Securities and Capital Banking Questions and Answers


Securities and Capital | Banking | Mock Test

1
A major advantage of the corporate form of organization is:
a. reduction of double taxation.
b. limited owner liability.
c. legal restrictions.
d. ease of organization.

Answer : limited owner liability.

2
How are funds allocated efficiently in a market economy
a. The most powerful economic unit receives the funds.
b. The economic unit that is willing to pay the highest expected return receives the funds
c. The economic unit that considers itself most in need of funds receives them
d. Receipt of the funds is rotated so that each economic unit can receive them in turn

Answer : The economic unit that is willing to pay the highest expected return receives the funds

3
Money market mutual funds
a. Enable individuals and small businesses to invest indirectly in money-market instruments
b. Are available only to high net-worth individuals
c. Are involved in acquiring and placing mortgages
d. Are also known as finance companies

Answer : Enable individuals and small businesses to invest indirectly in money-market instruments

4
The purpose of financial markets is to
a. Increase the price of common stocks
b. Lower the yield on bonds
c. Allocate savings efficiently
d. Control inflation

Answer : Allocate savings efficiently

5
Which of the following enjoys limited liability
a. A general partnership.
b. A corporation.
c. A sole proprietorship
d. Charitable Organization

Answer : A corporation.

6
__________ provide the buyer the right, but not the obligation to enter the contract under the terms specified
a. Futures
b. Forwards
c. Swaps
d. Options

Answer : Options

7
___________ refers to meeting the needs of the present without compromising the ability of future generations to meet their own needs
a. Corporate Social Responsibility (CSR)
b. Sustainability
c. Convergence
d. Green Economics

Answer : Sustainability

8
Which of the following is a characteristic of an efficient financial market
a. Absence of underpriced or overpriced securities
b. Abundance of bargain opportunities
c. Necessity of active portfolio management
d. Focus on security analysis

Answer : Absence of underpriced or overpriced securities

9
Which of the following is an example of the money market instrument?
a. Mortgage-backed securities
b. Federal funds
c. Treasury notes
d. Federal agency debt

Answer : Federal funds

10
Which of the following is characteristic of common stock as an investment?
a. Capital security
b. Unlimited liability
c. Residual claimant
d. Assured dividends

Answer : Residual claimant

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