Test On Financial Market

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Quizzes Created: 1 | Total Attempts: 325
Questions: 40 | Attempts: 325

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Fianance


Questions and Answers
  • 1. 

    Capital Employed is equal to _________.   

    • A.

      Fixed Assets + Current Assets +Current Liabilities

    • B.

      Fixed Assets + Current Assets - Current Liabilities

    • C.

      Fixed Assets - Current Assets + Current Liabilities

    • D.

      Fixed Assets - Current Assets - Current Liabilities

    Correct Answer
    B. Fixed Assets + Current Assets - Current Liabilities
    Explanation
    Capital Employed is a measure of the total capital invested in a company's operations. It includes both long-term and short-term sources of funds. The correct answer, Fixed Assets + Current Assets - Current Liabilities, reflects this by including fixed assets (long-term investments) and current assets (short-term investments) while subtracting current liabilities (short-term debts). This calculation gives a comprehensive view of the total capital employed by the company.

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  • 2. 

    Return on Total Asset is equal to __________.    

    • A.

      Gross Income/Average Total Asset

    • B.

      Average total asset/Gross Income

    • C.

      Return on Equity/Average total Asset

    • D.

      Net income /Average Total Asset

    Correct Answer
    D. Net income /Average Total Asset
    Explanation
    Return on Total Asset is a financial ratio that measures the profitability of a company by comparing its net income to its average total assets. This ratio indicates how efficiently a company is utilizing its assets to generate profits. A higher return on total assets indicates better asset utilization and profitability. Therefore, the correct answer is "Net income / Average Total Asset".

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  • 3. 

    The benchmark stock market index of India is ________.    

    • A.

      Dow Jones

    • B.

      Nikkei 225

    • C.

      S&P 500

    • D.

      the Nifty

    Correct Answer
    D. the Nifty
    Explanation
    The correct answer is the Nifty. The Nifty is the benchmark stock market index of India. It represents the performance of the top 50 companies listed on the National Stock Exchange (NSE) of India. It is widely used by investors and traders to track the overall performance of the Indian stock market.

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  • 4. 

    At 8% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after two year

    • A.

      Rs. 108

    • B.

      Rs. 118.84

    • C.

      Rs. 208

    • D.

      Rs. 116.64

    Correct Answer
    D. Rs. 116.64
    Explanation
    The correct answer is Rs. 116.64. This can be calculated by using the formula for compound interest. The formula is: Final Amount = Principal Amount * (1 + Interest Rate)^Time. In this case, the Principal Amount is Rs. 100, the Interest Rate is 8% (or 0.08), and the Time is 2 years. Plugging these values into the formula, we get: Final Amount = 100 * (1 + 0.08)^2 = 100 * (1.08)^2 = 100 * 1.1664 = Rs. 116.64.

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  • 5. 

    At 6% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after five years

    • A.

      Rs. 224

    • B.

      Rs. 133.82

    • C.

      Rs. 112.36

    • D.

      Rs. 130

    Correct Answer
    B. Rs. 133.82
    Explanation
    The correct answer is Rs. 133.82. This can be calculated by using the formula for compound interest. The future value of an item can be calculated using the formula: FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of years. Plugging in the values, FV = 100 * (1 + 0.06)^5 = 133.82.

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  • 6. 

    What is the dividend yield of ABC Co Share having a face value of Rs 100, market value of 360 and an annual dividend of Rs 10?    

    • A.

      1%

    • B.

      2.77%

    • C.

      10%

    • D.

      4%

    Correct Answer
    B. 2.77%
    Explanation
    The dividend yield is calculated by dividing the annual dividend by the market value of the share and then multiplying by 100. In this case, the annual dividend is Rs 10 and the market value is Rs 360. So, (10/360) * 100 = 2.77%.

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  • 7. 

    Earnings Per Share (EPS) is calculated by _________.   

    • A.

      Gross Profit / No. of equity shareholders

    • B.

      Net Profit / No. of equity shareholders

    • C.

      Gross Profit / No. of Ordinary shares outstanding

    • D.

