Finance 101 Quiz

Which of the following is a key characteristic of equity shares?

• Fixed dividend rate

• Voting rights

• Priority in dividend payment

• Redeemable at a fixed date

Which of the following is considered a current asset?

• Land

• Inventory

• Machinery

• Patents

What is the primary reason investors might prefer preference shares over equity shares?

• Higher potential for capital appreciation

• Fixed dividend payments

• Greater voting rights

• Higher risk

What does the time value of money concept imply?

• Money today is worth more than the same amount in the future due to its potential earning capacity.

• Money in the future is worth more than the same amount today due to inflation.

• Money value remains constant over time regardless of its earning potential.

• Money value decreases over time due to depreciation.

If the interest rate increases, what happens to the present value of a future cash flow?

• The present value decreases

• The present value remains the same

• The present value increases

• The present value fluctuates unpredictably

What is the primary difference between the money market and the capital market?

• Money market deals with long-term securities, while capital market deals with short-term securities.

• Money market deals with short-term securities, while capital market deals with long-term securities.

• Money market is for government securities only, while capital market is for corporate securities only.

• Money market is more volatile than the capital market.

What is the main function of a primary market?

• Facilitating the trading of existing securities

• Issuing new securities to raise capital

• Providing a platform for commodities trading

• Regulating the securities market

What happens to preference shareholders in case of liquidation of the company?

• They are paid before equity shareholders

• They are paid after equity shareholders

• They receive nothing

• They have a say in the company's operations

Goodwill is an example of which type of asset?

• Tangible asset

• Current asset

• Fixed asset

• Intangible asset

What is a debenture?

• A type of equity share issued by a company

• A long-term debt instrument issued by a company to borrow funds

• A short-term loan provided by a bank

• A financial instrument used for foreign exchange trading