Finance-I QUIZ - Sangit Budhathoki

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Welcome to your Class 11 Finance Quiz

Name

What is the primary purpose of a Follow-On Public Offering (FPO)?

To delist a company from the stock exchange

To merge with another company

To declare bankruptcy and liquidate assets

To raise capital by issuing new shares to the public after an initial public offering (IPO)

Which of the following is the primary purpose of a memorandum of association?

Outlining the day-to-day operations of the company

Defining the roles and responsibilities of shareholders

Stating the company’s name, registered office, and objectives

Detailing the distribution of profits among directors

Which of the following best describes a letter of credit?

A document issued by a bank guaranteeing payment to a seller on behalf of the buyer.

A legal contract outlining the terms of employment between an employer and an employee.

A certificate issued by a government agency to authorize the import or export of goods.

A financial instrument that represents ownership in a company.

What does the Time Value of Money (TVM) concept entail?

Predicting future stock market trends based on historical data

Calculating the purchasing power of money over different time periods

Evaluating the impact of inflation on investment returns

Assessing the impact of taxes on investment decisions

Which of the following statements about diversification in investment is correct?

Diversification reduces the potential return of an investment portfolio.

Diversification only works for long-term investments.

Diversification helps in spreading risk across different assets, reducing overall portfolio risk.

Diversification eliminates all risks associated with investing.

Which of the following statements best describes common stock?

Common stockholders receive priority over preferred stockholders in receiving dividends.

Common stockholders have fixed dividends paid out quarterly.

Common stock represents ownership in a corporation and typically carries voting rights.

Common stockholders have the right to redeem their shares at any time for a predetermined price.

What is the primary purpose of the commodities market?

To facilitate the trading of stocks and bonds

To regulate the pricing of consumer goods

To provide a platform for buying and selling raw materials and agricultural products

To offer insurance products for businesses

Which of the following best describes the purpose of a prospectus?

To provide financial statements for the company

To outline the marketing strategy of the company

To disclose information about the company to potential investors

To outline the company’s organizational structure

What best describes the over-the-counter (OTC) market?

A physical location where stocks and commodities are traded in person.

A decentralized market where trading occurs directly between parties without a central exchange.

A centralized exchange where securities are bought and sold through a formal trading floor.

An electronic platform for trading cryptocurrencies.

10.

What is the primary function of a merchant bank?

To underwrite securities and provide advisory services for corporate clients

To issue credit cards and personal loans

To facilitate international trade transactions

To provide banking services to individuals and small businesses

11.

Here's a question about the principle of insurable interest in insurance: What does the principle of insurable interest state in insurance?

The insured party must have a financial stake in the insured property or individual, meaning they would suffer a financial loss if the insured property or individual is damaged or lost.

The insurance policy must cover all possible risks without exception.

The insurance company must compensate the insured party regardless of their financial stake in the insured property or individual.

The insured party must transfer all ownership rights of the insured property or individual to the insurance company.

12.

How are profits typically distributed among members in a cooperative?

Equally among all members, regardless of their contribution

According to the decision of the cooperative’s board of directors

Proportionally to the amount of capital invested by each member

Based on the number of years each member has been a part of the cooperative

13.

What do PVIF and PVIFA represent in financial calculations?

Measures of future cash flows discounted to present value

Measures of future cash flows discounted to future value

Measures of present value of a single future cash flow and a series of future cash flows, respectively

Measures of future cash flows discounted to annuity value

14.

Which of the following best describes a joint-stock company?

A business owned and operated by a single individual

A business entity where ownership is divided into shares, allowing multiple shareholders

A partnership where partners have limited liability

A business structure that combines features of both sole proprietorship and corporation

15.

What best describes a recurring account?

An account specifically designed for retirement savings.

An account that requires regular deposits of a fixed amount over a specified period.

An account that offers high-interest rates for short-term investments.

An account where funds are deposited for a fixed period at a fixed interest rate.

16.

What does HPR stand for in the context of mutual funds?

High-Profit Return

Historical Performance Ratio

High Potential Revenue

Holding Period Return

17.

