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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-7 section-3

Each section contains 100 MCQs on International Finance and Treasury .
61
Longer debt instrument issued by government and corporations is considered as
Discuss
Answer & Solution
Answer: Option D
Solution:
Longer debt instrument issued by government and corporations is considered as bonds. A bond, also known as a fixed-income security, is a debt instrument created for the purpose of raising capital. They are essentially loan agreements between the bond issuer and an investor, in which the bond issuer is obligated to pay a specified amount of money at specified future dates.
62
To improve attractiveness for investors, bonds are partially backed by
Discuss
Answer & Solution
Answer: Option A
Solution:
To improve attractiveness for investors, bonds are partially backed by US.T-Bonds. United States Treasury securities are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Treasury securities are often referred to simply as Treasurys.
63
Financial securities which are issued to finance government expenditures and national debt are classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Financial securities which are issued to finance government expenditures and national debt are classified as treasury notes and bonds. Treasury bills, notes, and bonds are fixed-income securities issued by the U.S. government. They are sold at auction and on the secondary market.
64
As compared to general obligation bonds, revenue bonds are considered as
Discuss
Answer & Solution
Answer: Option D
Solution:
As compared to general obligation bonds, revenue bonds are considered as more risky. Revenue bonds are generally of higher risk than general obligation bonds, and as a result, they typically offer higher yields.
65
Marginal income tax rate is 35% and before tax rate of return is 12.5% then after tax rate of return is
Discuss
Answer & Solution
Answer: Option C
No explanation is given for this question. Let's Discuss on Board
66
In best efforts offering, price offered by investment banks is originally set by
Discuss
Answer & Solution
Answer: Option A
Solution:
In best efforts offering, price offered by investment banks is originally set by municipality. Best efforts is a contractual term in which an underwriter promises to make their best effort to sell as much of a securities offering (e.g., IPO) as possible. Best-effort agreements are used mainly for securities in a less-than-ideal market condition or with higher risk, such as an unseasoned offering.
67
Department who is appointed by bond holders as representative or monitor of bonds is considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
Department who is appointed by bond holders as representative or monitor of bonds is considered as trustee. A bond trustee is hired by a bond issuer and oversees the implementation of a bond or trust indenture, which is a contract between a bond issuer and a bondholder. The trustee has a fiduciary responsibility to act on behalf of the issuer, rather than in its own interests.
68
Bonds that are considered as junk bonds and termed as higher yield are classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Bonds that are considered as junk bonds and termed as higher yield are classified as subordinated debentures. Subordinated debt (also known as a subordinated debenture) is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated debentures are thus also known as junior securities.
69
Mortgage bonds issued by corporations are considered as
Discuss
Answer & Solution
Answer: Option A
Solution:
Mortgage bonds issued by corporations are considered as secured debt issues. Secured debt is debt backed or secured by collateral to reduce the risk associated with lending, such as a mortgage. If the borrower defaults on repayment, the bank seizes the house, sells it and uses the proceeds to pay back the debt.
70
Default risk is measured by large traders, managers and investors with help of
Discuss
Answer & Solution
Answer: Option B
Solution:
Default risk is measured by large traders, managers and investors with help of analyzing financial ratios. Default risk is the chance that a company or individual will be unable to make the required payments on their debt obligation. Lenders and investors are exposed to default risk in virtually all forms of credit extensions. A higher level of risk leads to a higher required return, and in turn, a higher interest rate.