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 8 of 49
- A. periodic dividend payments
- B. constant spot rate payment
- C. constant forward rate payment
- D. constant future rate payment
Explanation: A stockholder’s total return combines dividend income and capital gain, so removing the capital-gain component leaves the dividend return.
Correct answer: periodic dividend payments- A. floating swaps
- B. fixed swaps
- C. currency swaps
- D. notion swaps
Explanation: A currency swap exchanges cash flows denominated in different currencies, helping parties manage exchange-rate exposure caused by currency…
Correct answer: currency swaps- A. representation of ownership interest
- B. fixed periodic payment
- C. higher liquidity
- D. both A and BGet Study Guides
Explanation: Preferred stock is hybrid because it represents an ownership interest like common stock while normally providing a fixed periodic dividend…
Correct answer: both A and BGet Study Guides- A. 110
- B. 1010
- C. 450
- D. 560
Explanation: An option’s time value equals its market price minus intrinsic value: $560 − $450 = $110.
Correct answer: 110- A. assets backed market
- B. cash flow backed markets
- C. mortgage backed markets
- D. derivative securities markets
Explanation: Derivatives such as futures, options, forwards and swaps are traded in derivative securities markets.
Correct answer: derivative securities markets- A. post order
- B. transacted order
- C. market order
- D. available order
Explanation: A market order instructs the broker to execute immediately at the best price currently available.
Correct answer: market order- A. day traders
- B. broker traders
- C. non-position traders
- D. commercial traders
Explanation: Day traders open and close their positions within the same trading day, avoiding an overnight position.
Correct answer: day traders- A. floor broker
- B. roof broker
- C. broker of auction
- D. leverage investment broker
Explanation: A floor broker executes buy and sell orders on the exchange floor on behalf of public customers.
Correct answer: floor broker- A. European option
- B. Australian option
- C. call option
- D. put option
Explanation: A call option gives its holder the right to buy the underlying asset at the exercise price.
Correct answer: call option- A. swaps multiplier
- B. notion multiplier
- C. floor
- D. cap
Explanation: An interest-rate floor is composed of put-like options called floorlets and protects against rates falling below a specified level, with…
Correct answer: floor- A. non-cumulative proceeds
- B. net proceeds
- C. Gross proceeds
- D. cumulative proceeds
Explanation: Net proceeds are the amount the issuing company receives after underwriting discounts and issue expenses are deducted from the offering…
Correct answer: net proceeds- A. exercise price ⁄ stock price
- B. exercise price - stock price
- C. exercise price + stock price
- D. exercise price x stock priceCommodities & Futures Trading
Explanation: A put is valuable intrinsically when the exercise price exceeds the stock price, giving the basic expression exercise price minus stock…
Correct answer: exercise price - stock price- A. divided class firm
- B. sub class firm
- C. dual class firm
- D. One class firm
Explanation: A dual-class firm has two or more classes of shares with different voting rights, such as superior voting rights for founder-held shares.
Correct answer: dual class firm154. The pre-specified price at which the underlying asset is bought and sold is called as ___________?
- A. maturity price
- B. strike price
- C. exercise price
- D. both B and C
Explanation: Strike price and exercise price are two names for the pre-specified price at which the option’s underlying asset may be bought or sold.
Correct answer: both B and C155. The type of financial security whose payoff is linked to any other security is called ____________?
- A. strong security
- B. semi-strong security
- C. derivate security
- D. non-derivate securityFinancial Planning & Management
Explanation: A derivative security derives its value or payoff from an underlying security or other asset, such as a stock, bond, commodity or index.
Correct answer: derivate security- A. 60
- B. 57.2
- C. 55
- D. 63
Explanation: A price-weighted index is calculated by taking the arithmetic average of the stock prices: (50 + 60 + 55 + 58 + 63) ÷ 5 = 57.2.
Correct answer: 57.2- A. stock price > exercise price
- B. stock price treasury price
- C. treasury price < bond price
- D. None of These
Explanation: A call option is in the money when the market price of the underlying stock exceeds the exercise price, because exercising allows the…
Correct answer: stock price > exercise price- A. scalpers
- B. explorers
- C. temporary position holders
- D. professional position holders
Explanation: Scalpers take very short-term positions and may enter and exit trades within minutes, seeking small price differences.
Correct answer: scalpers- A. non clearing interest
- B. clearing interest
- C. close interest
- D. open interestInvesting
Explanation: Open interest is the total number of outstanding futures and options contracts that have not yet been closed or settled.
Correct answer: open interestInvesting160. The voting ballot that is sent to stock holders by the corporation is classified as ___________
- A. corporate paper
- B. white voting paper
- C. screened paper
- D. proxy
Explanation: A proxy is the voting authorization or ballot through which a shareholder appoints someone to vote on the shareholder’s behalf at a…
Correct answer: proxy