Finance MCQs

Page No. 25

In large expansion programs, increased riskiness and flotation cost associated with project can cause_______________?


aRise in marginal cost of capital


bFall in marginal cost of capital


cRise in transaction cost of capital


d Rise in transaction cost of capital



Reinvestment risk of bonds is higher on__________?


aShort maturity bonds


bHigh maturity bonds


cHigh premium bonds


dHigh inflated bonds


View Answer Short maturity bonds

Type of bonds that pays no coupon payment but provides little appreciation are classified as______________?


aDepreciated bond


b Interest bond


cZero coupon bond


dAppreciation bond


View Answer Zero coupon bond

Bonds issued by small companies tend to have_____________?


aHigh liquidity premium


bHigh inflation premium


cHigh default premium


dHigh yield premium



Coupon rate of bond is also called____________?


aNominal rate


bPremium rate


cQuoted rate


dBoth a and c


View Answer Both a and c

An increasing in interest rate leads to decline in value of__________?


a Junk bonds


bOutstanding bonds


cStanding bonds


dPremium bonds


View Answer Outstanding bonds

Bonds issued by government and backed by Pak government are classified as_________?


aIssued security


bTreasury bonds


cU.S bonds


d Return security


View Answer Treasury bonds

Value generally promises to pay at maturity date and a firm borrows is considered as bond’s__________?


aBond value


bPer value


cState value


dPar value


View Answer Par value

Maturity date decides at time of issuance of bond and legally permissible is classified as____________?


aOriginal maturity


bPermanent maturity


cArtificial maturity


dValued maturity


View Answer Original maturity

Bonds issued by local and state governments with default risk are____________?


aMunicipal bonds


bCorporation bonds


cDefault bonds


dZero bonds


View Answer Municipal bonds

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