Business IQ - Test Your Finance, Vocabulary, Investing Knoweldge

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Business IQ - Test Your Finance, Vocabulary, Investing Knoweldge - Quiz

This will test your knowledge of finance, investing, financial vocabulary, business, companies and economics. It will then rank you into 1 of 5 tiers of business knowledge.


Questions and Answers
  • 1. 

    Junk bond king.

    • A.

      John Gutfreund

    • B.

      Michael Milken

    • C.

      John Meriweather

    • D.

      Ivan Boesky

    Correct Answer
    B. Michael Milken
    Explanation
    Michael Milken is known as the "junk bond king" because he played a significant role in popularizing and expanding the market for high-yield, high-risk bonds in the 1980s. He was a key figure at the investment bank Drexel Burnham Lambert, where he developed and implemented innovative financial strategies that allowed companies with low credit ratings to raise capital through the issuance of high-yield bonds. Milken's efforts revolutionized the corporate finance industry, but he was later involved in a major insider trading scandal and was convicted of securities fraud.

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  • 2. 

    Dallas billionaire who sold his company to Yahoo for $6 billion at height of dot com bubble.

    • A.

      T Boone Pickens

    • B.

      Mark Cuban

    • C.

      Jerry Jones

    • D.

      Jerry Yang

    Correct Answer
    B. Mark Cuban
    Explanation
    Mark Cuban is the correct answer because he is a Dallas billionaire who sold his company, Broadcast.com, to Yahoo for $6 billion during the dot-com bubble. He is known for his success as an entrepreneur and his investments in various industries. T Boone Pickens is an oil tycoon, Jerry Jones is the owner of the Dallas Cowboys, and Jerry Yang is one of the co-founders of Yahoo.

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  • 3. 

    Warren Buffett owns:

    • A.

      AIG

    • B.

      Geico

    • C.

      AllState

    • D.

      Progressive

    Correct Answer
    B. Geico
    Explanation
    Warren Buffett owns Geico because it is listed as one of the companies he owns in the given list.

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  • 4. 

    Warren Buffets mentor

    • A.

      Bill Gates

    • B.

      Charlie Munger

    • C.

      Benjamin Graham

    Correct Answer
    C. Benjamin Graham
    Explanation
    Benjamin Graham is the correct answer because he was a mentor to Warren Buffet. Graham, known as the "father of value investing," taught Buffet the principles of investing and greatly influenced his investment strategy. Buffet often credits Graham for his success and considers him one of the most important figures in his life. Therefore, it is clear that Benjamin Graham was Warren Buffet's mentor.

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  • 5. 

    Andrew Carnegie made his fortune in:

    • A.

      Manufacturing

    • B.

      Finance

    • C.

      Steel

    • D.

      Railroads

    Correct Answer
    C. Steel
    Explanation
    Andrew Carnegie made his fortune in the steel industry. He was a prominent figure in the late 19th century and early 20th century, known for his leadership in the expansion of the American steel industry. Carnegie founded the Carnegie Steel Company, which became one of the largest and most profitable steel companies in the world. His success in the steel industry allowed him to amass a vast fortune and become one of the wealthiest individuals in history.

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  • 6. 

    H.L. Hunt made his fortune in:

    • A.

      Finance

    • B.

      Steel

    • C.

      Oil

    • D.

      Railroads

    • E.

      Cotton

    Correct Answer
    C. Oil
    Explanation
    H.L. Hunt made his fortune in the oil industry. This is evident from his success and wealth accumulation. The oil industry is known for its potential to generate enormous profits, and many individuals, including H.L. Hunt, have become extremely wealthy through their involvement in this sector.

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  • 7. 

    Jim Rogers and George Soros founded:

    • A.

      ESL Investments

    • B.

      Quantum Fund

    • C.

      Texas Pacific Group

    • D.

      Carlyle Group

    Correct Answer
    B. Quantum Fund
    Explanation
    Jim Rogers and George Soros founded the Quantum Fund. The Quantum Fund is a well-known hedge fund that was established in 1973. It was one of the first hedge funds to use a global macro investing strategy, which involves making bets on macroeconomic trends and events. The fund became highly successful and made both Rogers and Soros extremely wealthy. They eventually went on to pursue their own separate investment careers, but the Quantum Fund remains a significant part of their legacy in the financial industry.

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  • 8. 

     Many offshore companies and hedge funds are incorporated here.

    • A.

      Puerto Rico

    • B.

      Cuba

    • C.

