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Title: FINANCE MCQ'S AND ONE WORD
Description: These notes contain basics of Finance in the form of MCQ and One Word which would help you know the basic terms of finance
Description: These notes contain basics of Finance in the form of MCQ and One Word which would help you know the basic terms of finance
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100 Questions (One word + mcq's ) with answers related to general
finance
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What is the difference between revenue and profit?
a) Revenue is the money a company makes, while profit is the money it keeps after expenses
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c) Revenue and profit are the same thing
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Answer: a) Revenue is the money a company makes, while profit is the money it keeps after
expenses
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What is a balance sheet?
a) A financial statement that shows a company's revenues and expenses over a period of time
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c) A financial statement that shows a company's cash inflows and outflows over a period of
time
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Answer: b) A financial statement that shows a company's assets, liabilities, and equity at a
specific point in time
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What is an income statement?
a) A financial statement that shows a company's revenues and expenses over a period of time
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c) A financial statement that shows a company's cash inflows and outflows over a period of time
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b) Stocks pay a fixed rate of interest, while bonds pay a variable rate of interest
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d) None of the above
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b) Mutual funds are passively managed, while index funds are actively managed
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d) None of the above
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b) A loan that a company takes out from a bank
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d) None of the above
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b) When a company reduces the number of shares of its stock
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d) None of the above
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64 What is a loan-to-value ratio (LTV)?
Answer: A loan-to-value ratio (LTV) is the ratio of the amount of a loan to the value of the asset
that the loan is secured by
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What is a money market fund?
Answer: A money market fund is a type of mutual fund that invests in short-term, low-risk debt
securities
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What is a principal payment?
Answer: A principal payment is a payment made towards the original amount borrowed, rather
than towards interest
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What is a stock split?
Answer: A stock split is when a company increases the number of its outstanding shares, while
decreasing the value of each share proportionally
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What is a tax deduction?
Answer: A tax deduction is an expense that can be subtracted from a taxpayer's taxable income,
reducing the amount of tax owed
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What is a hedge fund?
Answer: A hedge fund is a type of investment fund that uses various investment strategies to
maximize returns while minimizing risk
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What is a stock split?
Answer: A stock split is a corporate action in which a company divides its existing shares into
multiple shares, often to make them more affordable for individual investors
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What is a bear market?
Answer: A bear market is a market condition in which stock prices are falling, often due to
widespread pessimism and negative sentiment among investors
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What is a mutual fund prospectus?
Answer: A mutual fund prospectus is a legal document that outlines the investment objectives,
strategies, and risks of a particular mutual fund
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What is a 529 plan?
Answer: A 529 plan is a tax-advantaged savings plan designed to help individuals and families
save for future education expenses
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What is a credit default swap?
Answer: A credit default swap is a financial contract in which the buyer of the contract pays a
premium to the seller in exchange for protection against default on a particular debt instrument
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What is a call option?
Answer: A call option is a financial contract that gives the holder the right, but not the
obligation, to buy an underlying asset at a specified price within a specified time period
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What is a credit union?
Answer: A credit union is a non-profit financial institution that is owned and controlled by its
members, typically offering banking and other financial services
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What is a dividend?
Answer: A dividend is a distribution of a portion of a company's earnings to its shareholders,
often paid out in the form of cash or additional shares of stock
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What is a junk bond?
Answer: A junk bond is a high-yield, high-risk bond that is rated below investment grade by
credit rating agencies
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What is a capital gain?
Answer: A capital gain is a profit that is realized when an asset is sold for more than its original
purchase price
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What is a credit limit?
Answer: A credit limit is the maximum amount of credit that a lender is willing to extend to a
borrower
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What is a stop-loss order?
Answer: A stop-loss order is a type of order placed by an investor to automatically sell a
security if it drops to a certain price level, in order to limit potential losses
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What is a stock option?
Answer: A stock option is a financial contract that gives the holder the right, but not the
obligation, to buy or sell an underlying stock at a specified price within a specified time period
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What is a money market account?
Answer: A money market account is a type of savings account that typically offers a higher
interest rate than a traditional savings account, but may require a higher minimum balance
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What is a P/E ratio?
Answer: The P/E ratio, or price-to-earnings ratio, is a valuation metric used to compare a
company's current stock price to its earnings per share
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What is a robo-advisor?
Answer: A robo-advisor is a digital platform that provides automated investment advice and
portfolio management services based on user-defined preferences
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What is a stock option vesting period?
Answer: The stock option vesting period is the period of time over which an employee must
wait before being able to exercise stock options granted as part of their compensation package
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What is a bond?
Answer: A bond is a debt security that represents a loan made by an investor to a borrower,
typically a corporation or government entity
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What is compound interest?
Answer: Compound interest is interest that is calculated not only on the principal amount of a
loan or investment, but also on any accumulated interest
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What is a budget?
Answer: A budget is a financial plan that outlines expected income and expenses for a given
period of time, often used to track and control spending
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What is a stock exchange?
Answer: A stock exchange is a marketplace where securities, such as stocks and bonds, are
bought and sold by investors and traders
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What is a capital market?
Answer: A capital market is a financial market where long-term securities such as stocks and
bonds are bought and sold, typically by institutional investors
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What is a mutual fund?
Answer: A mutual fund is a type of investment fund that pools money from multiple investors to
purchase a diversified portfolio of stocks, bonds, or other securities
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What is a derivative?
Answer: A derivative is a financial contract that derives its value from an underlying asset, such
as a stock or commodity
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What is a balance sheet?
Answer: A balance sheet is a financial statement that shows a company's assets, liabilities, and
equity at a specific point in time
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What is a yield curve?
Answer: A yield curve is a graphical representation of the relationship between the interest rates
on bonds of different maturities, typically used to assess future economic conditions
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What is a stock market index?
Answer: A stock market index is a statistical measure of the performance of a particular segment
of the stock market, typically based on the prices of a group of stocks
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What is diversification?
Answer: Diversification is a strategy of investing in a variety of assets to reduce risk and
increase potential returns
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What is a futures contract?
Answer: A futures contract is a financial contract that obligates the buyer to purchase an
underlying asset, such as a commodity or currency, at a future date and price
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What is a blue-chip stock?
Answer: A blue-chip stock is a stock in a well-established and financially stable company that is
generally considered to be a safe and reliable investment
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What is a bond rating?
Answer: A bond rating is a measure of the creditworthiness of a bond issuer, typically assigned
by credit rating agencies based on the issuer's financial strength and ability to repay its debts
Title: FINANCE MCQ'S AND ONE WORD
Description: These notes contain basics of Finance in the form of MCQ and One Word which would help you know the basic terms of finance
Description: These notes contain basics of Finance in the form of MCQ and One Word which would help you know the basic terms of finance