      Net Profit / No. of Ordinary shares outstanding

    Correct Answer
    D. Net Profit / No. of Ordinary shares outstanding
    Explanation
    Earnings Per Share (EPS) is a financial ratio that measures the profitability of a company on a per-share basis. It indicates the portion of a company's profit that is allocated to each outstanding share of common stock. The correct answer, "Net Profit / No. of Ordinary shares outstanding," aligns with the standard formula for calculating EPS. Net profit represents the company's total earnings after deducting all expenses and taxes, while the number of ordinary shares outstanding represents the total number of common shares held by shareholders. Dividing the net profit by the number of ordinary shares outstanding gives the EPS value, which is a key metric for investors to assess a company's profitability.

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  • 8. 

    Which amongst these is not a Debt market instrument?    

    • A.

      Public Sector Units bonds

    • B.

      Corporate Securities

    • C.

      FIIs

    • D.

      Government Securities

    Correct Answer
    C. FIIs
    Explanation
    FIIs, or Foreign Institutional Investors, are not a debt market instrument. They refer to institutional investors from outside the country who invest in the financial markets of another country. Debt market instruments typically include bonds, securities, and government securities, which are all mentioned in the given options. However, FIIs do not fall under the category of debt market instruments as they represent foreign investors rather than specific financial instruments.

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  • 9. 

    Which rate of return accounts for intra-year compounding?    

    • A.

      Effective

    • B.

      Stated

    • C.

      Both of the above

    • D.

      None of the above

    Correct Answer
    A. Effective
    Explanation
    The effective rate of return accounts for intra-year compounding because it takes into consideration the compounding of interest within a given year. This means that the interest earned in each compounding period is added to the principal, and then the next compounding period is calculated based on the new total. This allows for a more accurate representation of the actual return on an investment when compounding is involved. The stated rate of return, on the other hand, does not account for compounding within a year and only considers the interest rate on an annual basis.

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  • 10. 

    ___________ is a good indicator of the stock market behaviour

    • A.

      Reliance

    • B.

      TISCO

    • C.

      Infosys

    • D.

      Nifty index

    Correct Answer
    D. Nifty index
    Explanation
    The Nifty index is a good indicator of the stock market behavior because it represents the performance of the top 50 companies listed on the National Stock Exchange of India. The index is calculated based on the market capitalization of these companies and provides a broad overview of the overall market sentiment. As the Nifty index includes companies from various sectors, it reflects the overall performance of the stock market and is widely used by investors and analysts to track market trends and make investment decisions.

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  • 11. 

    Market Capitalisation is _____________.    

    • A.

      Value of shares of the company held by Foreign Investors

    • B.

      No. of shares issued by a company multiplied by it's market price

    • C.

      Value of shares held by promoters of the company

    • D.

      Value of shares in the company held by the public

    Correct Answer
    B. No. of shares issued by a company multiplied by it's market price
    Explanation
    Market capitalization is calculated by multiplying the number of shares issued by a company by its market price. It represents the total value of a company's outstanding shares in the stock market. This metric is used to determine the size and worth of a company and is often used by investors to assess the company's value and compare it to other companies in the market.

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  • 12. 

    A Fund has 50 cr units issued with a face value of Rs. 10. Its NAV isRs. 12.36. Its AUM in Rs. Cr is (Entry Load 2%)

    • A.

      500

    • B.

      618

    • C.

      630.36

    • D.

      Insufficient Information

    Correct Answer
    B. 618
    Explanation
    The answer is 618. The Assets Under Management (AUM) can be calculated by multiplying the number of units issued by the Net Asset Value (NAV). In this case, the AUM is calculated as 50 crore units multiplied by Rs. 12.36 (NAV) which equals Rs. 618 crore.

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  • 13. 

    If a scheme (Fund) issues more units, its NAV will

    • A.

      Have no impact

    • B.

      Fall

    • C.

      Rise

    • D.

      Can't Say

    Correct Answer
    A. Have no impact
    Explanation
    When a scheme (fund) issues more units, it means that the total number of units in the scheme increases. However, the Net Asset Value (NAV) of the scheme is calculated by dividing the total value of the assets by the total number of units. Since both the total value of assets and the total number of units increase proportionally, the NAV remains unchanged. Therefore, issuing more units has no impact on the NAV of the scheme.

