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All Free Management Sciences MCQs with Answers

Every Management Sciences question in the bank, across all chapters, each with the correct answer and a written explanation. Free and unlimited, with no account needed.

3,770 questions · page 23 of 189

441. The type of preferred stock whose dividend payments are never paid to stock holders and are not considered in arrears is classified as ____________?

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

Explanation: Non-cumulative preferred stock does not carry unpaid dividends forward as arrears when a dividend is omitted.

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Correct answer: non-cumulative preferred stock

442. The types of corporate stock that are traded in exchange markets are ___________?

  • A. common stock
  • B. preferred stock
  • C. quoted stock
  • D. both A and B

Explanation: Both common and preferred shares may be listed and traded on exchange markets, subject to the exchange’s listing requirements.

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Correct answer: both A and B

443. The intrinsic value of option is $280 and the price of option is $350 then the time value of option is ___________?

  • A. 125
  • B. 135
  • C. 280
  • D. 70

Explanation: An option’s time value is the amount paid above its intrinsic value, so it is calculated as $350 minus $280, or $70.

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Correct answer: 70

444. In interest rate swap transaction, the party who pays the fixed payments of interest is classified as __________?

  • A. notion buyer
  • B. notion seller
  • C. swap buyer
  • D. swap sellerHire An Accountant

Explanation: The swap buyer is conventionally the party that pays the fixed interest rate and receives the floating rate.

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Correct answer: swap buyer

445. The type of exchange members who only buy and sell for their personal account are classified as __________?

  • A. non-investment traders
  • B. professional traders
  • C. commercial traders
  • D. investment traders

Explanation: Professional traders buy and sell securities for their own accounts, unlike brokers who execute trades on behalf of clients.

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Correct answer: professional traders

446. The markets in which new securities are issued by the corporations to raise funds are called _____________?

  • A. primary markets
  • B. secondary markets
  • C. Gross markets
  • D. proceeds marketsGet Study Guides

Explanation: Primary markets are where corporations issue new securities directly to investors to raise funds.

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Correct answer: primary markets

447. The indexes in which the price of stock of companies listed in stock market index are added together and is divided by an adjusted value are classified as ________?

  • A. herring indexes
  • B. group indexes
  • C. John indexes
  • D. Dow Indexes

Explanation: A Dow index is price-weighted, meaning stock prices are combined and divided by an adjusted divisor.

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Correct answer: Dow Indexes

448. The difference between net proceeds and gross proceeds is called __________?

  • A. non-participating spread
  • B. participating spread
  • C. under writer spread
  • D. over writer spread

Explanation: The underwriter’s spread is the difference between the price paid to the issuing company, or net proceeds, and the price at which the…

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Correct answer: under writer spread

449. The agreement between two parties to exchange cash flows in future and the cash flows are based on underlying instruments is classified as ___________?

  • A. swaps
  • B. interchange
  • C. exchange
  • D. index

Explanation: A swap is a derivative agreement in which two parties exchange specified future cash flows based on an underlying rate, currency, or other…

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Correct answer: swaps

450. The type of preferred stock in which the dividend does not increase or decrease with the increase or decrease in profit of firm is classified as ____________?

  • A. non-cumulative preferred stock
  • B. cumulative preferred stock
  • C. non-participating preferred stock
  • D. participating preferred stockTrack Stocks Bonds

Explanation: Non-participating preferred stock pays its stated dividend and does not share in additional profits when the company earns more.

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Correct answer: non-participating preferred stock

451. The contract which gives the rights to holders to sell or buy the asset at specific time period rather than giving the obligation is classified as ___________?

  • A. option
  • B. contract
  • C. obligatory contract
  • D. non-obligatory contract

Explanation: An option gives its holder the right to buy or sell an asset at a specified price or time, without imposing an obligation to act.

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Correct answer: option

452. The example of derivative securities is ___________?

  • A. return backed security
  • B. mortgage backed security
  • C. cash flow backed security
  • D. interest backed securityAccounting & Auditing

Explanation: A mortgage-backed security derives its value and cash flows from an underlying pool of mortgages, so it is commonly treated as a…

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Correct answer: mortgage backed security

453. The orders that are transacted at specified price are considered as ___________?

  • A. red herring order
  • B. limit order
  • C. unlimited order
  • D. assets order

Explanation: A limit order instructs the broker to buy or sell only at a stated price or a more favourable one.

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Correct answer: limit order

454. The time value of an option is added into intrinsic value to calculate __________?

  • A. market index of an option
  • B. depreciated value of option
  • C. appreciated value of option
  • D. price of an optionCommodities & Futures Trading

Explanation: An option’s price, also called its premium, consists of intrinsic value plus time value.

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Correct answer: price of an optionCommodities & Futures Trading

455. In public corporation, the claim of fundamental ownership is called __________?

  • A. common stock
  • B. fundamental stock
  • C. corporate stock
  • D. claimed stockInvesting

Explanation: Common stock represents the basic ownership claim in a corporation and usually carries voting rights and a residual claim on profits.

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Correct answer: common stock

456. The type of option that can be exercised only at the date of expiration is classified as ____________?

  • A. European option
  • B. Canadian option
  • C. Australian option
  • D. American option

Explanation: A European option may be exercised only on its expiration date. An American option can be exercised at any time up to and including…

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Correct answer: European option

457. The capital gain is 9% and the return to stockholder is 18% then the periodic payments of dividends are __________?

  • A. 0.18
  • B. 0.27
  • C. 0.25
  • D. 0.09

Explanation: Total stock return equals capital gain plus dividend yield, so the dividend return is 18% minus 9%, or 9%. The decimal form is 0.09.

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Correct answer: 0.09

458. The type of unit which guarantees that all the buying and selling will be made by traders of exchange is called ___________?

  • A. trading house
  • B. guarantee house
  • C. clearing house
  • D. professional house

Explanation: A clearing house stands between exchange traders and guarantees that buying and selling obligations are properly settled.

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Correct answer: clearing house

459. The underwriter spread of stock is $17000 and the net proceeds of stock are $24000 then the gross proceeds are ____________?

  • A. 41000
  • B. 7000
  • C. 17000
  • D. 24000

Explanation: Gross proceeds equal net proceeds plus the underwriter’s spread, which is 24,000 + 17,000 = 41,000 dollars.

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Correct answer: 41000

460. The right of stockholders of firm that new shares must be offered to existing stockholders first, rather than new stock holders is classified as ____________?

  • A. non-offered rights
  • B. preemptive rights
  • C. existing rights
  • D. securitize rights

Explanation: Preemptive rights allow existing shareholders to purchase newly issued shares before they are offered to outsiders.

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Correct answer: preemptive rights
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