market efficiency
• C. semi-strong form market efficiency
• D. expensive form market efficiency

Explanation: Strong-form efficiency holds that stock prices reflect both publicly available and private information.

• A. non participating preferred stock
• B. participating preferred stock
• C. non-cumulative preferred stock
• D. cumulative preferred stockAccounting & Auditing

Explanation: Cumulative preferred stock carries unpaid dividends forward when they are missed, and those arrears must be settled before common-stock…

• A. red herring prospectus
• B. white herring prospectus
• C. preemptive prospectus
• D. securitized prospectus

Explanation: A red herring prospectus is a preliminary prospectus circulated before securities receive final registration or approval, so it may still…

• A. currency swaps
• B. notion swaps
• C. floating swaps
• D. fixed swaps

Explanation: Currency swaps are generally long-term agreements in which parties exchange cash flows denominated in different currencies.

• A. return
• B. equity
• C. spot rate contracts
• D. forward rate contractsStocks & Bonds

Explanation: An investor’s total return from stock consists of capital gains plus dividends or other periodic income.

• A. shares offering
• B. price offering
• C. rights offering
• D. stock offering

Explanation: A rights offering gives existing shareholders the right to buy additional shares, usually at a price below the current market price.

• A. characteristics of fundamental stock
• B. characteristics of claimed stock
• C. characteristics of common stock
• D. characteristics of preferred stock

Explanation: Common stockholders have residual claims after creditors and preferred shareholders, limited liability, and dividends that are not…

• A. initial margin
• B. futures margin
• C. conditional margin
• D. non-conditional margin

Explanation: Initial margin is the deposit posted when a futures position is opened to guarantee contractual performance.

• A. gain on spot contract
• B. loss on spot contract
• C. gain on capital
• D. loss on capitalAccounting & Auditing

Explanation: Total stock return consists of dividend income plus capital gain, so subtracting dividends from the return leaves the gain on capital.

• A. spot price of asset
• B. exercise price and exercise date of option
• C. price volatility
• D. all of the above

Explanation: Black-Scholes uses the asset’s spot price, exercise price, time to expiration, and price volatility, along with interest rate assumptions.

• A. floor
• B. cap
• C. swaps multiplier
• D. notion multiplier

Explanation: A cap is an interest-rate call arrangement made up of multiple caplets, each applying on a different reset date.

• A. low potential of losses
• B. high potential of losses
• C. high potential of profit
• D. low potential of profit

Explanation: A call option gives the right to buy at a fixed exercise price, so a rise in the stock price increases its potential payoff.

• A. originating house
• B. non originating house
• C. investment house
• D. non securitize houseCommodities & Futures Trading

Explanation: The originating house is the lead institution that initiates and negotiates the issue with the issuing bank for the underwriting…

• A. semi-strong form market efficiency
• B. expensive form market efficiency
• C. weak form of market efficiency
• D. strong form of market efficiency

Explanation: Semi-strong efficiency means share prices quickly incorporate all publicly available information.