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  • 14. 

    Money Markets refers to that part of the debt market where thematurity is

    • A.

      Less than 1 year

    • B.

      Less than 1 month

    • C.

      Less than 6 month

    • D.

      More than 1 year

    Correct Answer
    A. Less than 1 year
    Explanation
    Money Markets refers to that part of the debt market where the maturity of the financial instruments traded is less than 1 year. This means that the securities traded in the money markets have a short-term maturity, typically ranging from overnight to 1 year. Money markets provide a platform for short-term borrowing and lending, allowing participants to meet their short-term funding needs. These markets are characterized by high liquidity and low risk, making them attractive to investors seeking stability and short-term investment options.

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  • 15. 

    What is the present value of Rs 10000 receivable after 1 year discounted at 10% p.a.?    

    • A.

      11000

    • B.

      10000

    • C.

      9000

    • D.

      9090.9

    Correct Answer
    D. 9090.9
    Explanation
    The present value of a future cash flow is calculated by discounting it at a specific interest rate. In this question, the future cash flow is Rs 10000 receivable after 1 year and the discount rate is 10% per annum. To find the present value, we divide the future cash flow by (1 + discount rate) raised to the power of the number of years. In this case, the present value is calculated as 10000 / (1 + 0.10)^1 = 9090.9.

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  • 16. 

    Which of the following is not true about a debt instrument?

    • A.

      It signifies a ownership right in the company

    • B.

      It carries interest paying obligation.

    • C.

      It has a fixed maturity.

    • D.

      None of the above

    Correct Answer
    A. It signifies a ownership right in the company
    Explanation
    A debt instrument does not signify an ownership right in the company. Instead, it represents a loan or a borrowing arrangement between the issuer of the debt instrument and the holder. The issuer promises to repay the principal amount along with interest to the holder within a fixed maturity period. The holder of a debt instrument is considered a creditor of the company, not an owner. Therefore, the statement that a debt instrument signifies an ownership right in the company is not true.

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  • 17. 

    Which of the following is TRUE about Primary Markets?    

    • A.

      Primary Markets are markets where commodities are sold.

    • B.

      Primary Market is the place where public can buy and sell securities from one another.

    • C.

      Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures.

    • D.

      Primary Markets are places where only short term instruments are traded.

    Correct Answer
    C. Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures.
    Explanation
    Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures. This means that in primary markets, companies raise capital by selling securities such as shares or debentures directly to the public. It is a way for companies to obtain funds for their business activities and expansion. This option accurately describes the function and purpose of primary markets, distinguishing it from the other options which are incorrect.

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  • 18. 

    The future value of a Rs.10,000 investment, which gives an annual rate of return of 20% per annum, after two years would grow to _________

    • A.

      Rs. 14,400

    • B.

      Rs. 14,000

    • C.

      Rs. 14,250

    • D.

      Rs. 14,500

    Correct Answer
    A. Rs. 14,400
    Explanation
    The future value of an investment can be calculated using the formula: Future Value = Present Value * (1 + Rate of Return)^Number of Years. In this case, the present value is Rs.10,000, the rate of return is 20% per annum, and the number of years is 2. Plugging in these values into the formula, we get: Future Value = 10,000 * (1 + 0.2)^2 = 10,000 * (1.2)^2 = 10,000 * 1.44 = Rs. 14,400. Therefore, the correct answer is Rs. 14,400.

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  • 19. 

    'Bid' means the _____________.    

    • A.

      Seller's price

    • B.

      Traded Price

    • C.

      Market price

    • D.

      Buyer's price

    Correct Answer
    D. Buyer's price
    Explanation
    The term 'bid' refers to the price at which a buyer is willing to purchase a product or service. It represents the maximum amount that a buyer is willing to pay for the item. Therefore, the correct answer is "Buyer's price".

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  • 20. 

    For a scheme to be defined as equity fund, it must have minimum

    • A.

      65% in Indian equities

    • B.

      65% in equities

    • C.