      Cayman Islands

    • D.

      Hawaii

    Correct Answer
    C. Cayman Islands
    Explanation
    Many offshore companies and hedge funds are incorporated in the Cayman Islands due to its favorable tax laws and regulations. The Cayman Islands offer a tax-neutral environment, with no corporate or income taxes for offshore entities. This makes it an attractive destination for businesses looking to minimize their tax liabilities and maximize their profits. Additionally, the Cayman Islands provide a stable and secure financial system, making it a preferred choice for investors and financial institutions.

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  • 9. 

    Which country experienced a massive economic bubble in the 1980s followed by the "lost decade" in the 1990s?

    • A.

      USA

    • B.

      Japan

    • C.

      South Korea

    • D.

      Russia

    Correct Answer
    B. Japan
    Explanation
    Japan experienced a massive economic bubble in the 1980s, known as the "bubble economy," which was characterized by soaring stock and real estate prices. However, this bubble burst in the early 1990s, leading to a prolonged period of economic stagnation and deflation, commonly referred to as the "lost decade." During this time, Japan faced issues such as bank failures, high unemployment rates, and a decline in consumer spending. This period of economic decline had a significant impact on the country's economy and has been studied as a cautionary tale for other nations.

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  • 10. 

    Which of the following isn't a major port?

    • A.

      Rotterdam

    • B.

      Singapore

    • C.

      Hong Kong

    • D.

      San Francisco

    Correct Answer
    D. San Francisco
    Explanation
    San Francisco is not a major port because it does not have the same level of international trade and shipping activity as the other options. Rotterdam is one of the largest ports in Europe and a major hub for global trade. Singapore is a major port in Southeast Asia and one of the busiest in the world. Hong Kong is also a major port and a crucial gateway for trade in Asia. However, San Francisco does not have the same level of maritime trade and infrastructure, making it the correct answer.

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  • 11. 

    City with the most energy companies

    • A.

      Chicago

    • B.

      New York

    • C.

      Houston

    • D.

      Los Angeles

    Correct Answer
    C. Houston
    Explanation
    Houston is known as the energy capital of the world and is home to a large number of energy companies. It has a strong presence in the oil and gas industry, with many major companies having their headquarters or significant operations in the city. This concentration of energy companies in Houston makes it the city with the most energy companies compared to Chicago, New York, and Los Angeles.

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  • 12. 

    The long-term capital gains tax rate in the USA.

    • A.

      35%

    • B.

      10%

    • C.

      25%

    • D.

      15%

    Correct Answer
    D. 15%
    Explanation
    The long-term capital gains tax rate in the USA is 15%. This means that individuals who hold investments for more than a year and then sell them at a profit will be taxed at a rate of 15% on the gains they made. This rate is lower than the ordinary income tax rate, which encourages long-term investment and potentially stimulates economic growth.

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  • 13. 

    These terminals frequent the desks of Wall Street

    • A.

      Linux

    • B.

      IBM

    • C.

      Bloomberg

    • D.

      Dell

    Correct Answer
    C. Bloomberg
    Explanation
    The correct answer is Bloomberg because it is a well-known terminal that is commonly used by professionals in the financial industry, including those on Wall Street. Linux, IBM, and Dell are also technology companies, but they are not specifically known for their presence on Wall Street desks like Bloomberg is.

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  • 14. 

    Highly leveraged hedge fund employing many Nobel laureates that collapsed and lost billions in the 1998 Asian Financial crisis.

    • A.

      Amarath Advisors

    • B.

      Long Term Capital Management

    • C.

      ESL Investments

    • D.

      Clarium Capital Management

    Correct Answer
    B. Long Term Capital Management
    Explanation
    Long Term Capital Management (LTCM) is the correct answer because it fits the description of a highly leveraged hedge fund that collapsed and lost billions in the 1998 Asian Financial crisis. LTCM was founded by Nobel laureates and was known for its use of complex mathematical models to make investment decisions. However, its highly leveraged positions and excessive risk-taking led to significant losses during the financial crisis, ultimately resulting in the fund's collapse.

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  • 15. 

    World leader in database software

    • A.

      Oracle

    • B.

      Microsoft

    • C.

      SAP

    • D.

      BMC Software

    Correct Answer
    A. Oracle
    Explanation
    Oracle is considered the world leader in database software because it is one of the largest and most well-known companies in the database software industry. It offers a wide range of database products and services that are used by businesses and organizations around the world. Oracle has a strong reputation for its reliability, scalability, and security features, making it a popular choice for large enterprises. Additionally, Oracle has a long history in the database software market and has consistently been at the forefront of innovation in this industry.

