Can You Pass The Finance Vocabulary Quiz? Trivia

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Can You Pass The Finance Vocabulary Quiz? Trivia - Quiz


Can you pass the finance vocabulary quiz? There are a lot of words used in finance class that most people tend to forget what they mean and their meaning most times explains how they will be treated in financial statement. Do you know the difference between the put and call option and what they are? Take the quiz and get a chance to refresh your memory. All the best!


Questions and Answers
  • 1. 

    Golden opportunity

    • A.

      When you go bankrupt

    • B.

      You have unseccessful time

    • C.

      It's a favourable time or excellent opportunity

    • D.

      You need money

    Correct Answer
    C. It's a favourable time or excellent opportunity
    Explanation
    The phrase "golden opportunity" typically refers to a favorable or excellent chance to achieve something. In the given context of going bankrupt, it may imply that despite the difficult and unsuccessful time, there is still a chance to turn things around and seize a favorable opportunity to recover financially. It suggests that even in challenging circumstances, there may be a silver lining or a chance for improvement.

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  • 2. 

    Done and dusted

    • A.

      Time is lost

    • B.

      Completely finished or ready

    • C.

      Difficult situation

    • D.

      To depend on one plan or source of income

    Correct Answer
    B. Completely finished or ready
    Explanation
    The phrase "done and dusted" is commonly used to indicate that something is completely finished or ready. It implies that all necessary tasks or actions have been completed and there is nothing more to be done. This phrase is often used to describe the successful completion of a project or task, indicating that it has been fully accomplished and there are no loose ends remaining.

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  • 3. 

    Rushed off your feet.

    • A.

      Successful start

    • B.

      Dishonest and unethical

    • C.

      To be involved in many activities

    • D.

      Be extremely busy

    Correct Answer
    D. Be extremely busy
    Explanation
    The phrase "rushed off your feet" means to be extremely busy. This expression implies that someone is overwhelmed with tasks or responsibilities and does not have much free time. It suggests a high level of activity and a lack of leisure or relaxation. Therefore, the correct answer for this question is "be extremely busy."

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  • 4. 

    Work your fingers to the bone.

    • A.

      To become involved in all aspects of work

    • B.

      Get a generous reward

    • C.

      Deceptive commercial practice

    • D.

      To work very hard

    Correct Answer
    D. To work very hard
    Explanation
    The phrase "work your fingers to the bone" means to work very hard. This expression suggests that someone is putting in a great deal of effort and exertion in their work, to the point where it may be physically exhausting. The use of the word "bone" emphasizes the intensity and depth of the hard work being done.

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  • 5. 

    Drastic times call for drastic measures.

    • A.

      Taking serious actions when times are bad

    • B.

      Completely finished and ready

    • C.

      Delay with a decision

    • D.

      A successful start

    Correct Answer
    A. Taking serious actions when times are bad
    Explanation
    During difficult or extreme situations, it becomes necessary to take drastic measures in order to effectively address the problems at hand. These actions may involve making tough decisions or implementing unconventional strategies in order to bring about positive change or overcome challenges. This phrase emphasizes the need to be bold and decisive when faced with adversity, indicating that only serious actions can lead to desired outcomes during tough times.

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  • 6. 

    Get something off the ground.

    • A.

      To be come involved in all aspects of work

    • B.

      Know how to do the activity correctly

    • C.

      Putting into operation after having organized it

    • D.

      Make your own decisions

    Correct Answer
    C. Putting into operation after having organized it
    Explanation
    The phrase "get something off the ground" means to start or initiate something after having planned and organized it. It implies taking the necessary steps to put a project or activity into operation and make it functional. This could involve coordinating resources, setting up processes, and ensuring that everything is ready for execution. It does not refer to being involved in all aspects of work, knowing how to do the activity correctly, or making one's own decisions.

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  • 7. 

    Lame duck

    • A.

      Successful person

    • B.

      A person who is unable to do or manage something without help

    • C.

      Crazy person

    • D.

      Weak person

    Correct Answer
    B. A person who is unable to do or manage something without help
    Explanation
    A "lame duck" refers to a person who is unable to do or manage something without help. This term is often used to describe someone who is ineffective or powerless in their position, typically in a political context. It implies that the person lacks the necessary skills, authority, or resources to accomplish tasks independently and requires assistance or support from others.

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  • 8. 

    Let me bounce this off you

    • A.

      Test an idea or a plan by sharing with another person on order to get advice or a feedback

    • B.

