stud
bud
Sign up
Log in
Home
Library
Explore
SAT
More
FINVERSE Flashcards | StudBud
Explore
/
FINVERSE
FINVERSE
40 terms
·
StudBud Administration
·
20 plays
Imported from external platform
Flashcards
40 cards
F
Practice quiz
P
Host live
L
Questions
40
Answers
1
Which of the following statements about ETFs (Exchange-Traded Funds) is FALSE?
They are illiquid compared to mutual funds
They trade like stocks
They can be actively managed
They provide diversification
2
What happens to bond prices when interest rates rise?
They rise
They fall
No change
They become volatile
3
Which capital budgeting technique considers the time value of money?
Book Value Depreciation
Payback Period
Internal Rate of Return (IRR)
Accounting Rate of Return
4
Which bond type is most sensitive to interest rate changes?
Short-Term Bond
Floating-Rate Bond
Corporate Bond
Zero-Coupon Bond
5
Which financial metric measures a company's profitability relative to its revenue?
Debt-to-Equity Ratio
Gross Profit Margin
Current Ratio
Price-to-Sales Ratio
6
Which financial ratio best assesses short-term liquidity?
Net Profit Margin
Quick Ratio
Return on Assets
Debt-to-Equity Ratio
7
Which pricing model is used to value options?
Black-Scholes Model
Capital Asset Pricing Model
Gordon Growth Model
Dividend Discount Model
8
What does the Modigliani-Miller theorem suggest in a world without taxes?
Debt financing increases firm value
Dividend policy is irrelevant
Capital structure is irrelevant
Equity is always more expensive than debt
9
A futures contract differs from a forward contract because:
No counterparty risk
It’s settled daily
It’s customizable
It trades OTC
10
What is the main goal of a hedge fund?
Avoid leverage
Replicate market returns
Generate absolute returns
Minimize risk through index funds
11
What is the primary role of an investment bank in an IPO?
Underwriting and distributing shares
Providing loans to retail investors
Setting stock exchange regulations
Managing a company's internal accounts
12
Which is NOT a characteristic of a junk bond?
Low credit rating
High yield
Government-backed security
High risk
13
What is a key feature of a Ponzi scheme?
No legal consequences
Returns based on real profits
Dependence on new investors
Use of high-frequency trading
14
Which monetary policy tool is the most direct way to control inflation?
Discount Rate
Reserve Requirements
Open Market Operations
Fiscal Stimulus
15
Which of the following is NOT considered a non-cash expense?
Depreciation
Amortization
Salaries Expense
Stock-Based Compensation
16
A stock has a beta of 1.5. If the market returns 10%, what is the expected return assuming a risk-free rate of 2%?
12%
11%
15%
17%
17
What does an increase in a company's free cash flow indicate?
More funds for expansion or dividends
Higher fixed costs
Declining profitability
Increased reliance on debt
18
Which is a primary goal of quantitative easing (QE)
Cut government debt
Reduce inflation
Strengthen currency
Lower interest rates
19
Which factor is NOT considered in credit ratings?
Economic Growth Rate
Company’s Debt Levels
CEO’s Salary
Past Default History
20
Which derivative helps hedge against rising interest rates?
Interest Rate Cap
Forward Rate
Interest Rate Swap (Fixed to Floating)
Put Option on Bonds
21
Which yield curve shape is often a recession predictor?
Normal
Flat
Inverted
Steepening
22
Which of the following is NOT a component of GDP?
Government Spending
Net Exports
Stock Market Performance
Consumer Spending
23
Which is an example of a lagging economic indicator?
Stock Market Performance
New Home Construction
Unemployment Rate
Consumer Confidence
24
Which is a key feature of preferred stock?
Fixed dividends
No dividend payout
Voting rights
Higher risk than common stock
25
Which risk does diversification NOT reduce?
Market Risk
Company-Specific Risk
Credit Risk
Industry-Specific Risk
26
Which of the following is a measure of tail risk?
Gordon Growth Model
Sharpe Ratio
Value at Risk (VaR)
Jensen’s Alpha
27
Which valuation method is best for companies with negative earnings?
Price-to-Sales Ratio
Discounted Cash Flow (DCF)
P/E Ratio
EV/EBITDA
28
Which company is most likely to use an LBO?
High-growth Tech Firm
Loss-Making Startup
Stable Cash Flow Business
Government Enterprise
29
Which of these is NOT part of fundamental analysis?
Historical Stock Prices
Earnings Per Share
Interest Rates
Revenue Growth
30
A higher P/E ratio suggests that investors expect:
A declining stock price
Lower future earnings
Higher future earnings
High debt levels
31
Which option strategy benefits most from high volatility?
Covered Call
Protective Put
Iron Condor
Straddle
32
Which type of risk is NOT diversifiable?
Business Risk
Credit Risk
Political Risk
Systematic Risk
33
Which is NOT a common stock valuation method?
Discounted Cash Flow
Gordon Growth Model
Dividend Discount Model
Black-Scholes Model
34
Which event is most likely to increase currency depreciation?
Increased foreign investment
Trade surplus
Political instability
Rising interest rates
35
What is a key limita on of the Efficient Market Hypothesis (EMH)?
It assumes insider trading is legal (
It assumes all investors are ra onal
It supports technical analysis
It ignores arbitrage opportuni es
36
What is a key advantage of a REIT?
Tax-free dividends
Low capital requirements
Fixed income payments
High liquidity
37
Which accounting method recognizes revenue when earned, not when cash is received?
Accrual Accounting
Tax Basis Accounting
Deferred Revenue Method
Cash Basis Accounting
38
A high accounts receivable turnover indicates:
Company takes too much credit risk
Customers pay quickly
Company isn't selling enough
Company has excess cash
39
If a company has a high P/B ratio, it suggests:
High debt levels
The stock is overvalued
Weak cash flows
The stock is undervalued
40
What is the main purpose of a stock buyback?
Issue more dividends to shareholders
Reduce company debt
Reduce outstanding shares and increase EPS
Increase tax liabilities
