All Free Management Sciences MCQs with Answers

• A. forward rate
• B. backward rate
• C. termed rate
• D. structured rate

Explanation: A forward rate is an interest rate agreed or expected for a period that begins at a future date.

• A. short term working capital
• B. long term working capital
• C. long term fixed assets
• D. short term fixed assets

Explanation: Accounts receivable and inventory are current assets that normally turn over within the operating cycle, so they form part of short-term…

• A. saving fund theory
• B. constant funds
• C. borrowed theory
• D. loanable funds theory

Explanation: The loanable funds theory explains the equilibrium interest rate through the interaction of the supply of and demand for funds in…

• A. invested interest
• B. simple interest
• C. earned interest
• D. unstated interest

Explanation: Simple interest is calculated only on the original principal, so the interest earned is not added back for further interest.

• A. down and to the left
• B. down and to the right
• C. up and to the left
• D. up and to the rightAccounting & Auditing

Explanation: Worsening economic conditions usually reduce saving and the supply of loanable funds.

• A. investing abroad
• B. investing in domestic markets
• C. increase in sovereign risk
• D. increase in country risk

Explanation: Better economic conditions abroad can make foreign investments more attractive or profitable, encouraging local investors to invest…

• A. insurance companies
• B. government
• C. corporations
• D. households

Explanation: Households are generally the main net suppliers of loanable funds because they save more than they borrow.

• A. financial markets
• B. setting interest arte
• C. setting compounding rate
• D. setting savings rate

Explanation: Suppliers of funds, borrowers or fund consumers, foreign participants, governments, and financial intermediaries all participate in…

• A. increase in total wealth
• B. decrease in total wealth
• C. increase in future value
• D. decrease in future valueCredit & Lending

Explanation: An increase in total wealth generally increases saving and the supply of loanable funds, shifting the supply curve rightward and lowering…

• A. increase restrictiveness
• B. decrease restrictiveness
• C. zero restrictiveness
• D. negative restriction

Explanation: When equilibrium interest rates fall, lenders may compensate by imposing stricter non-price conditions, such as tighter collateral or…

• A. increase in future value
• B. decrease in future value
• C. increase in total wealth
• D. decrease in total wealthInvesting

Explanation: A decrease in total wealth tends to reduce saving and the supply of loanable funds, shifting the supply curve leftward or upward.

• A. equilibrium goods
• B. non-equilibrium goods
• C. durable goods
• D. non-durable goods

Explanation: Education and medical expenses provide services that are consumed rather than lasting physical assets, so loans financing them are grouped…

• A. tax-ability
• B. covert ability
• C. call ability
• D. inflation premiumFinance

Explanation: Taxability, convertibility, and callability are special bond provisions that can affect the required interest rate.

• A. up and to the left
• B. up and to the right
• C. down and to the left
• D. down and to the right

Explanation: A lower equilibrium interest rate, assuming demand is unchanged, indicates an increase in the supply of loanable funds.

• A. decreases
• B. increases
• C. positive
• D. negativeAccounting & Auditing

Explanation: Greater risk makes lenders less willing to supply funds, shifting the supply curve left.

• A. effective annual return
• B. ineffective annual return
• C. decrease in return
• D. increase in return

Explanation: An effective annual return includes the effect of compounding during the year, unlike a nominal return that may quote only the stated…

• A. down and to the left
• B. down and to the right
• C. up and to the left
• D. up and to the right

Explanation: A decrease in monetary expansion reduces the supply of loanable funds. The resulting leftward supply shift moves the curve up and to the…

• A. upside movement
• B. downside movement
• C. shift left
• D. shift rightCredit & Lending

Explanation: On an upward-sloping supply-of-funds curve, a fall in the interest rate reduces the quantity of funds supplied, producing a downward…

• A. fall in globalization
• B. rise in globalization
• C. rise in demand
• D. inflation

Explanation: Inflation is a sustained rise in the general price level of a selected basket of goods and services.

• A. supply of loan-able funds
• B. demand of loan-able funds
• C. compounded funds
• D. savings funds

Explanation: Users of funds, such as firms borrowing for investment, create demand in the loanable-funds market.