All Free Management Sciences MCQs with Answers

• A. price and supply to decrease
• B. price and supply to increase
• C. demand and size to decrease
• D. demand and size to increase

Explanation: Currency consolidation can create a larger and more liquid market, increasing investor demand and enabling larger Eurobond issues.

• A. security of indentures
• B. security of unregistered bonds
• C. security of bearer bonds
• D. security of registered bondsBusiness Formation

Explanation: Bearer bonds can be transferred simply by delivery, so ownership is less protected if the bond is lost or stolen.

• A. investment bank
• B. insurance firm
• C. reissuing firm
• D. reselling firmBonds

Explanation: Under firm commitment underwriting, the investment bank buys the entire issue and resells it to investors.

• A. $1.65
• B. $220
• C. $900
• D. $0.0165

Explanation: The call premium is the amount by which the call price exceeds face value, so face value equals $560 − $340 = $220.

• A. only in issuing country
• B. stagnant exchange
• C. telephonic market
• D. over the counter marketInvesting

Explanation: Eurobonds are generally traded over the counter through an international network of banks and dealers rather than on a single central…

• A. long term indenture
• B. federal indenture
• C. private indenture
• D. bond indenture

Explanation: A bond indenture is the formal legal agreement defining the rights and obligations of the issuer and bondholders.

• A. indenture bonds
• B. trustee bonds
• C. collateral bonds
• D. mortgage bonds

Explanation: Mortgage bonds are secured by specified collateral, usually real estate or project assets, and are commonly used to finance identifiable…

• A. full price investors
• B. household investors
• C. corporation investors
• D. clean price investors

Explanation: Household investors often prefer municipal bonds because their interest may receive tax advantages and they generally provide relatively…

• A. bonds with interbank rate
• B. bonds with intra market rate
• C. bonds with equity warrants
• D. bonds with common stock

Explanation: A Eurobond carrying an equity warrant gives the holder a right to purchase shares in addition to the bond claim, making it an…

• A. insurance companies
• B. index banking firm
• C. commercial banking firm
• D. stock exchange

Explanation: Municipal bonds are commonly distributed through commercial banking firms acting as underwriters or investment-banking intermediaries.

• A. parallel term income
• B. pledged
• C. volatile
• D. non-volatile

Explanation: When earnings are volatile, spreading bond maturities across several dates reduces the pressure of repaying the entire issue at one time.

• A. treasury KIBOR notes
• B. treasury KIBOR bonds
• C. treasury zero coupon bonds
• D. treasury LIBOR bonds

Explanation: STRIPS are Treasury securities whose principal and interest payments are separated and sold as individual zero-coupon securities.

• A. national debt
• B. international debt
• C. global debt
• D. contraction debt

Explanation: National debt is the accumulated borrowing of a country's federal government, reflecting past budget deficits and government expenditures…

• A. contraction mortgages
• B. bonds and mortgages
• C. expansion bonds
• D. expansion mortgages

Explanation: Capital-market instruments generally have maturities exceeding one year, and the listed instruments fitting this description are bonds and…

• A. sinking fund provision
• B. sinking fund premium
• C. sinking fund discount
• D. floating fund provision

Explanation: A sinking fund provision requires the issuer to set aside funds or retire a specified portion of a bond issue periodically, often each…

• A. not receive fee
• B. receive fee
• C. receive interest rate
• D. receive market rate of return

Explanation: Under a best-efforts offering, the investment bank acts as an agent and attempts to sell the securities without guaranteeing the entire…

• A. Brady bonds
• B. swapped bonds
• C. developed bonds
• D. developing bonds

Explanation: Brady bonds were issued in the 1980s and 1990s to restructure developing countries' outstanding commercial bank loans.

• A. dirty price
• B. clean price
• C. paid price
• D. unpaid price

Explanation: The dirty price includes both the quoted bond price and the interest accrued since the last coupon payment.

• A. Federal, local government & corporation
• B. Federal corporation
• C. government debts
• D. stock calculator

Explanation: Capital-market securities are primarily issued by governments and corporations to obtain long-term financing.

• A. corporate markets
• B. treasury markets
• C. bond markets
• D. municipal markets

Explanation: These markets are specifically called bond markets because they handle the issuance and trading of bonds.