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International Finance and Treasury MCQ Questions and Solutions with Explanations | Management

International Finance and Treasury MCQ Questions and answers with easy and logical explanations. Management provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. International FinanceMCQ is important for exams like MAT, CAT, CA, CS, CMA, CPA, CFA, UPSC, Banking and other Management department exam. Page-5 section-6

Each section contains 100 MCQs on International Finance and Treasury .
41
Amount of money involved in swap transaction is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Amount of money involved in swap transaction is classified as notion principal. The notional principal amount, in an interest rate swap, is the predetermined dollar amounts, or principal, on which the exchanged interest payments are based. The notional principal never changes hands in the transaction, which is why it is considered notional, or theoretical.
42
Up-front fee which must be paid by buyer to seller is called
Discuss
Answer & Solution
Answer: Option A
Solution:
Up-front fee which must be paid by buyer to seller is called call premium. Call premium is the dollar amount over the par value of a callable debt security that is given to holders when the security is redeemed early by the issuer. The call premium is also called the redemption premium.
43
Capital gain is 9% and return to stockholder is 18% then periodic payments of dividends are
Discuss
Answer & Solution
Answer: Option D
Solution:
Periodic payments of dividends = Return to stockholder - Capital gain = 18% - 9% = 9.00%.
44
Type of option that can be exercised only at date of expiration is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Type of option that can be exercised only at date of expiration is classified as European option. A European option is a version of an options contract that limits execution to its expiration date. In other words, if the underlying security such as a stock has moved in price an investor would not be able to exercise the option early and take delivery of or sell the shares.
45
Stock markets in which already issued stocks are resold and re-bought are classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Stock markets in which already issued stocks are resold and re-bought are classified as secondary stock markets. The secondary market is where investors buy and sell securities they already own. It is what most people typically think of as the "stock market," though stocks are also sold on the primary market when they are first issued.
46
In public corporation, claim of fundamental ownership is called
Discuss
Answer & Solution
Answer: Option A
Solution:
In public corporation, claim of fundamental ownership is called common stock. Common stock is a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy.
47
Time value of an option is added into intrinsic value to calculate
Discuss
Answer & Solution
Answer: Option D
Solution:
Time value of an option is added into intrinsic value to calculate price of an option. The price of an option, called the premium, is composed of a number of variables. Options traders need to be aware of these variables so they can make an informed decision about when to trade an option.
48
Orders that are transacted at best available price are classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Orders that are transacted at best available price are classified as market order. A market order is a request by an investor usually made through a broker or brokerage service to buy or sell a security at the best available price in the current market. It is widely considered the fastest and most reliable way to enter or exit a trade and provides the most likely method of getting in or out of a trade quickly.
49
Orders that are transacted at specified price are considered as
Discuss
Answer & Solution
Answer: Option B
Solution:
Orders that are transacted at specified price are considered as limit order. A limit order is an order to buy or sell a stock at a specific price or better.
50
Example of derivative securities is
Discuss
Answer & Solution
Answer: Option B
Solution:
Example of derivative securities is mortgage backed security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond.