MCQs on Finance

Best of luck !

1) Which is the Currency of Malaysia?
a) Malaysian Dollor b) Bhat c) Ringgit d) lira e) Rupiah

2) Which of the following is true about Convertibility of Rupee?
i) Rupee is fully convertible on the current account.
ii) Rupee is partially convertible on the capital account.
iii) Rupee is partially convertible on the current account.
iv) Rupee is non-convertible on the capital account.

a) i & ii only
b) i & iv only
c) ii & iii only
d) none of these

3) Full form of AUM?
a) All under management
b) All asset under-manageable
c) Assets under management
d) Always under management

4) What does full current account convertability of Rupee means?
i) Residents can make & recieve trade related payments in foreign currency & vice-versa.
ii) Can convert local financial assets into foreign assets.
iii) residents can purchase real estate abroad.
iv) for education & tourism purpose Rupee can be converted in restricted manner only.
v) Indian companies can buy foreign companies without restrictions out of Indian resources.

a) i & iii only
b) i, ii & v only
c) ii & iv only
d) i & iv only

5) In stock market parlance what does the term 'bearish' associated to?
a) index in upward trend
b) index in downward trend
c) index volatile & moving both ways
d) index showing not much activity.

6) Expand CAD?
a) Capital account deficit
b) Concurrent audit
c) Current Account deficit.
d) Convertible account deficit.

7) BSE's stock market index - Sensex is based on __ no. of large companies/scrips?
a) 25
b) 30
c) 50
d) 100

8) In stock market parlance what does the term 'short' associated to?
a) a trader sell a scrip/co. first & buys it later.
b) a trader short on money.
c) time period of 5 mins before the market closes.
d) a trader buys a scrip first & sells it later.

9) Which of the following is true about Derivatives?
i) They derive their value from an underlying asset.
ii) Its basically a financial contract refering future price.
iii) They are used to hedge risk in a transaction or for speculation purpose.
iv) They are available in OTC (Over-the-counter) market as well as Exchanges like NSE.

a) i only
b) i & ii only
c) i, ii & iii only
d) All the above.

10) Which of the following is true about Options?
i) they are basically derivative products only.
ii) there is no obligation to honor the contract.
iii) Premium is paid for not honoring the contract.
iv) 'Call option' gives holder right to sell underlying asset at prefixed rate.
v) 'Put option' gives holder right to buy underlying asset at prefixed rate.

a) i, ii only
b) i, ii & iii only.
c) i, iv & v only
d) all the above.

11) Which of the following is true about Futures?
i) these are derivatives products only.
ii) there is no obligation to honor the contract.
iii) they are listed on an exchange.
iv) they are used for hedging & speculation.

a) i & ii only
b) i, iii  & iv only
c) i & iii only
d) all the above.

12) Which of the following is true about Forward Contracts?
i) they are Over-the-counter derivative products
ii) traded on one-to-one basis among parties & mutually agreed terms.
iii) its used for hedging risk
iv) they are listed on an exchange.

a) i only
b) i & ii only
c) ii, iii & iv only
d) i, ii & iii only

13) Which of the following is true about recent Interest Rate Futures contract launched in India?
i) underlying security is either 10 year GoI bond (G-sec) or 91 day T-bill.
ii) contract to buy or sell a debt instrument.
iii) these are non-standard OTC contracts
iv) these are standaridized contracts available on MCX-FX, NSE & BSE.
v) they are basically derivative products only

a) i & v only
b) i, ii, iv & v only
c) i, ii, iii & v only
d) all the above.

14) Which of the following is true about Hedge funds?
i) they are meant for ultra rich individuals.
ii) they invest very aggressively in any class, from G-sec to any exotic derivatives.
iii) they can charge upto 20% of net profit, and do not share losses.
iv) they are virtually unregulated
v) they can market publicly.

a) i, ii only
b) i, ii & iv only
c) i, ii, iii & iv only
d) all the above

15) Which of the following is true about Swaps?
i) Swap is an exchange of cash-flows.
ii) in an Interest-rate swap, basis for calculation of Interest is changed e.g. from floating to fixed or vice-versa.
iii) in Currency Swap, cash flow of one currency is changed to another currency.
iv) Swaps are used to hedge currency & interest rate risks.

a) i only
b) i & ii only
c) i & iv only
d) all of above.

16) Which of the following is true about Volatility Index (Vix)?
i) It captures mood of the market, high volatility is associated with fall in market.
ii) If Vix more than 30%, stock market investors are in fear zone.
iii) A low Vix associated with price rise.
iv) India Vix is based only Nifty 50 Option prices.

a) i & iii only
b) iv only
c) ii & iii only
d) all the above.

17) Whats REIT?
a) REal IT
b) Realistic Infra Technology fund
c) Reference for IT index
d) Real Estate Investment Trust

18) Full form of EURIBOR?
a) EUropean reference for labor market
b) EU's bechmark index
c) Euro Inter-Bank offered rate.
d) EU libor rate

19) 50 basis points means?
a) 5.00 %
b) 0.50 %
c) 0.05%
d) 50.00 %

20) What is meant by Arbitrage?
a) its nothing but name of a movie.
b) practice of taking advantage of a price difference between two or more markets.
c) hedging practice
d) an pre-budget activity.


Ans:
1) C. Thailand- Bhat. Turkey- Lira. Indonesia- Rupiah.
2) A.
3) C.
4) D.
5) B. And the term "Bullish" refers when Index is in upward trend.
6) C.
7) 30. NSE's Nifty is based on 50 large companies.
8) A. The term 'Long' refers to "buy first, sell later".
9) D. Derivative products includes OTC (forward contracts), Futures (forward contracts on exchanges), Options, Swaps
10) B. Options as the name suggests has no obligation. Call option is right to buy (think you are calling for price), Put option is right to sell (think you are putting 'it' on OLX to sell).
11) B. Furutes have obligation to honor the contract, think of it as buying/selling shares on NSE - you can't go back on trade you've done.
12) D.
13. B. IRF was recently re-launched for 3rd time in India.
14) C. Hedge funds can't market publicly.
15) D.
16) D.
17) D.
18) C.
19) B.
20) B.

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