Finance Basics MCQs (11-20)

11. The goal of fundamental analysts is to find securities?

(a) Whose intrinsic value exceeds market price

(b) With a positive present value of growth opportunities

(c) With high market capitalization rates

(d) All of the above

Correct! Wrong!

12. The combination of two or more firm, the resulting firm maintains the identity of one of the firm usually the larger?

(a) Joint venture

(b) Partnership

(c) Merger

(d) Consolidation

Correct! Wrong!

13. If an investor were to sell 100 shares of Microsoft stock to another investor in the securities market, this would be referred to as what type of transaction?

(a) It is primary market transaction

(b) A secondary market transaction

(c) A money market transaction

(d) A futures market transaction

Correct! Wrong!

14. A Financial institution that underwrites new securities for resale?

(a) Financial intermediaries

(b) Mortgage Banker

(c) Investment Banker

(d) None

Correct! Wrong!

15. Which of the following statements always apply to corporations?

(a) Limited life

(b) Limited liability

(c) Single taxation

(d) None

Correct! Wrong!

16. 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

Correct! Wrong!

17. Which of the following is a depository financial institution?

(a) A savings bank

(b) An investment bank

(c) A finance company

(d) A pension fund

Correct! Wrong!

18. Among the pairs given below select a (n) example of a principal and a (n) example of an agent respectively?

(a) Shareholder; manager

(b) Manager; owner

(c) Accountant; bondholder

(d) Shareholder; bondholder

Correct! Wrong!

19. What is potentially the biggest advantage of a small partnership over a sole proprietorship?

(a) Unlimited liability

(b) Single tax filing

(c) Difficult ownership resale

(d) Raising capital

Correct! Wrong!

20. Which of the following statements is most correct?

(a) One of the way in which firm can mitigate or reduce agency problems between bondholders and stockholders is by increasing the amount of debt in the capital structure

(b) Managerial compensation can be structured to reduce agency problems between stockholders & managers

(c) All of above statements are incorrect

(d) All of the statements above are correct

Correct! Wrong!

11. The goal of fundamental analysts is to find securities?

12. The combination of two or more firm, the resulting firm maintains the identity of one of the firm usually the larger?

13. If an investor were to sell 100 shares of Microsoft stock to another investor in the securities market, this would be referred to as what type of transaction?

14. A Financial institution that underwrites new securities for resale?

15. Which of the following statements always apply to corporations?

16. The purpose of financial markets is to?

17. Which of the following is a depository financial institution?

18. Among the pairs given below select a (n) example of a principal and a (n) example of an agent respectively?

19. What is potentially the biggest advantage of a small partnership over a sole proprietorship?

20. Which of the following statements is most correct?

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