Free Business Finance MCQs with Answers
975 Business Finance MCQs from Management Sciences, each with the correct answer and a written explanation of why it is correct. Free and unlimited, with no account needed.
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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975 questions · page 23 of 49
- A. discount convertible bonds
- B. convertible bonds
- C. non-convertible bonds
- D. premium convertible bonds
Explanation: A convertible bond gives its holder the right to exchange the bond for shares of the issuing company.
Correct answer: convertible bonds- A. higher price
- B. lower price
- C. indexed price
- D. commercial price
Explanation: Under firm commitment underwriting, the underwriter purchases the entire issue and resells it to investors at a higher price to earn the…
Correct answer: higher price- A. excess of information
- B. lack of information
- C. frequent information
- D. infrequent information
Explanation: Municipal bonds often trade thinly because investors have limited and uneven information about the financial condition of issuing…
Correct answer: lack of information444. The foreign bonds issued in United States financial institutions are classified as ____________?
- A. bull dog bonds
- B. bull cat bonds
- C. Yankee bonds
- D. samurai bonds
Explanation: Yankee bonds are bonds issued in the United States by foreign borrowers, usually denominated in U.S. dollars.
Correct answer: Yankee bonds- A. monthly
- B. quarterly
- C. annually
- D. semiannually
Explanation: Eurobonds traditionally pay interest annually, although the exact payment frequency can vary by issue.
Correct answer: annually- A. untimed indentures
- B. untimed debentures
- C. indentures
- D. debentures
Explanation: Debentures are generally unsecured bonds backed by the issuer's creditworthiness rather than specific collateral.
Correct answer: debentures- A. must not changes
- B. must changes
- C. must be debited
- D. must be credited
Explanation: Yield spreads respond to bond characteristics that increase or reduce risk, such as unfavorable security features or weaker credit…
Correct answer: must changes448. The foreign bonds issued in United Kingdom financial institutions are classified as ____________?
- A. Yankee bonds
- B. samurai bonds
- C. bull dog bonds
- D. Euro bonds
Explanation: Bulldog bonds are foreign bonds issued in the United Kingdom and denominated in pounds sterling.
Correct answer: bull dog bonds449. The type of bonds in which whole issues get mature on a single date is considered as ___________?
- A. term bonds
- B. under bonds
- C. collateral bonds
- D. trustworthy bonds
Explanation: Term bonds have a single maturity date for the entire issue, unlike serial bonds, which mature in portions on different dates.
Correct answer: term bonds- A. less discounted
- B. more risky
- C. less risky
- D. more discountedAccounting & Auditing
Explanation: Stock warrants are commonly attached to bonds by firms perceived as more risky, because the warrant makes the issue more attractive to…
Correct answer: more risky- A. current market price
- B. past market price
- C. future market value
- D. current stock value
Explanation: Conversion value equals the stock’s market price multiplied by the conversion rate, so dividing conversion value by the conversion rate…
Correct answer: current market price- A. best efforts offering
- B. least good index
- C. least good premium
- D. least good discount price
Explanation: Under a best-efforts offering, the investment bank acts as the issuer’s distributor without guaranteeing that the issue will be sold or…
Correct answer: best efforts offering- A. maturity date of euro bond
- B. cost of euro bond
- C. issuance process of bonds
- D. process of printing moneyBonds
Explanation: The currency selected for denomination and changes in interest-rate volatility influence investors’ required returns and therefore the…
Correct answer: cost of euro bond- A. buyers of bond
- B. issuers of bonds
- C. close market prices
- D. open market prices
Explanation: The issuer generally chooses the denomination currency of a Eurobond, often considering borrowing costs, expected cash flows, and investor…
Correct answer: issuers of bonds- A. principle and interest
- B. debt and cash
- C. capital and profit
- D. cash and interest
Explanation: A financial guarantee protects the lender by ensuring payment of both the principal amount borrowed and the interest due.
Correct answer: principle and interest- A. 0.0744
- B. 0.0844
- C. 0.0944
- D. 0.1044
Explanation: The after-tax return is the before-tax return multiplied by one minus the tax rate: 14.5% × (1 − 0.28) = 10.44%, or 0.1044.
Correct answer: 0.1044- A. 0.0725
- B. 0.08246
- C. 0.1025
- D. 0.0925
Explanation: Applying the tax adjustment gives 15.5% × (1 − 0.468) = 8.246%, expressed as 0.08246.
Correct answer: 0.08246- A. more risky
- B. less risky
- C. term risk
- D. serial risk
Explanation: Mortgage bonds are secured by specific assets, giving bondholders a claim on collateral if the issuer defaults.
Correct answer: less risky- A. London and Luxembourg
- B. Australian markets
- C. Swiss banks counters
- D. Asian banks countersAccounting & Auditing
Explanation: London and Luxembourg are major international centres for Eurobond issuance and trading.
Correct answer: London and Luxembourg- A. outside bonds
- B. foreign bonds
- C. issuing country bonds
- D. denominated bonds
Explanation: A foreign bond is issued in a country by an issuer from another country, usually in the currency of the market where it is sold.
Correct answer: foreign bonds