      Accuse someone of giving money to someone in order to gain an unfair advantage

    • C.

      Try to survive by staying out of debt

    • D.

      To go out of business

    Correct Answer
    A. Test an idea or a plan by sharing with another person on order to get advice or a feedback
    Explanation
    The phrase "Let me bounce this off you" is commonly used to indicate that someone wants to test an idea or plan by sharing it with another person in order to get advice or feedback. It implies that the person is seeking input or opinions from someone else before making a decision or taking further action.

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  • 9. 

    Accounts receivable:

    • A.

      Money owed to a company for goods and services it has sold

    • B.

      Money owed by a company for goods and services purchased

    Correct Answer
    A. Money owed to a company for goods and services it has sold
    Explanation
    The correct answer is "Money owed to a company for goods and services it has sold." This means that accounts receivable refers to the amount of money that customers owe to a company for products or services that have been provided to them. It represents the company's assets as it expects to receive the payment in the future.

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  • 10. 

    Debenture

    • A.

      Interest accumulated

    • B.

      A certificate of indebtedness

    • C.

      A contract usually sold by life insurance companies

    • D.

      The percentage distribution of assets

    Correct Answer
    B. A certificate of indebtedness
    Explanation
    A debenture is a type of financial instrument that represents a certificate of indebtedness issued by a company or government entity. It is a form of long-term borrowing where the issuer promises to repay the principal amount along with interest at a specified rate and within a specific time frame. Therefore, the correct answer is "a certificate of indebtedness."

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  • 11. 

    Auction market

    • A.

      A market at which securities are bought and sold by brokers acting as agents

    • B.

      A market in which securities are bought and sold over-the counter

    Correct Answer
    A. A market at which securities are bought and sold by brokers acting as agents
    Explanation
    This explanation suggests that an auction market is a type of market where securities are bought and sold by brokers who act as agents. In this market, brokers represent the interests of their clients and facilitate the transactions between buyers and sellers. This is different from an over-the-counter market where securities are bought and sold directly between parties without the involvement of brokers.

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  • 12. 

    Common stock

    • A.

      Has a right to receive dividends and not entitled to vote

    • B.

      Has a right to vote and not entitled to dividends

    • C.

      Has a right to vote and is entitled to dividends after preferred stock (if dividends are declared)

    Correct Answer
    C. Has a right to vote and is entitled to dividends after preferred stock (if dividends are declared)
    Explanation
    Common stock represents ownership in a company and typically carries voting rights for shareholders. This means that common stockholders have the right to vote on important company decisions, such as electing board members. Additionally, common stockholders are entitled to receive dividends, which are a portion of the company's profits distributed to shareholders. However, common stockholders are only entitled to receive dividends after preferred stockholders have been paid their dividends, if dividends are declared. Preferred stockholders have priority when it comes to receiving dividends, hence common stockholders receive dividends after preferred stockholders have been paid.

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  • 13. 

    Preferred stock

    • A.

      Shares that are entitled to a fixed dividend ahead of the company’s common shares.

    • B.

      Has a right to vote

    Correct Answer
    A. Shares that are entitled to a fixed dividend ahead of the company’s common shares.
    Explanation
    Preferred stock refers to shares that are entitled to a fixed dividend ahead of the company's common shares. This means that preferred stockholders have a higher priority when it comes to receiving dividends compared to common stockholders. Preferred stockholders also have a higher claim on the company's assets in the event of liquidation. However, unlike common stockholders, preferred stockholders usually do not have voting rights.

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  • 14. 

    NAVPS-

    • A.

      Represents the liability for the company

    • B.

      Represents the asset for the company

    • C.

      The percentage distribution of assets in a portfolio

    • D.

      Represents the market value of the fund’s share and is calculated as total assets minus its liabilities.

    Correct Answer
    D. Represents the market value of the fund’s share and is calculated as total assets minus its liabilities.
    Explanation
    NAVPS stands for Net Asset Value Per Share. It represents the market value of the fund's share and is calculated by subtracting the fund's liabilities from its total assets. This value reflects the worth of each share in the fund and is commonly used to determine the price at which investors can buy or sell shares in the fund.

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  • 15. 

    Bear market

    • A.

      A sustained decline in equity prices.

    • B.

      A general and prolonged rising trend in security prices.

    Correct Answer
    A. A sustained decline in equity prices.
    Explanation
    The correct answer is "A sustained decline in equity prices." This is because a bear market refers to a period of time when stock prices are consistently falling. It is characterized by a negative sentiment in the market, with investors selling off their shares and causing a downward trend in prices. This is opposite to a bull market, which is characterized by a sustained rise in stock prices.