      51% Indian equities

    • D.

      35% Indian equities

    Correct Answer
    A. 65% in Indian equities
    Explanation
    To be classified as an equity fund, a scheme must have a minimum allocation of 65% in Indian equities. This means that at least 65% of the fund's total assets are invested in stocks of Indian companies. This requirement ensures that the fund's primary focus is on investing in the Indian equity market, allowing investors to gain exposure to the potential growth and returns of Indian stocks.

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  • 21. 

    The lenders use ______________ ratio to assess debt servicing capacity of a firm.    

    • A.

      Interest Coverage ratio

    • B.

      Debt-Asset Ratio

    • C.

      Acid-test Ratio

    • D.

      Current Ratio

    Correct Answer
    A. Interest Coverage ratio
    Explanation
    The lenders use the Interest Coverage ratio to assess the debt servicing capacity of a firm. This ratio measures the ability of a company to cover its interest expenses with its operating income. It indicates the firm's ability to make interest payments on its debt obligations. A higher interest coverage ratio suggests that the company is more capable of servicing its debt, which is favorable for lenders.

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  • 22. 

    ________________ is maintained by NSE to make good investor claims, which may arise out of non-settlement of obligations by the trading member, who has been declared defaulter, in respect of trades executed on the Exchange.    

    • A.

      Investor Education and Reimbursement Fund (IERF)

    • B.

      Investor Reimbursement Fund (IRF)

    • C.

      Investor Education and Protection Fund (IEPF)

    • D.

      Investor Protection Fund (IPF)

    Correct Answer
    D. Investor Protection Fund (IPF)
    Explanation
    The correct answer is Investor Protection Fund (IPF). The IPF is maintained by NSE to ensure that investors are protected in case a trading member fails to fulfill their obligations. It provides a mechanism for investors to make claims for any losses incurred due to the non-settlement of trades executed on the Exchange by a defaulter trading member. The IPF acts as a safety net for investors and helps maintain trust and confidence in the market.

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  • 23. 

    _____________ gives the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date.   

    • A.

      Put Option

    • B.

      Forward

    • C.

      Future

    • D.

      Call Option

    Correct Answer
    A. Put Option
    Explanation
    A put option gives the buyer the right, but not the obligation, to sell a given quantity of an underlying asset at a specified price on or before a specific future date. This means that the buyer has the choice to sell the asset at the agreed-upon price, but is not obligated to do so. This type of option is often used as a form of insurance or hedging strategy against potential price declines in the underlying asset.

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  • 24. 

    The holders of which instrument are members of the company and have voting rights?    

    • A.

      Treasury Bill

    • B.

      Commercial Paper

    • C.

      Debenture

    • D.

      Equity

    Correct Answer
    D. Equity
    Explanation
    Equity holders are members of the company and have voting rights. Equity represents ownership in a company and entitles the holder to a share of the company's profits and assets. Equity holders, also known as shareholders or stockholders, have the right to vote on important company matters, such as electing the board of directors or approving major corporate decisions. Unlike other instruments listed, such as Treasury Bills, Commercial Paper, and Debentures, equity represents ownership and membership in the company, which grants voting rights.

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  • 25. 

    NAV Means

    • A.

      Face Value of Units / No. of Units

    • B.

      (Market Value of Assets – Liabilities)/ units outstanding

    • C.

      Current Market Value of Assets / No. of Units

    • D.

      Net assets divided by initial number of units

    Correct Answer
    B. (Market Value of Assets – Liabilities)/ units outstanding
    Explanation
    The correct answer is (Market Value of Assets – Liabilities)/ units outstanding. This formula calculates the net asset value (NAV) of a fund by subtracting the liabilities from the market value of assets and then dividing it by the number of units outstanding. The NAV represents the per-unit value of the fund and is used to determine the price at which investors can buy or sell units in the fund.

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  • 26. 

    When you keep deposit with bank

    • A.

      You are creditor of bank

    • B.

      You are lender of bank

    • C.

      You are unitholder of bank

    • D.

