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Ques : 1
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Ques : 2
The market where new securities are bought and sold for the first time is known as a
__________ market.
primary
secondary
tertiary
capital
Option A
Option B
Option C
Option D
A market for existing (used) securities, such as the NYSE or AMEX, rather than new issues is
known as the __________ market.
primary
secondary
tertiary
capital
Ques : 3
Option A
Option B
Option C
Option D
Ques : 4
Option A
Option B
Option C
Option D
The primary distinction between securities sold in the primary and secondary markets is the:
riskiness of the securities.
price of the securities.
previous issuance of the securities.
profitability of the issuing corporation.
Ques : 5
Option A
Option B
Option C
Option D
Primary markets can be distinguished from secondary markets in that primary markets sell:
lower valued shares.
previously unsold shares.
only the shares of large firms.
shares with greater profit potential.
Ques : 6
Which of the following financial assets might be least likely to have an active secondary
market?
Common stock of a large firm
Option A
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Option B
Option C
Option D
Ques : 7
Option A
Option B
Option C
Option D
Ques : 8
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Option D
Ques : 9
Option A
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Option C
Option D
Ques : 10
Option A
Option B
Option C
Option D
Ques : 11
When a non-profit organization, like a university, purchases copying paper for its
photocopying machines, what is it purchasing?
A consumer good.
A consumer service.
An industrial good.
An industrial service.
Option A
Option B
Option C
Option D
Ques : 12
Option A
Option B
Option C
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In addition to being provided with physical objects, peoples needs may be satisfied in a less
tangible form through:
differential forms.
products.
goods.
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Option D
services.
Ques : 13
Option A
Option B
Option C
Option D
__________ lease is a lease where the lessee maintains and insures the leased asset rather
than the lessor in a full-service lease.
A financial
An operating
A net
None of the above answers are correct.
Ques : 14
Option A
Option B
Option C
Option D
Ques : 15
Option A
Option B
Option C
Option D
Ques : 16
Option A
Option C
Option D
Ques : 17
Option A
Option B
Option C
Option D
The type of lease that includes a third party, a lender, is called a(n):
sale and leaseback.
direct leasing arrangement.
leveraged lease.
operating lease.
Ques : 18
Option A
Option B
Option C
Option D
A direct lease, a sale and leaseback, and a leveraged lease are all examples of
operating leases.
financial leases.
full-service leases.
"off-balance sheet" methods of financing.
Option B
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Ques : 19
Option A
Option B
Option C
Option D
A company which pools money from investors and invests in stocks, bonds, shares is called
a bank
an insurance company
bancassurance
mutual fund
Ques : 20
Option A
Option B
Option C
Option D
Closed-end funds have lower cash requirements than open-end funds because:
open-end funds allow investors to redeem their shares at any time.
closed-end funds have limited lifetimes.
open-end funds tend to invest in less liquid assets.
open-end funds pay more taxes than closed-end funds.
Ques : 21
Option A
Option B
Option C
Option D
Which type of fund invests in debt securities with very short maturities?
Money market mutual fund.
Certified fund.
Growth fund.
Bond fund.
Ques : 22
Option A
Option B
Option C
Option D
Most mutual funds are members of a group of mutual funds known as:
an investment trusts.
dual purpose funds.
a money market funds.
a family of funds.
Ques : 23
Option A
Option B
Option C
Option D
Ques : 24
Option A
Option B
Option C
Option D
Which type of fund is most likely to have the lowest management fee?
Equity growth fund.
Index fund.
Bond fund.
Equity income fund.
Ques : 25
______ fund managers try to replicate the performance of a benchmark index, by replicating
the weights of its constituent stocks.
Active
Option A
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Option B
Option C
Option D
Passive
Aggressive
Neutral
Ques : 26
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Option D
Ques : 27
Option A
Option B
Option C
Option D
If a mutual fund holds a substantial amount of Treasury bills, this is probably a(an):
tax-exempt fund.
conservative bond fund.
income fund
money market mutual fund.
Ques : 28
Option A
Option B
Option C
Option D
Ques : 29
Option A
Option B
Option C
Option D
Ques : 30
Option A
Option B
Option C
Option D
The act of buying an asset without having to make full payment in the immediate future is
known as:
Finance lease
Hire purchase
Operating lease
Sale and leaseback
Ques : 31
Option A
Option B
Option C
Option D
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Ques : 32
Option A
Option B
Option C
Option D
Which of the following would not make a distinction between a hire purchase and a normal
purchase?
