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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-1 section-7

Each section contains 100 MCQs on International Finance and Treasury .
1
Prospectus which describe new securities are distributed before their registration is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Prospectus which describe new securities are distributed before their registration is classified as red herring prospectus. Red Herring Prospectus is a prospectus, which does not have details of either price or number of shares being offered, or the amount of issue. This means that in case price is not disclosed, the number of shares and the upper and lower price bands are disclosed.
2
Intrinsic value of option is subtracted from exercise price of an option to calculate
Discuss
Answer & Solution
Answer: Option B
Solution:
Intrinsic value of option is subtracted from exercise price of an option to calculate price of underlying asset. The intrinsic value of an option represents the current value of the option, or in other words how much in the money it is.
3
Type of preferred stock whose payments are missed and must be paid before paying dividends of common stock is classified as
Discuss
Answer & Solution
Answer: Option D
Solution:
Type of preferred stock whose payments are missed and must be paid before paying dividends of common stock is classified as cumulative preferred stock. Cumulative preferred stock is a type of preferred stock with a provision that stipulates that if any dividend payments have been missed in the past, the dividends owed must be paid out to cumulative preferred shareholders first.
4
Under writer spread is subtracted from gross proceeds to calculate
Discuss
Answer & Solution
Answer: Option D
Solution:
Under writer spread is subtracted from gross proceeds to calculate net proceeds. Net proceeds are the amount the seller receives following the sale of an asset after all costs and expenses are deducted from the gross proceeds.
5
Form of market efficiency which states that prices of stock reflects public and private information of firm is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Form of market efficiency which states that prices of stock reflects public and private information of firm is classified as strong form of market efficiency. Market efficiency refers to the degree to which market prices reflect all available, relevant information. If markets are efficient, then all information is already incorporated into prices, and so there is no way to "beat" the market because there are no undervalued or overvalued securities available.
6
Difference between intrinsic value of option and price of option is classified as
Discuss
Answer & Solution
Answer: Option C
Solution:
Difference between intrinsic value of option and price of option is classified as time value of option. Time value refers to the portion of an option's premium that is attributable to the amount of time remaining until the expiration of the option contract.
7
Security which has characteristics of common stock and bonds both at same time is classified as
Discuss
Answer & Solution
Answer: Option A
Solution:
Security which has characteristics of common stock and bonds both at same time is classified as preferred stock. Preferred stock (also called preferred shares, preference shares or simply preferreds) is a form of stock which may have any combination of features not possessed by common stock including properties of both an equity and a debt instrument, and is generally considered a hybrid instrument.
8
Type of option that can be exercised before date of expiration as well as on expiry date is classified as
Discuss
Answer & Solution
Answer: Option B
Solution:
Type of option that can be exercised before date of expiration as well as on expiry date is classified as American option. An American option is a version of an options contract that allows holders to exercise the option rights at any time before and including the day of expiration. Another version or style of option execution is the European option that allows execution only on the day of expiration.
9
Intrinsic value of an option is $490 and price of underlying asset is $290 then exercise price of an option is
Discuss
Answer & Solution
Answer: Option C
No explanation is given for this question. Let's Discuss on Board
10
Underwriter spread of stock is added to net proceeds to calculate value of
Discuss
Answer & Solution
Answer: Option B
Solution:
Underwriter spread of stock is added to net proceeds to calculate value of Gross proceeds. Gross Proceeds means the aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Selling Commissions, volume discounts, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses.