All Free Management Sciences MCQs with Answers

• A. Aggregate risk
• B. Remaining risk
• C. Effective risk
• D. Ineffective risk

Explanation: Unsystematic risk can be diversified away, while systematic market risk remains after diversification.

• A. Pessimistic
• B. Optimistic
• C. Experienced
• D. Inexperienced

Explanation: When book value exceeds market value, investors are valuing the stock below its accounting value, suggesting doubt about its future…

• A. Probability error
• B. Actual error
• C. Prediction error
• D. Random error

Explanation: In a return model, the difference between actual and predicted return is the residual or random error term.

• A. Individual
• B. Collective
• C. Weighted
• D. Linear

Explanation: Beta measures the systematic risk of an individual stock relative to movements in the overall market.

• A. Historical betas
• B. Adjusted betas
• C. Standard betas
• D. Varied betas

Explanation: Because future beta cannot be observed directly, analysts commonly estimate it using the stock's historical beta.

• A. Eurodollar market deposits
• B. Commercial loans
• C. Consumer credit loans
• D. Consumer credit loans

Explanation: Loans that banks provide to businesses and corporations for operations, expansion, or other commercial purposes are called commercial…

• A. Stock market
• B. Dealer market
• C. Outcry auction system
• D. Face to face communication

Explanation: In a dealer market, dealers or market makers trade from their own inventory of securities and quote buying and selling prices.

• A. Non-financial intermediary
• B. Financial intermediary
• C. Savers intermediary
• D. Discounted intermediary

Explanation: A financial intermediary, such as a bank or mutual fund, channels funds between savers and borrowers or investors.

• A. Cost of production
• B. Cost of money
• C. Opportunity cost
• D. Inflation risk

Explanation: Federal Reserve policy and government budget surpluses or deficits influence interest rates, which determine the cost of borrowing money.

• A. Money market funds
• B. Capital market funds
• C. Money mutual funds
• D. Insurance money funds

Explanation: Money market funds invest in short-term, highly liquid instruments and may provide check-writing or interest-bearing account features.

• A. Electronic communication network
• B. Electronic dealer network
• C. Electronic stock network
• D. Electronic order network

Explanation: An electronic communication network, or ECN, electronically matches posted buy and sell orders.

• A. Consumer credit loans
• B. Dollar bonds
• C. Eurodollar market deposits
• D. Euro bonds

Explanation: Consumer credit loans are borrowing arrangements used by individuals to purchase goods or services, commonly supplied by banks, credit…

• A. Capital markets
• B. Money markets
• C. Liquid markets
• D. Short-term markets

Explanation: Money markets deal in highly liquid, short-term debt instruments such as Treasury bills and commercial paper.

• A. Customer's acceptance
• B. Banker's acceptance
• C. Federal acceptance
• D. Treasury acceptance

Explanation: A banker’s acceptance is a bank-guaranteed promise to pay, commonly used to finance trade transactions.

• A. Physical asset markets
• B. Intangible assets
• C. Competitive markets
• D. Easy markets

Explanation: Wheat, rice, cotton, real estate, and automobiles are tangible goods or assets, so markets dealing in them are physical asset markets.

• A. Short-term
• B. Long-term
• C. Intermediate term
• D. Capital term

Explanation: Financial instruments maturing in roughly one to five years are commonly classified as intermediate-term instruments.

• A. Future funds
• B. Hedge funds
• C. Retirement funds
• D. Pension funds

Explanation: A hedge fund pools money from investors and deploys it across investment strategies and assets to seek returns.

• A. Market price
• B. Intrinsic price
• C. Extrinsic price
• D. Fundamental price

Explanation: The price at which a stock is currently traded or quoted in the financial market is its market price.

• A. Original trading
• B. Liquidity
• C. Offline trading
• D. Fixed price trading

Explanation: Liquidity is the ability to buy or sell an asset quickly at, or close to, its current market price.

• A. Leases
• B. Preferred stocks
• C. Common stocks
• D. Corporate stocks

Explanation: A lease gives a firm the right to use an asset without purchasing it outright or borrowing specifically to buy it.