Cost to buyer is likely to be higher than it would be for a normal purchase
Purchaser pays for item by instalments over a period of time
Asset does not belong to purchaser when delivery is received from supplier
Trade discounts cannot be offered on hire purchase
Ques : 33
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Option D
Ques : 34
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Option D
Ques : 35
Option A
Option B
Option C
Option D
__________ lease is a long-term lease that is not cancelable and its life often matches the
useful life of the asset.
A financial
An operating
A net
None of the answers are correct.
Ques : 36
Option A
Option B
Option C
Option D
Ques : 37
Option A
Option B
Option C
Option D
Ques : 38
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Option A
Option B
Option C
Option D
on the NYSE.
on NASDAQ.
in the money market.
in the over-the-counter market.
Ques : 39
Option A
Option B
Option C
Option D
Ques : 40
Option A
Option B
Option C
Option D
Ques : 41
Option A
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Option D
Ques : 42
Option A
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Option D
Ques : 43
Option A
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Option C
Option D
Ques : 44
Option A
Option B
Option C
Option D
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Ques : 45
Option A
Option B
Option C
Option D
Why are securitized loans often issued through a special purpose entity?
Because the securitized loans often add risk to the bank and need to be held separately
Because the securitized loans are not profitable for the bank and need to be held separately
Because the special purpose entity might fail and this prevents the failure of the bank
Because the bank might fail and this protects the credit status of the securitized loans
Ques : 46
Option A
Option B
Option C
Option D
Ques : 47
Option A
The major difference between hire purchase (HP) and leasing is:
With HP, the user of the equipment generally owns it eventually after a set number of
payments, whereas with leasing the user never owns the equipment
In HP the payments are made annually, whereas with leasing monthly payments are more
common
The effective rate is much higher on HP than on leasing
HP is easy to arrange at point of sale, whereas leasing involves a prolonged legal process
Option B
Option C
Option D
Ques : 48
Option A
Option B
Option C
Option D
Ques : 49
Option A
Option B
Option C
Option D
Ques : 50
Option A
Option B
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Once a venture capitalist makes an investment in a firm, subsequent investments are made in
rounds and are referred to as:
later funding
subsequent backing
ensuing backing
follow-on funding
In regard to the stages (or rounds) of venture capital funding, the stage of funding that occurs
when the firm has stated commercial production and sales but requires additional financing
to ramp up its production is called:
seed funding
second-stage funding
first-stage funding
mezzanine financing
In regard to the stages (or rounds) of venture capital funding, funding made in a firm to
provide for further expansion or to bridge its financing needs before a public offering of stock
or before a buyout is referred to as:
second-state funding
first-state funding
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Option C
Option D
seed funding
mezzanine financing
Ques : 51
AusAmer is an exporter who has sold outright their accounts receivable to another
institution. This is an example of __________.
export factoring
forfaiting
striding
countertrade
Option A
Option B
Option C
Option D
Ques : 52
Option A
Option B
Option C
Option D
Ques : 53
Angel investors, private placement, venture capital, and initial public offerings are the most
common sources of:
equity funding
debt financing
guaranteed loans
grants and outright gifts
Option A
Option B
Option C
Option D
__________ is/are money that is invested by venture-capital firms in start-ups and small
businesses with exceptional growth potential.
At-risk capital
Institutional capital
Venture capital
Angel dollars
Ques : 54
Option A
Option B
Option C
Option D
Ques : 55
Option A
Option B
Option C
Option D
Ques : 56
Option A
Option B
Option C
Option D
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Ques : 57
Option A
Option B
Option C
Option D
Ques : 58
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Option B
Option C
Option D
Ques : 59
Option A
Option B
Option C
Option D
Ques : 60
The difference in interest rates between securitized loans themselves and the securities
issued against the loans is referred to as:
The funding gap
Residual income.
Service returns
Security income
A securitized asset where the asset used to back the securities is a loan based on the residual
value of a homeowner's residence is called:
A mortgage backed security
A credit card backed security
An automobile backed security
A home equity loan backed security
Loans that are to be securitized pass to ____________________.
This helps
ensure that if the lender goes bankrupt it does not affect the credit status of the pooled
loans.
The originator
The special purpose entity
The trustee
The servicer
Option A
Option B
Option C
Option D
When an issuer of securitized loans divides them into different risk classes or tranches, they
are providing an:
Internal credit enhancement
External credit enhancement
Internal liquidity enhancement
External liquidity enhancement
Ques : 61
Option A
Option B
Option C
Option D
Ques : 62
Option A
Option B
Option C
Option D
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Ques : 63
Option A
Option B
Option C
Option D
Ques : 64
Option A
Option B
Which one of the following most accurately describes factoring as a source of finance?