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  • 16. 

    Beta-

    • A.

      An investment approach that seeks out undervalued companies.

    • B.

      One who expects that the market generally or the market price of a particular security will rise.

    • C.

      A measure of the sensitivity of a stock or a mutual fund to movements in the overall stock market.

    • D.

      One who expects that the market generally, or the market price of a particular security will decline.

    Correct Answer
    C. A measure of the sensitivity of a stock or a mutual fund to movements in the overall stock market.
    Explanation
    The correct answer is "A measure of the sensitivity of a stock or a mutual fund to movements in the overall stock market." This is because beta is a statistical measure that indicates how closely the price of a stock or a mutual fund moves in relation to the overall stock market. A beta value of 1 means that the stock or mutual fund tends to move in line with the market, while a beta greater than 1 indicates that it is more volatile than the market, and a beta less than 1 suggests that it is less volatile. Therefore, beta is used to assess the risk and potential return of an investment in relation to the market.

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  • 17. 

    Bottom-up investment approach.

    • A.

      General trends in the economy are analyzed

    • B.

      An investment approach that seeks out undervalued companies.

    • C.

      An active, leading, nationally known.

    • D.

      A type of fundamental analysis.

    Correct Answer
    B. An investment approach that seeks out undervalued companies.
    Explanation
    The correct answer is "An investment approach that seeks out undervalued companies." This answer is supported by the statement "An investment approach that seeks out undervalued companies." This suggests that the bottom-up investment approach involves identifying companies that are undervalued, meaning their stock prices do not accurately reflect their true value. This approach focuses on analyzing individual companies rather than general trends in the economy. It is an active and leading approach, suggesting that it involves actively seeking out these undervalued companies.

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  • 18. 

    Call option

    • A.

      A right to sell specified number of shares

    • B.

      A right to buy specified number of shares

    Correct Answer
    B. A right to buy specified number of shares
    Explanation
    A call option is a financial contract that gives the holder the right, but not the obligation, to buy a specified number of shares at a predetermined price within a certain time frame. Therefore, the correct answer is "a right to buy a specified number of shares." This means that the holder of a call option has the option to purchase the shares at the agreed-upon price, known as the strike price, if they choose to do so.

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  • 19. 

    Put option

    • A.

      A right to buy specified number of shares

    • B.

      A right to sell specified number of shares

    Correct Answer
    B. A right to sell specified number of shares
    Explanation
    A put option is a financial contract that gives the holder the right, but not the obligation, to sell a specified number of shares at a predetermined price within a set period of time. This means that the holder of a put option has the right to sell the shares at the agreed-upon price, regardless of the actual market price. It is often used as a form of insurance or hedging strategy against a potential decline in the value of the underlying shares.

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  • 20. 

    Capital Loss

    • A.

      Selling a security for less than its purchase price.

    • B.

      Selling security for more than you purchase it for.

    • C.

      Can be applied toward your income

    Correct Answer
    A. Selling a security for less than its purchase price.
    Explanation
    Capital loss refers to selling a security for less than its purchase price. This means that the investor incurs a loss on the investment. It is the opposite of capital gain, where the security is sold for more than its purchase price, resulting in a profit. Capital losses can be used to offset capital gains and reduce the amount of taxable income.

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  • 21. 

    Secondary market

    • A.

      The market where securities are traded through an exchange or over-the counter. The proceeds from trades in a secondary Market go to the selling dealers and investors

    • B.

      The market for new issues of securities. The proceeds of the sale of securities in primary market go directly to the company issuing the securities.

    Correct Answer
    A. The market where securities are traded through an exchange or over-the counter. The proceeds from trades in a secondary Market go to the selling dealers and investors
    Explanation
    The correct answer describes the secondary market as the market where securities are traded through an exchange or over-the-counter. It also states that the proceeds from trades in the secondary market go to the selling dealers and investors. This explanation accurately defines the secondary market and explains where the proceeds from trades in this market go.

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  • 22. 

    An example of commodity will be:

    • A.

      Government bond

    • B.

      Company's stock

    • C.

      T-bill

    • D.

      Canola or wheat

    Correct Answer
    D. Canola or wheat
    Explanation
    Canola or wheat are examples of commodities because they are raw materials or primary agricultural products that can be bought and sold in large quantities. These commodities are typically used as inputs in the production of other goods or as food products. Unlike government bonds or company stocks, which represent ownership or debt in a specific entity, canola or wheat are physical goods that have standardized quality and can be traded on commodity exchanges.