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  • 16. 

    What economic system would best be described as laissez-faire?

    • A.

      Socialism

    • B.

      Capitalism

    • C.

      Communism

    Correct Answer
    B. Capitalism
    Explanation
    Laissez-faire is an economic system that advocates for minimal government intervention in the economy. In a laissez-faire system, businesses are free to operate without government regulations and individuals have the freedom to pursue their own economic interests. Capitalism aligns with the principles of laissez-faire as it promotes private ownership of resources and businesses, competition, and free markets. In a capitalist system, the government's role is limited to enforcing property rights and contracts, rather than controlling or directing economic activities. Therefore, capitalism is the economic system that best fits the description of laissez-faire.

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  • 17. 

    Does leveraged buyouts of companies.

    • A.

      Hedge funds

    • B.

      Venture capital funds

    • C.

      Private equity funds

    • D.

      Mutual funds

    Correct Answer
    C. Private equity funds
    Explanation
    Private equity funds are a type of investment fund that specializes in buying and taking control of companies. They use a strategy called leveraged buyouts, which involves using borrowed money to acquire a company with the intention of improving its financial performance and selling it at a profit. Hedge funds, venture capital funds, and mutual funds are not specifically focused on leveraged buyouts of companies, making private equity funds the correct answer.

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  • 18. 

    Example of a monopoly:

    • A.

      General Electric

    • B.

      Standard Oil

    • C.

      General Motors

    • D.

      Wal-Mart

    Correct Answer
    B. Standard Oil
    Explanation
    Standard Oil is an example of a monopoly because it was a dominant company in the oil industry during the late 19th and early 20th centuries. It controlled a significant portion of the market and had a monopoly over the production, refining, and distribution of oil. Standard Oil used aggressive tactics such as predatory pricing and vertical integration to eliminate competition and maintain its monopoly power. The company's dominance eventually led to its breakup in 1911 due to antitrust laws.

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  • 19. 

    This is an example of a conglomerate:

    • A.

      Microsoft

    • B.

      Berkshire Hathaway

    • C.

      Southwest Airlines

    • D.

      Chevron

    Correct Answer
    B. Berkshire Hathaway
    Explanation
    Berkshire Hathaway is a conglomerate because it is a multinational conglomerate holding company that owns a diverse range of businesses. It has subsidiaries in various industries such as insurance, utilities, manufacturing, and retail. This diversification of businesses under one parent company is a characteristic of a conglomerate. Microsoft, Southwest Airlines, and Chevron, on the other hand, are not conglomerates as they primarily operate within specific industries.

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  • 20. 

    A company that is owned by another:

    • A.

      Start up

    • B.

      Subsidiary

    • C.

      Corporation

    • D.

      LLC

    Correct Answer
    B. Subsidiary
    Explanation
    A subsidiary is a company that is owned by another company, known as the parent company. The parent company usually holds a majority of the subsidiary's shares, giving it control over the subsidiary's operations and decision-making processes. Subsidiaries are separate legal entities from their parent companies, with their own management and financial statements. They are often established to expand the parent company's business into new markets or industries, or to isolate certain assets or liabilities.

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  • 21. 

    Black Scholes is a way to value:

    • A.

      Private placements

    • B.

      Options

    • C.

      Bonds

    • D.

      Derivatives

    Correct Answer
    B. Options
    Explanation
    The Black Scholes model is a mathematical formula used to calculate the theoretical price of options. It takes into account factors such as the underlying asset's price, the strike price, the time to expiration, the risk-free interest rate, and the volatility of the underlying asset. Therefore, the correct answer is options, as the Black Scholes model is specifically designed to value options.

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  • 22. 

    An investor owns 1/3,000th of a company that has 15 million shares outstanding, how many shares does he own?

    • A.

      15000

    • B.

      5000

    • C.

      500

    • D.

      50000

    Correct Answer
    B. 5000
    Explanation
    The investor owns 1/3,000th of the company, which means he owns 1 share for every 3,000 shares. Since there are 15 million shares outstanding, we can calculate the number of shares the investor owns by dividing 15 million by 3,000. This equals 5,000 shares.

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  • 23. 

    If a company has a $2 billion dollar market cap, and its got 1 million shares what is its share price?

    • A.

      $100

    • B.

      $200

    • C.

      $1000

    • D.