A factor buys invoices not yet settled by customers at a discount on their face value
A factor sells a financial security to the firm needing funds. The firm can then use this to
obtain finance from banks
A factor lends money to a firm on the security of its fixed assets. It charges fees and interest
A factor will give an advanced payment on the security of outstanding invoices. When the
invoices are paid the factor provides the company with the amount of the invoice not
advanced, less fees and interest
Option C
Option D
Ques : 65
Option A
Option B
Option C
Option D
Ques : 66
Option A
Option B
Option C
Option D
Ques : 67
Option A
Option B
Option C
Option D
Ques : 68
The advantage of consortium finance is? i. Speedy transactions and individual approach. ii.
Involvement of huge amounts. iii. Use of expertise of all the banks
(i) only
(ii) only
(iii) only
(i), (ii) and (iii)
Option A
Option B
Option C
Option D
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Ques : 69
Option A
Option B
Option C
Option D
Which of the following is not a function of the agent bank in loan syndication?
Ensuring the compliance of conditions precedent under the loan agreement
Determining the LIBOR interest rate for each interest rate
Planning for future syndication of loans
Receiving notices relating to cancellation of any part of the loan
Ques : 70
Which of the following is a function of the agent bank relating to flow of money in the
process of loan syndication?
Receiving notices relating to cancellation of any part of the loan
Calling of loans in the event of default
Receiving the fee from the borrower and distributing among the participating banks
Receiving notices relating to transfers of banks
Option A
Option B
Option C
Option D
Ques : 71
Option A
Option B
Option C
Option D
Ques : 72
Option A
Option B
Option C
Option D
Ques : 73
Option A
Option B
Option C
Option D
Ques : 74
Option A
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Option B
Option C
Option D
ultimate consumers.
organizational customers.
utilitarian consumers.
Ques : 75
Option A
Option B
Option C
Option D
Ques : 76
Option A
Option B
Option C
Option D
Intermediaries who are agents of investors and match buyers with sellers of securities are
called
investment bankers.
traders.
brokers.
dealers.
Ques : 77
Option A
Option B
Option C
Option D
Ques : 78
Option A
Option B
Option C
Option D
Ques : 79
Option A
Option B
Option C
Option D
Venture-capital firms are __________ of money managers who raise money in funds to
invest in start-ups and growing firms.
corporations
formal associations
loose collections
limited partnerships
Ques : 80
Option A
Option B
Option C
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Option D
Your job is to market the financial services. As a financial advisor, you have been approached by
a client called Joseph, who wants some help in investment related matters. Joseph is currently 45
years old and has Rs. 600000 in the bank. He plans to work for 15 more years and retire at the
age of 60. Josephs present salary is Rs. 400,000 per year. He expects his salary to increase at the
rate of 12 % per year until his retirement. Joseph has decided to invest his bank balance and
future savings in a portfolio. You receive compensation for giving advice on investing in stocks,
bonds, mutual funds, or exchange traded funds etc. You also manage portfolios of securities. You
assess every aspect of client's financial lifeincluding saving, investments, insurance, taxes,
retirement, and estate planningit help you develop a detailed strategy or financial plan for
meeting all client financial goals. Joseph believes that bonds would provide a return of 7% and
stocks a return of 13 %. You concur with his assessment. Once Joseph retires at the age of 60 he
would like to withdraw Rs. 500,000 per year from his investments for the following 15 years as
he expects to live up to the age of 75 years. He also wants to bequeath Rs. 1,000,000 to his
children at the end of his life. How would you market him the financial services keeping him
satisfied?
Ques : 81
Option A
Option B
Option C
Option D
As per the case, a client Joseph approached you because you are a(an):
chartered accountant
financial advisor
doctor
lawyer
Ques : 82
Option A
Option B
Option C
Option D
Ques : 83
Option A
Option B
Option C
Option D
Ques : 84
Option A
Option B
Option C
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Option D
65 years
Ques : 85
Option A
Option B
Option C
Option D
Joseph expects his salary to increase at the rate of ___ % per year until his retirement
8
10
12
14
Ques : 86
Option A
Option B
Option C
Option D
Ques : 87
Option A
Option B
Option C
Option D
What is the amount that Joseph wants to bequeath to his children at the end of his life?
Rs. 6,00,000
Rs. 4,00,000
Rs. 3,000,00
Rs. 10,00,000
Ques : 88
Option A
Option B
Option C
Option D
Ques : 89
Option A
Option B
Option C
Option D
Once Joseph retires, he would like to withdraw Rs. _______ per year from his investments
Rs. 5,00,000
Rs. 4,00,000
Rs. 3,000,00
Rs. 6,00,000
Ques : 90
Option A
Option B
Option C
Option D
Joseph believes that bonds would provide a return of __% and stocks a return of ___ %
6,12
5,12
7,13
7,12
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