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 32 of 189
- A. cash mortgage
- B. securitized mortgage
- C. financial mortgage
- D. instrumental mortgage
Explanation: A securitized mortgage represents mortgage cash flows that have been pooled and converted into tradable financial securities.
Correct answer: securitized mortgage- A. global transfer
- B. pension transfer
- C. direct transfer
- D. indirect transfer
Explanation: A direct transfer occurs when savers provide funds directly to borrowers by purchasing their financial instruments, without a financial…
Correct answer: direct transfer- A. payment risk
- B. liquidity risk
- C. income risk
- D. balance risk
Explanation: Liquidity risk occurs when an institution cannot meet sudden withdrawals without selling assets quickly, often at depressed prices.
Correct answer: liquidity risk- A. prospectus
- B. stated document
- C. risk detailed document
- D. exchange commission document
Explanation: A prospectus is the formal disclosure document filed for a securities issue, describing the offering, issuer and associated risks.
Correct answer: prospectus- A. channel risk
- B. globalization risk
- C. state risk
- D. country risk
Explanation: Country risk is the possibility that a foreign government or political environment will prevent or disrupt payments.
Correct answer: country risk- A. money market
- B. capital market
- C. transaction market
- D. global market
Explanation: The money market deals in short-term financial instruments, normally with maturities of one year or less.
Correct answer: money market- A. system risk
- B. technology risk
- C. operational risk
- D. support risk
Explanation: A technology-system malfunction is commonly treated as operational risk because it results from failures in internal systems or processes.
Correct answer: operational risk- A. swap contract
- B. option contract
- C. futures contract
- D. all of the above
Explanation: Swaps, options and futures are all derivatives because their values or payoffs are linked to an underlying asset, rate or index.
Correct answer: all of the above- A. savings associations
- B. savings banks
- C. credit unions
- D. all of the above
Explanation: Thrift or depository institutions commonly include savings associations, savings banks and credit unions.
Correct answer: all of the above- A. linked security
- B. derivative security
- C. payable security
- D. non-issuing security
Explanation: A derivative security has a payoff linked to the value or performance of another security or underlying asset.
Correct answer: derivative security- A. flexible costs
- B. low transaction costs
- C. high transaction costs
- D. constant costs
Explanation: Centralized markets generally reduce search, negotiation and settlement costs by bringing trading into an organized venue.
Correct answer: low transaction costs- A. price risk
- B. profit risk
- C. selling risk
- D. financial risk
Explanation: Price risk is the possibility that an asset’s market price will fall or fail to provide the expected gain when sold.
Correct answer: price risk- A. counter instruments
- B. long term instruments
- C. money market instruments
- D. capital market instruments
Explanation: Federal funds, bankers’ acceptances, commercial paper and repurchase agreements are short-term instruments used for borrowing and lending…
Correct answer: money market instruments- A. junk bonds
- B. deposits
- C. loans
- D. swap bonds
Explanation: Deposits are the principal liabilities of commercial banks because the bank owes these funds to depositors and must repay them on demand…
Correct answer: deposits- A. interest rate risk
- B. channel rate risk
- C. economic risk
- D. issuance risk
Explanation: A maturity mismatch exposes a financial intermediary to interest rate risk because changes in rates can affect the costs of liabilities…
Correct answer: interest rate risk- A. off balance sheet risk
- B. income statement risk
- C. balance of trade risk
- D. balance of payment risk
Explanation: Contingent assets and liabilities arise from commitments that may not appear on the balance sheet until a future event occurs, creating…
Correct answer: off balance sheet risk- A. economies of cost
- B. economies of scale
- C. economies of efficiency
- D. economies of transaction
Explanation: Economies of scale reduce the average cost of transaction services as the volume of operations increases, often through technology and…
Correct answer: economies of scale- A. activity institutions
- B. investment companies
- C. mortgage companies
- D. finance companies
Explanation: Finance companies specialize in providing loans and commonly raise funds by issuing short-term and long-term debt.
Correct answer: finance companies- A. thrifts
- B. state bank
- C. global bank
- D. multinational institutions
Explanation: Thrifts are specialized depository institutions that concentrate their lending in particular areas, traditionally residential mortgages…
Correct answer: thrifts- A. linked security
- B. previous security
- C. payoff security
- D. derivative security
Explanation: A derivative security derives its value or payoff from an underlying security, asset or financial variable.
Correct answer: derivative security