      You are debtor of bank

    Correct Answer
    B. You are lender of bank
    Explanation
    When you keep a deposit with a bank, you are acting as a lender to the bank. By depositing your money, you are providing funds for the bank to use for various purposes such as lending to other customers or investing. In return, the bank agrees to pay you interest on your deposit. This makes you a creditor of the bank, as the bank owes you the amount of your deposit plus the agreed-upon interest.

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  • 27. 

    A person purchases 200 units of a mutual fund at NAV of Rs. 12/- each. There was no entry load. The fund purchased securities worth Rs. 2400 using this money. After one year the fund had 20,000 units. The value of unitholder's holding in that mutual fund would be

    • A.

      Rs. 2400

    • B.

      1 % of the net assets of the fund at that time

    • C.

      1% of the value of fund's portfolio at that time

    • D.

      Cannot say with the given data

    Correct Answer
    B. 1 % of the net assets of the fund at that time
    Explanation
    The value of the unitholder's holding in the mutual fund can be calculated by multiplying the number of units held by the net asset value (NAV) per unit. Since the question does not provide the NAV after one year, it is not possible to determine the exact value of the unitholder's holding. Therefore, the answer is "Cannot say with the given data."

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  • 28. 

    Systematic Transfer Plan is well defined as

    • A.

      One can transfer from one scheme to other

    • B.

      Cost Averaging

    • C.

      To Transfer amount into his bank account

    • D.

      Fixed sum periodically

    Correct Answer
    A. One can transfer from one scheme to other
    Explanation
    The correct answer is "One can transfer from one scheme to another." This means that with a Systematic Transfer Plan, an individual has the ability to move their investments from one mutual fund scheme to another. This allows for flexibility and the opportunity to adjust their investment strategy as needed.

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  • 29. 

    A Fund having beta more than 1

    • A.

      More volatile than market

    • B.

      Less volatile than market

    • C.

      Volatile as the market

    • D.

      None of the above

    Correct Answer
    A. More volatile than market
    Explanation
    A fund with a beta greater than 1 indicates that it is more volatile than the market. Beta measures the sensitivity of the fund's returns to changes in the market. A beta greater than 1 suggests that the fund's price movements are expected to be more pronounced than the overall market. This means that the fund is likely to experience larger swings in value, both on the upside and downside, compared to the market as a whole.

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  • 30. 

    A mutual fund launched a new scheme, it issued 10 crore units. The offer document mentioned entry load of 2.25% of face value during the New fund offer period. Issue expenses were Rs. 8 Crore. How much of this is borne out of entry load?

    • A.

      Rs. 2.25 Crore

    • B.

      Rs. 6 Crore

    • C.

      Rs. 8 Crore

    • D.

      Rs. 3.75 Crore

    Correct Answer
    A. Rs. 2.25 Crore
    Explanation
    During the New fund offer period, the mutual fund charges an entry load of 2.25% of the face value. Since the fund issued 10 crore units, the total amount collected from the entry load would be 2.25% of the face value multiplied by 10 crore units. This calculation would result in Rs. 2.25 crore, which is the amount borne out of the entry load.

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  • 31. 

    Yield curve is a graph that shows:

    • A.

      Yields of various equities of various firm

    • B.

      Yields of various bonds of various maturities using one set of bonds such as GSEC

    • C.

      Yield from mutual funds

    • D.

      None of the above

    Correct Answer
    B. Yields of various bonds of various maturities using one set of bonds such as GSEC
    Explanation
    The correct answer is "Yields of various bonds of various maturities using one set of bonds such as GSEC." The yield curve is a graphical representation of the yields (interest rates) of bonds with different maturities. It shows the relationship between the interest rate (yield) and the time to maturity of the bonds. By using one set of bonds, such as GSEC (Government Securities), the yield curve allows for a comparison of yields across different maturities, providing insights into the market's expectations about future interest rates and economic conditions.

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  • 32. 

    What is the minimum paid up capital of a public limited company?

    • A.

      Rs. 5 Lacs

    • B.

      Rs. 10 Lacs

    • C.

      Rs. 15 Lacs

    • D.