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  • 23. 

    CPI-

    • A.

      Measures the volatility of the market

    • B.

      Measures the cost of living

    • C.

      Measures the performance of the portfolio

    • D.

      Measures the market's fluctuation

    Correct Answer
    B. Measures the cost of living
    Explanation
    CPI, or Consumer Price Index, is a measure that calculates the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is used to gauge the cost of living and inflation rates. By tracking the prices of various goods and services, CPI provides an indication of how much it costs for consumers to maintain a certain standard of living. Therefore, the correct answer is that CPI measures the cost of living.

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  • 24. 

    Contribution in Kind.

    • A.

      Transferring securities into an RRSP

    • B.

      An asset is transferred there is a deemed disposition

    • C.

      Taxes will not be paid

    • D.

      Any capital losses that result can be claimed

    Correct Answer(s)
    A. Transferring securities into an RRSP
    B. An asset is transferred there is a deemed disposition
    Explanation
    When securities are transferred into an RRSP, it is considered as an asset transfer, leading to a deemed disposition. This means that the transfer is treated as if the securities were sold at their fair market value. However, no taxes are paid on this deemed disposition. Additionally, any capital losses that occur as a result of this transfer can be claimed.

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  • 25. 

    Default risk

    • A.

      Selling securities

    • B.

      Default risk applies to equity securities

    • C.

      The risk that a debt security issuer will be unable to pay interest on the prescribed date or the principal at maturity. Applies only to debt securities

    Correct Answer
    C. The risk that a debt security issuer will be unable to pay interest on the prescribed date or the principal at maturity. Applies only to debt securities
    Explanation
    Default risk refers to the risk that a debt security issuer will not be able to make interest payments on time or repay the principal amount at maturity. This risk is specific to debt securities, such as bonds, and does not apply to equity securities. Therefore, the correct answer is the one that mentions the risk of a debt security issuer being unable to make interest or principal payments, and specifies that it applies only to debt securities.

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  • 26. 

    Depletion

    • A.

      Can be replenished

    • B.

      Company's liability

    • C.

      It’s a consumption of natural resources that are part of a company’s assets.

    Correct Answer
    C. It’s a consumption of natural resources that are part of a company’s assets.
    Explanation
    Depletion refers to the consumption of natural resources that are considered as assets for a company. This means that the company is using up these resources, reducing the quantity or availability of them over time. Depletion is different from other forms of consumption as it specifically relates to the utilization of natural resources that are owned by the company and are essential for its operations.

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  • 27. 

    Dividend Payout ratio:

    • A.

      Yearly dividend per share divided by earnings per share

    • B.

      Annual dividend divided by current stock price

    • C.

      Dividing income from operations by average total assets

    Correct Answer
    A. Yearly dividend per share divided by earnings per share
    Explanation
    The dividend payout ratio is a financial metric that shows the proportion of earnings that a company distributes to its shareholders in the form of dividends. It is calculated by dividing the yearly dividend per share by the earnings per share. This ratio indicates how much of the company's profits are being returned to investors. A higher dividend payout ratio suggests that the company is distributing a larger portion of its earnings as dividends, while a lower ratio indicates that the company is retaining more earnings for reinvestment or other purposes.

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  • 28. 

    Enterprise Multiple

    • A.

      Income after taxes and interest/sharehilder's equity

    • B.

      Net sales/average net fixed assets

    • C.

      Enterprise value/EBITDA

    Correct Answer
    C. Enterprise value/EBITDA
    Explanation
    The correct answer is "Enterprise value/EBITDA." This ratio is known as the Enterprise Multiple, which is used to assess the value of a company relative to its earnings. It calculates the enterprise value (market value of equity plus debt) divided by EBITDA (earnings before interest, taxes, depreciation, and amortization). A lower multiple indicates that the company is relatively undervalued, while a higher multiple suggests overvaluation. This ratio is commonly used in the financial industry to compare companies within the same industry or to evaluate potential investment opportunities.

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  • 29. 

    Treasury shares

    • A.

      Not entitled to dividends and do not have voting rights

    • B.

      Outstanding shares of a company that have a right to vote and receive dividends, may not be bought or sold unless special approval is obtained

    • C.

