Finance Questions

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81. Which from the following statements is incorrect?
(A) A European option can only be exercised at expiry
(B) An American option can only be exercised at expiry
(C) A European option is a right but not obligation
(D) An American option is a right but not obligation

82. An agreement on a telephone or email to buy/sell an asset at an agreed future time for an agreed price is called
(A) spot contract
(B) forward contract
(C) future contract
(D) swap

83. When forward contract is traded on an exchange, it is called
(A) spot contract
(B) future contract
(C) call option
(D) put option

84. On 1 January you enter a contract to buy 1 million barrel of oil for $80 per barrel to be delivered on 1 March. The price on 1 March is $82 per barrel. Your gain is
(A) $200
(B) $20000
(C) $200000
(D) $2000000

85. Allocating stock in popular new issues to manager of their important corporate clients is called
(A) subscription
(B) under-performance
(C) rights
(D) spinning

86. Which from the following issues has the lowest total direct cost?
(A) straight bonds
(B) corporate stocks
(C) all issues have same cost
(D) none of these

87. An option that allows the underwriter to increase the number of shares bought by 15% is called
(A) spread
(B) spinning
(C) whiteshoe
(D) greenshoe

88. A four year zero-coupon bond has 6% yield. What is its duration in years?
(A) 4
(B) 5
(C) 6
(D) 7

89. Changes in interest rates have a __________ impact on the prices of long-term bonds than the short-term bonds.
(A) greater
(B) smaller
(C) both have same impact
(D) interest rate does not matter

90. An investment of $9,000 today will yield $10,000 after one year. What is the Net Present Value if the interest rate is 10%?
(A) $71
(B) $81
(C) $91
(D) $101

ANSWERS: FINANCE QUESTIONS
81. B
82. B
83. B
84. D
85. D
86. A
87. D
88. A
89. A
90. C

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