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An investment is a resource or thing gained determined to create pay or appreciation. Appreciation alludes to an increment in the worth of a resource over the long run. Whenever a singular buys a decent as a venture, the plan isn't to consume the upside yet rather involve it in the future to make riches. A venture generally concerns the cost of some capital today-time, exertion, cash, or a resource with at least some expectations of a more noteworthy result in the future than what was initially placed in.
Investment MCQs: This section contains multiple-choice questions and answers on Investment. It will help the students to prepare well for their exams.
List of Investment MCQs
1. Employment of funds on assets to earn a return is known as?
- Loan
- Investment
- Liability
- Assets
Answer: B) Investment
Explanation:
An investment is a resource or thing gained determined to create pay or appreciation. Appreciation alludes to an increment in the worth of a resource over the long run. Whenever a singular buys a decent as a venture, the plan isn't to consume the upside yet rather involve it in the future to make riches.
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2. What is a Treasury Bill?
- Short-term U.S. government debt obligation
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An unsecured money market instrument
Answer: A) Short-term U.S. government debt obligation
Explanation:
A Treasury Bill (T-Bill) is a transient U.S. government obligation commitment supported by the Treasury Department with a development of one year or less. Depository bills are generally sold in groups of $1,000. Nonetheless, some can arrive at the greatest section of $5 million in non-cutthroat offers. These protections are broadly viewed as okay and secure ventures.
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3. What is National Savings Certificate?
- Short-term U.S. government debt obligation
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An unsecured money market instrument
Answer: B) A fixed-income investment scheme
Explanation:
The National Savings Certificate (NSC) is a decent pay venture conspire that you can open with any mail centre branch. The plan is a Government of India drive. It is a reserve funds security that empowers endorsers - for the most part, little to mid-pay financial backers - to contribute while saving money on personal assessment.
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4. What is a Certificate of Deposit?
- Short-term U.S. government debt obligation
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An unsecured money market instrument
Answer: C) A financial product commonly sold by banks, thrift institutions, and credit unions
Explanation:
A certificate of deposit (CD) is an item presented by banks and credit associations that gives a loan fee premium in return for the client consenting to leave a single amount store immaculate for a foreordained timeframe. Practically all shopper monetary organizations offer CDs, even though it's up to each bank which terms it needs to offer, how much higher the rate will be contrasted with the bank's reserve funds and currency market items, and what punishments it applies for early withdrawal.
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5. What is a Commercial Paper?
- Short-term U.S. government debt obligation
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An unsecured money market instrument
Answer: D) An unsecured money market instrument
Explanation:
Commercial paper is an unstable type of promissory note that pays a proper pace of interest. It is regularly given by enormous banks or companies to cover transient receivables and meet momentary monetary commitments, like subsidizing for another venture. Similarly, as with some other sort of bond or obligation instrument, the responsible substance offers the paper expecting that it will be in a situation to pay both interest and head by development. It is only from time to time utilized as a subsidizing vehicle for longer-term commitments because different options are more qualified for that reason.
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6. What is an Unsecured Promissory Note?
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An obligation for payment without any property securing the payment
- A legal agreement that requires a borrower to provide security for a loan
Answer: C) An obligation for payment without any property securing the payment
Explanation:
An unsecured promissory note is a commitment for an instalment with next to no property getting the instalment. On the off chance that the payor neglects to pay, the payee should record a claim and trust that the payor has adequate resources that can be seized to fulfil the advance. If the payor doesn't have adequate resources, the payee is in a tough situation. If the payor petitions for financial protection, the payee's case is behind the cases of any gotten banks.
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7. What is a Secured Promissory Note?
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
- An obligation for payment without any property securing the payment
- A legal agreement that requires a borrower to provide security for a loan
Answer: D) A legal agreement that requires a borrower to provide security for a loan
Explanation:
A secured promissory note is a commitment to pay that is gotten by some kind of property. This intends that if the payor neglects to pay, the payee can hold onto the assigned property to get repayment of the advance. By guaranteeing that the property connected to the note is of adequate worth to cover how much the advance, the payee in this way has an assurance of being reimbursed.
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8. Which of the following is a type of Investment?
- Economic Investments
- Investment Vehicles
- Both A & B
- None of the above
Answer: C) Both A & B
Explanation:
There are two types of investments i.e., Economic Investments and Investment Vehicles. Inside a nation or a country, monetary development is connected with speculations. Whenever organizations and different substances take part in sound business speculation rehearses, it normally brings about financial development. A speculation bank gives an assortment of administrations to people and organizations, including many administrations that are intended to help people and organizations during the time spent expanding their riches.
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9. What is an Economic Investment?
- When companies and other entities engage in sound business investment practices
- A specific division of banking is related to the creation of capital for other companies, governments, and other entities.
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
Answer: A) When companies and other entities engage in sound business investment practices
Explanation:
Assuming an element is occupied with the development of products, it might fabricate or secure another piece of gear that permits it to create more merchandise in a more limited timeframe. This would raise the absolute result of products for the business. Taken in blend with the exercises of numerous different substances, this increment underway could cause the country's (GDP) to rise.
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10. What is Investment Banking?
- When companies and other entities engage in sound business investment practices
- A specific division of banking is related to the creation of capital for other companies, governments, and other entities
- A fixed-income investment scheme
- A financial product commonly sold by banks, thrift institutions, and credit unions
Answer: B) A specific division of banking is related to the creation of capital for other companies, governments, and other entities
Explanation:
Investment banks guarantee new obligation and value protections for a wide range of enterprises, help in the offer of protection, and assist with working with consolidations and acquisitions, redesigns, and dealer exchanges for the two foundations and private financial backers. Venture banks may likewise give direction to organizations who are thinking about giving offers freely interestingly, for example, with the first sale of stock (IPO).