      Entitled to voting rights

    Correct Answer
    A. Not entitled to dividends and do not have voting rights
    Explanation
    Treasury shares are shares of a company's own stock that have been repurchased by the company. These shares are held by the company itself and are not available for public trading. Since treasury shares are owned by the company, they do not have voting rights as they cannot vote on company matters. Additionally, since they are not available for public trading, they do not receive dividends like outstanding shares do. Therefore, treasury shares are not entitled to dividends and do not have voting rights.

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  • 30. 

    Floating-rate debenture

    • A.

      Contract in which the seller agrees to deliver a specified commodity or financial instrument at a specified price sometime in the future.

    • B.

      Type of debenture that offers protection to investors during periods of very volatile interest rates.

    • C.

      A type of debenture that offers a fixed income protection plan

    Correct Answer
    B. Type of debenture that offers protection to investors during periods of very volatile interest rates.
    Explanation
    A floating-rate debenture is a type of debenture that offers protection to investors during periods of very volatile interest rates. This means that the interest rate on the debenture will change in response to changes in the market interest rates. This can be beneficial for investors during times of high interest rate volatility, as it allows them to potentially earn higher returns if interest rates increase. This type of debenture provides a level of flexibility and risk mitigation for investors in uncertain interest rate environments.

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  • 31. 

    Futures

    • A.

      Cannot be traded on secondary market

    • B.

      A contract in which the seller agrees to deliver a specified commodity or financial instrument at a specified price sometime in the future. The contract is standardized

    • C.

      Seller agrees to deliver a specified commodity or financial instrument at a specified price sometime in the future, but the contract can be negotiated at the time of the trade

    Correct Answer
    B. A contract in which the seller agrees to deliver a specified commodity or financial instrument at a specified price sometime in the future. The contract is standardized
  • 32. 

    Gross profit margin

    • A.

      A profitability ratio that shows the company’s rate of profit after allowing for cost of goods sold.

    • B.

      After tax profit generated for each dollar of sales

    Correct Answer
    A. A profitability ratio that shows the company’s rate of profit after allowing for cost of goods sold.
    Explanation
    The correct answer is a profitability ratio that shows the company's rate of profit after allowing for cost of goods sold. This means that the gross profit margin measures how much profit a company makes on each dollar of sales, after deducting the cost of producing or purchasing the goods being sold. It is a key indicator of a company's ability to generate profit from its core operations and can be used to assess the efficiency and profitability of a business.

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  • 33. 

    Coverage ratio is calculated

    • A.

      Net income/number of common stock

    • B.

      Profit before interest and taxes/average interest and bank charges

    • C.

      Net profit after taxes/net sales

    • D.

      Income from operations/average total assets

    Correct Answer
    B. Profit before interest and taxes/average interest and bank charges
    Explanation
    The correct answer is "profit before interest and taxes/average interest and bank charges". The coverage ratio is a financial metric that measures a company's ability to cover its interest and bank charges with its profit before interest and taxes. By dividing the profit before interest and taxes by the average interest and bank charges, the coverage ratio indicates the extent to which a company's earnings can cover its financial obligations. A higher coverage ratio suggests that the company is more capable of meeting its interest and bank charges, while a lower ratio indicates a higher risk of default.

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  • 34. 

    Debt-to-equity ratio is calculated

    • A.

      Total liabilities/shareholder equity

    • B.

      Total assets/total liabilities

    • C.

      Total quick assets/current liabilities

    • D.

      Net credit sales/average accounts receivables

    Correct Answer
    A. Total liabilities/shareholder equity
    Explanation
    The debt-to-equity ratio is a financial metric that indicates the proportion of debt and equity used to finance a company's assets. It is calculated by dividing the total liabilities by the shareholder equity. This ratio is important for investors and creditors as it helps assess the financial risk of a company. A higher debt-to-equity ratio indicates a higher level of financial leverage and potential risk, while a lower ratio suggests a more conservative financial structure.

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  • 35. 

    Debt-to-asset ratio is calculated:

    • A.

      Current assets/current liabilties

    • B.

      Net sales/total assets

    • C.

      Total assets (current and fixed)/total liabulities

    • D.

      Net sales/average net fixed assets

    Correct Answer
    C. Total assets (current and fixed)/total liabulities
    Explanation
    The correct answer is total assets (current and fixed)/total liabilities. This ratio is used to assess a company's financial leverage and indicates the proportion of a company's assets that are financed by debt. A higher ratio suggests that a larger portion of the company's assets are funded by debt, which can indicate higher financial risk. Conversely, a lower ratio suggests a lower level of financial risk and a higher proportion of assets funded by equity.

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