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Financial Management MCQ Questions and Solutions with Explanations | Commerce

Financial Management MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Financial Management MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-6 section-6

Each section contains 100 MCQs on Financial Management .
51
Difference between bond's yield and any other security yield having same maturities is considered as
Discuss
Answer & Solution
Answer: Option B
Solution:
Difference between bond's yield and any other security yield having same maturities is considered as bond spread. The term “bond spreads” or “spreads” refers to the interest rate differential between two bonds.
52
Protective covenant devised in market to reduce event risk and to control debt cost is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Protective covenant devised in market to reduce event risk and to control debt cost is classified as super poison put. Protective covenant. A part of an indenture or loan agreement that limits certain actions a company may take during the term of the loan to protect the lender's interests.
53
Coupon rate of convertible bond is
Discuss
Answer & Solution
Answer: Option B
Solution:
Coupon rate of convertible bond is lower. Investors will generally accept a lower coupon rate on a convertible bond, compared with the coupon rate on an otherwise identical regular bond, because of its conversion feature.
54
Rate denoted as r* is best classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Rate denoted as r* is best classified as real risk-free interest rate. The Risk-Free Rate of return is the interest rate an investor can expect to earn on an investment that carries zero risk.
55
An outstanding bonds are also classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
An outstanding bonds are also classified as seasoned bonds. A seasoned issue is an issue of additional securities from an established company whose securities already trade in the secondary market. A seasoned issue is also known as a "seasoned equity offering" or "follow-on offering."
56
An inflation rate includes in bond's interest rates is one which is inflation rate
Discuss
Answer & Solution
Answer: Option B
Solution:
An inflation rate includes in bond's interest rates is one which is inflation rate expected in future. Inflation is measured in a variety of ways depending upon the types of goods and services considered and is the opposite of deflation which indicates a general decline occurring in prices for goods and services when the inflation rate falls below 0 percent.
57
A premium charged by lenders for securities that cannot be converted into cash is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
A premium charged by lenders for securities that cannot be converted into cash is classified as liquidity premium and marketability premium.
58
An unsecured bond that provides no lien against property as security for bond obligation is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
An unsecured bond that provides no lien against property as security for bond obligation is classified as debenture. A debenture is a type of debt instrument that is not secured by collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.
59
Unsecured bonds which is designated for only notes payable or all other debts are classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Unsecured bonds which is designated for only notes payable or all other debts are classified as subordinated bonds. Subordinated debt is a loan or security that ranks below other loans or securities with regard to claims on assets or earnings. Subordinated debt is also known as a junior security or subordinated loan.
60
A market interest rate for specific type of bond is classified as bonds
Discuss
Answer & Solution
Answer: Option A
Solution:
A market interest rate for specific type of bond is classified as bonds required rate of return.