All Free Management Sciences MCQs with Answers

• A. commercial banks
• B. broker deals
• C. investment banks
• D. all of the aboveHire An Accountant

Explanation: Forward markets commonly involve commercial banks, investment banks and broker-dealers, which arrange, trade or facilitate customized…

• A. red herring stock market
• B. preemptive stock market
• C. silence stock market
• D. secondary stock markets

Explanation: A secondary market handles the resale and repurchase of securities that have already been issued.

• A. notion principal
• B. swap principal
• C. transaction principal
• D. time value of swap

Explanation: The notional principal is the reference amount on which swap payments are calculated; it is normally not exchanged between the parties.

• A. buy the call option
• B. sell the call option
• C. buy the put option
• D. sell the put option

Explanation: A call option benefits from an increase in the underlying asset because it allows purchase at the fixed strike price while the market…

• A. notion buyer
• B. notion seller
• C. swap buyer
• D. swap sellerCompare Futures Brokers

Explanation: In the usual swap convention, the swap buyer pays the fixed rate and receives the floating rate, while the swap seller pays the floating…

• A. future investment
• B. forward investment
• C. leveraged investment
• D. non-leveraged investment

Explanation: A leveraged investment uses borrowed funds, often supplied by a broker, to purchase a larger position than the investor's own capital…

• A. float-fixed swaps
• B. interest rate swaps
• C. indexed swaps
• D. counter party swapsHire An Accountant

Explanation: An interest rate swap exchanges one interest-payment structure for another, commonly fixed-rate payments for floating-rate payments.

• A. negative discount
• B. negative duration
• C. positive duration
• D. positive discountTry Prep Courses

Explanation: Bond prices generally move inversely to interest rates, and this inverse sensitivity is expressed in the price-change formula as a…

• A. coupon bond
• B. interest bonds
• C. discount bond
• D. premium bondGet Corporate Bonds

Explanation: When a bond's present value exceeds its face value, its coupon rate is higher than the market's required return, so investors pay a…

• A. forward rate of return
• B. unturned rate of return
• C. required rate of return
• D. termed rate of return

Explanation: The required rate of return is the return investors demand for the security's risk and is used to discount its expected cash flows to fair…

• A. interest free bond
• B. zero coupon bond
• C. price less coupon bond
• D. useless price bonds

Explanation: A zero-coupon bond makes no periodic interest payments and is normally issued below face value, with the investor's return coming at…

• A. premium time
• B. standard time
• C. mean time
• D. duration

Explanation: Duration is the weighted average time at which a bond's cash flows are received, with the weights based on the present value of those cash…

• A. price sensitivity
• B. yield sensitivity
• C. maturity sensitivity
• D. premium sensitivity

Explanation: Price sensitivity describes how much a bond's present value or market price changes when interest rates change.

• A. forward bond
• B. payment bonds
• C. coupon bond
• D. interest bonds

Explanation: A coupon bond makes periodic interest payments to its holder, unlike a zero-coupon bond, which pays no coupons and is redeemed at…

• A. decreased duration
• B. increase duration
• C. modified duration
• D. at par durationAccounting & Auditing

Explanation: Modified duration is calculated by dividing Macaulay duration by one plus the yield to maturity, or Duration ÷ (1 + interest rate).

• A. maturity is lower
• B. maturity is higher
• C. interest payment is higher
• D. interest payment is lower

Explanation: A higher coupon produces larger interim cash flows, allowing investors to recover more of their investment earlier rather than waiting…

• A. the higher its duration
• B. the lower its duration
• C. zero duration
• D. One year duration

Explanation: Larger coupon payments return more cash before maturity, reducing the weighted average time until the bond’s cash flows are received.

• A. discount bond
• B. premium bond
• C. coupon bond
• D. interest bondsCredit Cards

Explanation: A discount bond sells for less than its face value, usually because its coupon rate is below the market yield.

• A. multi mortgage
• B. multifamily dwelling mortgages
• C. sovereign dwelling mortgages
• D. primary dwelling mortgages

Explanation: Mortgages financing properties designed for several families, such as townhouses and apartment complexes, are called multifamily dwelling…

• A. borrower defaults
• B. borrower does not default
• C. borrower want less rate
• D. borrower want profitInvesting

Explanation: When a borrower defaults, the lender may enforce its security interest through foreclosure and take ownership or possession of the…