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11. Money Market Securities do not comprise of which of the following?
- Commercial Paper
- Certificate of Deposit
- Treasury Bills
- National Savings Certificate
Answer: D) National Savings Certificate
Explanation:
Foundations that partake in the currency market incorporate banks that loan to each other and to huge organizations in the eurocurrency and time store markets; organizations that fund-raise by selling business paper into the market, which can be purchased by different organizations or assets; and financial backers who buy bank CDs as a protected spot to stop cash temporarily. A portion of those discount exchanges at last advance under the control of buyers as parts of currency market common assets and different ventures.
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12. Who is authorised to decide the basis of allotment?
- Manager
- Banks
- Registrar
- Government
Answer: C) Registrar
Explanation:
"Registrar to an issue" signifies any individual carrying on the exercises comparable to an issue including gathering application structures from financial backers, tracking applications and cash got from financial backers or paying to the vender of protections, helping with deciding the premise of designation of protections, concluding the rundown of people qualified for distribution of protections and handling and dispatching assignment letters, discount requests or endorsements and other related records.
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13. Who is an Insurance Underwriter?
- Underwriters that assess the risk of insuring a home, car or driver
- Most commonly used underwriters in the loan industry
- Underwriter that determines if the loan is safe for all parties
- Underwriters that work with initial public offerings (IPOs)
Answer: A) Underwriters that assess the risk of insuring a home, car or driver
Explanation:
Insurance underwriters assess the gamble of safeguarding a home, vehicle or driver. They likewise survey people who are applying for disaster protection arrangements. Protection financiers decide whether the agreement is beneficial for the safety net provider. They consider if the candidate meets specific measures to fit the bill for a protection strategy. From that point, they lay out the kind of strategy for which a candidate is qualified. At long last, they give a diagram of what the strategy covers for the candidate's novel conditions.
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14. Who is a Mortgage Underwriter?
- Underwriters that assess the risk of insuring a home, car or driver
- Most commonly used underwriters in the loan industry
- An underwriter that determines if the loan is safe for all parties
- Underwriters that work with initial public offerings (IPOs)
Answer: B) Most commonly used underwriters in the loan industry
Explanation:
Mortgage underwriters are probably the most normally utilized guarantors among the credit business. Regardless of whether another mortgage holder has decent pay and incredible financial assessment, purchasing a house is as yet a hazardous undertaking. A home loan guarantor should do a careful gamble appraisal. When an evaluation is done, the financier can affirm assuming the credit is a reasonable endeavour for the candidate.
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15. Who is a Loan Underwriter?
- Underwriters that assess the risk of insuring a home, car or driver
- Most commonly used underwriters in the loan industry
- An underwriter that determines if the loan is safe for all parties
- Underwriters that work with initial public offerings (IPOs)
Answer: C) An underwriter that determines if the loan is safe for all parties
Explanation:
Loan underwriters assess the gamble engaged with loaning a candidate a credit like an automobile advance. The goal is to decide whether the credit is alright for all parties. Huge banks frequently utilize a blend of guarantors and endorsing programming to decide the gamble of loaning assets to a candidate. Utilizing the mix of programming and a financier is a typical practice among of all shapes and sizes banks.
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16. Who is a Securities Underwriter?
- Underwriters that assess the risk of insuring a home, car or driver
- Most commonly used underwriters in the loan industry
- An underwriter that determines if the loan is safe for all parties
- Underwriters that work with initial public offerings (IPOs)
Answer: D) Underwriters that work with initial public offerings (IPOs)
Explanation:
A securities underwriter is an alternate sort of financier. Protections guarantors frequently work with introductory public contributions (IPOs). They assess the speculation's gamble to decide a fitting cost for an IPO. Ordinarily, a protections guarantor is a worker of the venture bank or another trained professional. Probably the greatest gamble engaged with protections endorsing is the business time frame. For example, if security doesn't sell at the recommended cost, the speculation bank is responsible for the distinction.
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17. The risk-free investment comprises of which of the following?
- Equity in a house
- Gold
- Machines
- Bonds
Answer: B) Gold
Explanation:
Gold is eminent for being a brilliant store of riches. This implies that it can hold its worth throughout a significant period, thus the motivation behind why certain individuals believe it to be sans hazard. This standing depends on hundreds of years of execution results demonstrating that gold costs will quite often go up amid financial flimsiness or political agitation.
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18. What has greatly increased the cost of security trading?
- Unsecured Promissory Note
- Internet
- Mutual Funds
- Commercial Banks
Answer: B) Internet
Explanation:
The Internet has been one of the most progressive and troublesome advances ever, making a significant change in perspective. It significantly affects the way that purchasers pay attention to music, watches motion pictures, trade items, and convey. It usefully affects contributing, particularly for retail financial backers.
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19. In which market do the investment bankers operate?
- Primary Market
- Secondary Market
- Third Market
- Fourth Market
Answer: A) Primary Market
Explanation:
Investment bankers work in the essential market. A speculation financier is a person who frequently fills in as a feature of a monetary establishment and is principally worried about raising capital for organizations, states, or different substances.
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20. Which risk increases when the cost of the Internet rises?
- Business Risk
- Financial Risk
- Inflation Risk
- Liquidity Risk
Answer: D) Liquidity Risk
Explanation:
Monetary organizations rely on acquired cash to a significant degree, so they're generally investigated to decide if they can meet their obligation commitments without acknowledging extraordinary misfortunes, which could be horrendous. Foundations, hence, face severe consistence prerequisites and stress tests to quantify their monetary solidness.
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