Corporate Finance MCQs

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51. If two firms in the same line of business merge together, it is called __________ merger.
(A) horizontal
(B) vertical
(C) straight
(D) conglomerate

52. If two firms at different stages of production merge together, it is called __________ merger.
(A) horizontal
(B) vertical
(C) straight
(D) conglomerate

53. If two firms in unrelated line of business merge together, it is called __________ merger.
(A) horizontal
(B) vertical
(C) straight
(D) conglomerate

54. The measure for calculating how much two random variable change together is called
(A) variance
(B) covariance
(C) skewness
(D) kurtosis

55. The normalized version of covariance is called
(A) regression
(B) correlation
(C) cross-section
(D) spread

56. Suppose our portfolio consists of two stocks A and B. What should be the correlation between them so that we have no risk in our portfolio?
(A) –1
(B) 0
(C) 1
(D) risk cannot be eliminated

57. In the beginning, some companies receive equity investment from wealthy individuals. The wealthy individuals are called
(A) angel investors
(B) corporate investors
(C) venture capitalists
(D) venture capital firms

58. Firms that invest in new companies as they try to grow are called
(A) spinning
(B) underwriters
(C) venture capitalists
(D) venture capital firms

59. An investor will receive $5,000 and $10,000 after one and two years from today respectively. If the interest rate during this period is 10% then what is the present value of this cash flow?
(A) $12000
(B) $12450
(C) $12810
(D) $13705

60. What is volatility if the duration of a bond is 4 years and yield to maturity is 8%?
(A) 3.1%
(B) 3.4%
(C) 3.7%
(D) 4.0%

ANSWERS: CORPORATE FINANCE MCQS
51. A
52. B
53. D
54. B
55. B
56. A
57. A
58. D
59. C
60. C

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