      $2000

    Correct Answer
    D. $2000
    Explanation
    The share price of a company can be calculated by dividing the market capitalization by the number of shares. In this case, the company has a market cap of $2 billion and 1 million shares. Dividing $2 billion by 1 million gives us a share price of $2000.

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  • 24. 

    If a company has $1 million in annual earnings and 10 million shares, what is its quarterly earnings per share?

    • A.

      1 cent

    • B.

      1.5 cents

    • C.

      2 cents

    • D.

      2.5 cents

    Correct Answer
    D. 2.5 cents
    Explanation
    The quarterly earnings per share can be calculated by dividing the annual earnings by the number of shares and then dividing the result by 4 (since there are 4 quarters in a year). In this case, $1 million divided by 10 million shares is $0.10 per share. And $0.10 divided by 4 is 0.025, which is equal to 2.5 cents per share.

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  • 25. 

    A company pays out $100 million in dividends and has 500 million shares at $20/share. What is its annual yield?

    • A.

      1%

    • B.

      10%

    • C.

      11%

    • D.

      100%

    Correct Answer
    A. 1%
    Explanation
    The annual yield is calculated by dividing the dividend payout by the total value of shares and multiplying by 100. In this case, the dividend payout is $100 million and the total value of shares is $20/share * 500 million shares = $10 billion. Dividing $100 million by $10 billion and multiplying by 100 gives an annual yield of 1%.

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  • 26. 

    Apartment buildings, shopping malls and office buildings are most likely to be owned by a:

    • A.

      Corporation

    • B.

      REIT

    • C.

      Partnership

    • D.

      Sole Proprietorship

    Correct Answer
    B. REIT
    Explanation
    Apartment buildings, shopping malls, and office buildings are typically large-scale properties that require significant investment and management. These types of properties are commonly owned by Real Estate Investment Trusts (REITs). REITs are companies that own, operate, or finance income-generating real estate. They allow individuals to invest in real estate without directly owning the properties themselves. REITs are attractive to investors because they offer the potential for regular income through rental payments and the potential for capital appreciation. Additionally, REITs are subject to certain tax advantages, such as not being taxed on corporate income if they distribute at least 90% of their taxable income to shareholders.

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  • 27. 

    The 80-20 rule states that, for many events, roughly 80% of the effects come from 20% of the causes is also known as:

    • A.

      Gaussian Distribution

    • B.

      The Pareto Principle

    • C.

      Benford's law

    • D.

      Sturgeon's law

    Correct Answer
    B. The Pareto Principle
    Explanation
    The 80-20 rule, also known as the Pareto Principle, states that roughly 80% of the effects come from 20% of the causes. This principle is commonly observed in various fields such as business, economics, and productivity. It suggests that a small portion of inputs or efforts often yield a large portion of the results or outcomes. The Pareto Principle helps in identifying and prioritizing the most significant factors or contributors to a particular outcome or problem.

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  • 28. 

    A company releases its financial statements including the income statement, balance sheet and the statement of _______:

    Correct Answer
    cash flows
    cash flow
    Explanation
    The correct answer is "cash flows". When a company releases its financial statements, it includes the income statement, balance sheet, and the statement of cash flows. The statement of cash flows provides information about the cash inflows and outflows of a company during a specific period. It helps investors and stakeholders understand how the company generates and uses its cash, providing insights into its liquidity and financial health.

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  • 29. 

    You have the option of leasing a warehouse for $1,000/month or buying it for $100,000 with an 10% mortgage. You must put down a $20,000 down payment, your earning 20% ROE in your business right now. Which is better?

    • A.

      Leasing

    • B.

      Buying

    • C.

      Cost the same

    Correct Answer
    C. Cost the same
    Explanation
    The leasing option and the buying option have the same cost. This means that the total amount of money spent on either option would be equal. Therefore, there is no financial advantage to choosing one option over the other in terms of cost.

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  • 30. 

    The command to add cells together in Excel is:

    • A.

      PLUS

    • B.

      ADD

    • C.

      TOTAL

    • D.

      SUM

    Correct Answer
    D. SUM
    Explanation
    The correct answer is "SUM". In Excel, the SUM function is used to add up the values in a range of cells. By selecting the cells you want to add together and using the SUM function, Excel will calculate the total sum of those cells. This is a commonly used command in Excel for performing calculations and obtaining the total of a set of numbers.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

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  • Mar 22, 2023
    Quiz Edited by
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  • Apr 18, 2009
    Quiz Created by
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