What is the primary function of the SWIFT system?

To facilitate international currency exchange rates

To oversee compliance with anti-money laundering regulations

To provide a secure messaging network for financial institutions to communicate and conduct transactions

To regulate global stock exchanges

18.

Which of the following best describes the primary difference between the capital market and the money market?

The capital market deals with long-term securities, while the money market deals with short-term securities.

The money market is more volatile than the capital market.

The capital market is exclusively for government securities, while the money market is for corporate securities.

The money market operates on weekdays, while the capital market operates on weekends.

19.

Which of the following is true regarding capital gains tax?

It is only applicable to gains made from the sale of real estate properties.

It is calculated based on the original purchase price of the asset, regardless of its current market value.

It is not applicable if the capital gain is reinvested in a similar asset within a certain timeframe.

It is a tax levied on the profit made from the sale of capital assets.

20.

Which of the following best describes executive finance functions?

Handling day-to-day financial transactions

Strategizing long-term financial goals and investments

Maintaining accounting records and bookkeeping

Managing payroll and invoicing operations

21.

Which of the following statements best describes preference shares?

Preference shares typically have voting rights in company decisions.

Preference shareholders have priority over common shareholders in receiving dividends.

Preference shares have no fixed dividend rate.

Preference shares can be converted into common shares at any time.

22.

What is the main function of the derivatives market?

To provide a platform for trading physical commodities

To facilitate the exchange of foreign currencies

To allow investors to speculate on the future price movements of underlying assets

To regulate the issuance of corporate bonds

23.

What best describes an endowment policy?

A life insurance policy that provides coverage for a specified period and pays out a lump sum amount upon the death of the insured.

A life insurance policy that offers coverage only for accidental death or dismemberment.

A life insurance policy that allows the insured to borrow against the cash value of the policy.

A life insurance policy that combines insurance coverage with an investment component, providing a lump sum payout at a specified maturity date or upon the death of the insured, whichever occurs first.

24.

Which of the following is typically addressed in a partnership deed?

Financial statements of the partnership

Employee payroll and benefits

Distribution of profits and losses among partners

Annual general meeting schedule

25.

What is the primary purpose of FVIF (Future Value Interest Factor) and FVIFA (Future Value Interest Factor of an Annuity) in financial calculations?

To calculate the present value of future cash flows

To estimate the impact of inflation on future cash flows

To assess the risk associated with future investment returns

To determine the future value of a single sum of money and a series of cash flows, respectively

26.

What does liquidity risk refer to in the context of finance?

The risk of loss due to changes in interest rates

The risk of default by borrowers

The risk of losses due to inflation

The risk of being unable to sell an investment quickly at a fair price

27.

What is a defining characteristic of a sole proprietorship?

Limited liability for the owner

Separate legal entity from its owner

Ownership and control by a single individual

Mandatory requirement of a board of directors

28.

What best describes a mutual fund?

A type of investment that offers a fixed rate of return over a specified period.

A financial instrument that provides guaranteed income payments to investors.

A savings account offered by banks with a high interest rate.

An investment vehicle that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other assets.

29.

What is the primary characteristic of treasury bills (T-bills)?

They offer a fixed interest rate.

They have a maturity period of less than one year.

They are issued by private corporations.

They are subject to high market volatility.

30.

Who issues Treasury Bill in Nepal?

Directly by Government.

By Commercial banks.

By Multi-national companies.

By Nepal Rastra bank on the behalf of government.

31.

Which of the following best describes the role of a stock broker?

Providing legal advice to corporations

Facilitating the buying and selling of securities on behalf of clients

Managing the day-to-day operations of a stock exchange

Auditing financial statements of publicly traded companies

32.

What is a key difference between a current account and a savings account?

Current accounts are designed for long-term savings, while savings accounts are for short-term expenses.

Savings accounts typically offer higher interest rates than current accounts.

Savings accounts often full restrictions on withdrawals, while current accounts allow frequent withdrawals.

Current accounts are only offered by credit unions, while savings accounts are offered by banks.

