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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-8 section-4

Each section contains 100 MCQs on International Finance and Treasury .
71
Value of option issued to call debt is $940 and return rate on callable bond is $480 then return rate on non-callable bond is
Discuss
Answer & Solution
Answer: Option A
Solution:
Return rate on non-callable bond = Value of option issued to call debt - Return rate on callable bond
= $940 - $480 = $460.
72
Risk associated with Eurobonds and usually bears by underwriters is related to
Discuss
Answer & Solution
Answer: Option D
Solution:
Risk associated with Eurobonds and usually bears by underwriters is related to initial sale of bond. Most bonds can be sold by the initial bondholder to other investors after they have been issued. In other words, a bond investor does not have to hold a bond all the way through to its maturity date.
73
Call premium of bond is $630 and call price of bond is $240 then face value of bond is
Discuss
Answer & Solution
Answer: Option C
Solution:
Face value of bond = Call premium of bond - Call price of bond
= $630 - $240 = $390.
74
Principal amount in Treasury Inflation Protection Securities is considered as
Discuss
Answer & Solution
Answer: Option B
Solution:
Principal amount in Treasury Inflation Protection Securities is considered as inflation adjusted principal. Treasury Inflation-Protected Securities (TIPS) are a form of U.S. Treasury bond designed to help investors protect against inflation. These bonds are indexed to inflation, have U.S. government backing, and pay investors a fixed interest rate as the bond's par value adjusts with the inflation rate.
75
If price at which stock is purchased exceeds market value then stock warrants will
Discuss
Answer & Solution
Answer: Option A
Solution:
If price at which stock is purchased exceeds market value then stock warrants will be exercised. A stock warrant represents the right to purchase a company's stock at a specific price and at a specific date. A stock warrant is issued directly by a company to an investor. Stock options are purchased when it is believed the price of a stock will go up or down.
76
To make promised payments, federal money can
Discuss
Answer & Solution
Answer: Option D
Solution:
To make promised payments, federal money can raise taxes and print money. Promised payment is an agreement between a borrower and a lender in which borrower states he or she will provide payment by a specific date.
77
Reason of default risk on municipal bonds is because of
Discuss
Answer & Solution
Answer: Option A
Solution:
Reason of default risk on municipal bonds is because of economic recession. Economic Recession Definition. Economic recession is a period of general economic decline and is typically accompanied by a drop in the stock market, an increase in unemployment, and a decline in the housing market. Generally, a recession is less severe than a depression.
78
Current market price is multiplied to conversion rate received on conversion to calculate
Discuss
Answer & Solution
Answer: Option A
Solution:
Current market price is multiplied to conversion rate received on conversion to calculate conversion value. The term conversion value refers to the financial worth of the securities obtained by exchanging a convertible security for its underlying assets.
79
Bonds rated lower than triple-B bonds by Standard and Poor's are considered as
Discuss
Answer & Solution
Answer: Option C
Solution:
Bonds rated lower than triple-B bonds by Standard and Poor's are considered as junk bonds. Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments.
80
Type of sale in which investment bank got rights to underwrite, distribute and originate new bonds is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Type of sale in which investment bank got rights to underwrite, distribute and originate new bonds is classified as negotiated sale. A negotiated sale is when the issuer and an underwriter negotiate the terms of municipal bonds in lieu of groups bidding to establish the terms.