General Awareness Quiz for ECGC PO & Bank Mains Exams 2021- 29th January

Q1. Debenture holders are________.
(a)Debtors of the Company
(b)Creditors of the Company
(c)External users
(d)Owners of the Company
(e)None of the above

Q2. Which of the following bonds offer the investor the most protection?
(a)First-mortgage bonds
(b)Subordinated debentures
(c)Debentures
(d)Income bonds
(e)None of these

Q3. Debenture Application A/c is in the form of______.
(a)Current Account
(b)Nominal Account
(c)Personal Account
(d)Real Account
(e)None

Q4. The call-option value of a callable bond is likely to be high when?
(a)Interest rates are volatile.
(b)Interest rate is high and expected to remain high.
(c)Interest rates are low and expected to remain low.
(d)Markets are inefficient.
(e)To reduce interest costs.

Q5. The form of a discount on issue of Debentures is in the nature of
(a)Deferred Revenue Expenditure
(b)Revenue loss
(c)Capital loss
(d)Both a and B
(e)None of the above

Q6. Which of the following is TRUE about a zero-coupon bond?
(a)No periodic interest payments are made
(b)The maturity date is typically one to three years in the future
(c)The face value is less than the maturity value
(d)The bond is sold at an amount greater than its maturity value
(e)None of the above

Q7. When a company is liquidated, the debenture holders have a prior right for:
(a)Principal amount
(b)Interest
(c)Both (a)and (b)
(d)Fixed dividend
(e)None of these

Q8. The exchange markets and over the counter market are consider as two types of______.
(a)Floating market
(b)Risky market
(c)Secondary market
(d)Primary market
(e)Treasury market

Q9. What is the difference between common stock and preferred stock?
(a)Preferred stock does not involve equity ownership.
(b)Common stock does not offer dividends.
(c)Common stock cannot be traded to other investors.
(d)Preferred stock has fixed dividends.
(e)None of the Above

Q10. One of the main purposes of the capital markets is:
(a)More profitability and productively
(b)Boosts economic growth
(c)Both A and B
(d)To set various interest rates
(e)To allocate capital to the most efficient user

Q11. Which of the following constitutes an internal source of funds?
(a)Retained earnings and amortization cash flow
(b)Commercial paper
(c)Common stock
(d)Corporate bonds
(e)None of the above

Q12. The invoice price of a bond that a buyer would pay is equal to_______.
(a)The asked price less accrued interest.
(b)The bid price less accrued interest.
(c)The bid price plus accrued interest.
(d)The asked price plus accrued interest.
(e)None

Q13. Which of the following are generally characteristics of bonds:
(a)Prior claim on the assets of issuers and a fixed period to maturity
(b)Fixed coupon payments and no fixed period to maturity
(c)Zero capital risk and bi-annual coupons
(d)Zero default risk and fixed coupon payments
(e)No fixed period to maturity and variable coupon payments

Q14. The treasury notes that provide returns tied to inflation rate are classified?
(a)Discount index bonds
(b)Premium index bonds
(c)Inflation index bonds
(d)Clean price bonds
(e)None

Q15. When the price of a coupon bond increases?
(a)The current yield increases
(b)The current yield declines
(c)The coupon rate increases
(d)The coupon rate declines
(e)None of the above

Solutions

S1.Ans(b)
Sol. Debenture holders are Creditors of the Company.

S2.Ans(a)
Sol. Bonds offer the investor the most protection First-mortgage bonds.

S3.Ans(c)
Sol. Debenture Application A/c is in the form of Personal Account.

S4.Ans(a)
Sol. The call-option value of a callable bond is likely to be high when interest rates are volatile.

S5.Ans(c)
Sol. The form of a discount on issue of Debentures is in the nature of is Capital loss.

S6.Ans(a)
Sol. Zero coupon bond is No periodic interest payments are made.

S7.Ans(c)
Sol. The debenture holders have a prior right for principal amount and interest.

S8.Ans(a)
Sol. Exchange markets and over the counter market are consider as two types of Floating market.

S9.Ans(d)
Sol. The main difference between preferred and common stock is that preferred stock.

S10.Ans(c)
Sol. The main purposes of the capital markets are More profitability and productively, Boosts economic growth.

S11.Ans(b)
Sol. Constitutes an internal source of funds retained earnings and amortization cash flow.

S12.Ans(c)
Sol. The invoice price of a bond that a buyer would pay is equal to the asked price plus accrued interest.

S13.Ans(a)
Sol. Generally characteristics of bonds: Prior claim on the assets of issuers and a fixed period to maturity.

S14.Ans(c)
Sol. The treasury notes that provide returns tied to inflation rate are classified into inflation index bonds.

S15.Ans(b)
Sol. Price of a coupon bond increases when the current yield declines.

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