33.

What does ASBA stand for in the context of financial markets?

Automated Share Bidding Application

Allotment of Securities Before Application

Advance Securities Blocking Application

Application Supported by Blocked Amount

34.

Which of the following does KYC stand for in the financial industry?

Know Your Customer

Keep Your Credentials

Know Your Corporation

Keep Your Cash

35.

What does DEMAT stand for?

Dematerialized Account

Deposit Management Account

Digital Equity Management Account

Direct Market Account

36.

In the context of insurance, what role does reinsurance typically play?

Reinsurance refers to the process of insuring a policy multiple times with different insurers.

Reinsurance involves the direct sale of insurance policies to individuals and businesses.

Reinsurance involves the transfer of insurance risks from the insured to the reinsurer.

Reinsurance is the process of merging multiple insurance policies into a single contract.

37.

What is the primary purpose of credit rating agencies?

To provide loans to individuals and businesses

To regulate the interest rates charged on loans

To assess the creditworthiness of borrowers

To manage investment portfolios

38.

What does the term "liquidity" refer to in finance?

The ability to borrow money

The ability to convert assets into cash quickly without significant loss in value

The ability to generate high returns on investments

The ability to predict future market trends accurately

39.

What is commonly regarded as the first central bank in the world?

Bank of England

Federal Reserve System

Bank of France

Reek Bank of Sweden

40.

What is the main function of the articles of association in a company?

Outlining the company’s business objectives

Defining the roles and responsibilities of the board of directors

Establishing the company’s legal existence and ownership structure

Regulating the internal management and administration of the company

41.

Who is the regulator of Insurance Companies in Nepal?

Ministry of Insurance

Insurance Board of Nepal

IRDIA

Insurance Authority of Nepal

42.

What is the primary function of the secondary market?

To facilitate the initial issuance of securities by companies or governments.

To set the initial market price for newly issued securities.

To provide a platform for investors to buy and sell previously issued securities.

To regulate the trading activities of primary market participants.

43.

Which of the following best describes a progressive tax system?

A tax system where everyone pays the same amount of tax regardless of income level.

A tax system where the tax rate decreases as income increases.

A tax system where the tax rate increases as income increases.

A tax system where only the wealthy individuals are taxed.

44.

Which of the following statements best captures the difference between ownership and debt instruments?

Ownership instruments guarantee fixed returns to investors, while debt instruments offer variable returns based on market performance.

Ownership instruments typically have a maturity date, while debt instruments have no fixed term.

Ownership instruments provide voting rights to investors, while debt instruments do not offer any voting privileges.

Ownership instruments represent a claim on the assets and earnings of a company, while debt instruments represent a claim on the liabilities of a company.

45.

Which of the following best describes the primary market?

A market where already issued securities are bought and sold among investors.

A market where new securities are issued and sold for the first time by companies or governments.

A market where only government securities are traded.

A market where derivative financial instruments are traded.

46.

What does the Net Asset Value (NAV) of a mutual fund represent?

The total market capitalization of the mutual fund

The total assets of the mutual fund minus liabilities, divided by the number of outstanding shares

The dividend yield of the mutual fund

The price per share of the mutual fund

47.

What does burglary insurance typically cover?

Losses due to damage caused by external events

Losses resulting from unauthorized entry and theft

Damages caused by natural disasters

Liability for accidents occurring on the insured property

48.

What does PAN stand for in the context of taxation?

Permanent Account Number

Personal Account Number

Public Account Number

Personal Access Number

49.

What is the main purpose of bonds for investors?

To provide ownership in a company

To generate fixed interest income

To grant voting rights in corporate decisions

To offer potential for high returns

50.

Which of the following best distinguishes between mobile banking and internet banking?

Internet banking offers more features and functionalities compared to mobile banking.

Mobile banking requires a separate login credential from internet banking.

Mobile banking allows transactions only within a specific geographical location, while internet banking offers global access.

Mobile banking is accessible only through smartphones, while internet banking can be accessed through any internet-enabled device.

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