      None of Above

    Correct Answer
    A. Rs. 5 Lacs
    Explanation
    The minimum paid-up capital of a public limited company is Rs. 5 Lacs. This means that a public limited company must have a minimum capital of Rs. 5 Lacs in order to be registered and operate as a public limited company.

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  • 33. 

    The total market value of all final goods and services produced within the country in a given period of time (usually a calendar year) is known as

    • A.

      National income

    • B.

      Purchasing power parity

    • C.

      Gross domestic product

    • D.

      None of the above

    Correct Answer
    C. Gross domestic product
    Explanation
    Gross domestic product (GDP) is the correct answer because it represents the total market value of all final goods and services produced within a country during a specific time period, typically a year. It is a measure of the economic activity and productivity of a country, and it includes both goods and services. National income refers to the total income earned by individuals in a country, while purchasing power parity is a measure of the relative value of different currencies.

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  • 34. 

    Choose the correct option:

    • A.

      Debt to asset ratio = long term debt/ total asset

    • B.

      Debt to asset ratio = total liabilities/ total asset

    • C.

      Debt to asset ratio = short term debt/fixed asset

    • D.

      None of the above

    Correct Answer
    B. Debt to asset ratio = total liabilities/ total asset
    Explanation
    The correct answer is "Debt to asset ratio = total liabilities/ total asset" because the debt to asset ratio is a measure of a company's financial leverage, indicating the proportion of its assets that are financed by debt. It is calculated by dividing the total liabilities (which include both short-term and long-term debt) by the total assets. This ratio provides insights into a company's ability to meet its debt obligations and the level of risk associated with its debt financing.

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  • 35. 

    The amount of deposit required to be kept with RBI by all the commercial bank is known as

    • A.

      Prime lending rate

    • B.

      Statutory liquid ratio

    • C.

      Credit reserve ratio

    • D.

      None of the above

    Correct Answer
    D. None of the above
    Explanation
    The correct answer is "Statutory liquid ratio". The amount of deposit required to be kept with RBI by all commercial banks is known as the statutory liquid ratio. The statutory liquid ratio is a certain percentage of the total demand and time liabilities of the bank that needs to be maintained in the form of cash, gold, or other liquid assets. The prime lending rate refers to the interest rate at which banks lend to their most creditworthy customers. The credit reserve ratio is the percentage of deposits that banks are required to keep with the central bank as a reserve.

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  • 36. 

    X deposited 1,00,000 on retirement in a bank which can be withdrawn RS 16,274 annually for a period of 10 years .What is the interest rate?

    • A.

      14%

    • B.

      20%

    • C.

      10%

    • D.

      12.36%

    Correct Answer
    C. 10%
    Explanation
    The interest rate is 10%. This can be calculated by dividing the annual withdrawal amount of RS 16,274 by the initial deposit of 1,00,000. This gives us a quotient of 0.16274. To convert this to a percentage, we multiply by 100, resulting in 16.274%. However, since the withdrawal is made for a period of 10 years, we need to calculate the compound interest rate. Using the formula for compound interest, we can find that the interest rate is approximately 10%.

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  • 37. 

        The process of investing in various avenues of investment instead of investing in one class of asset is known as

    • A.

      Basket trading

    • B.

      Diversification

    • C.

      Autonomic investment

    • D.

      None of the above

    Correct Answer
    B. Diversification
    Explanation
    Diversification refers to the practice of investing in various avenues of investment instead of putting all the money into one asset class. This strategy helps to spread the risk by investing in different types of assets, such as stocks, bonds, real estate, and commodities. By diversifying the investment portfolio, investors can potentially minimize the impact of any individual investment's poor performance on the overall portfolio and increase the chances of achieving better returns. Basket trading, autonomic investment, and none of the above do not accurately describe the concept of investing in multiple avenues to reduce risk and increase returns.

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  • 38. 

    Money Market Funds invest in

    • A.

      Long term securities

    • B.

      Equities

    • C.

      Debentures

    • D.

      Short term interest bearing instruments like t-bills, CD's, Call money

    Correct Answer
    D. Short term interest bearing instruments like t-bills, CD's, Call money
    Explanation
    Money Market Funds invest in short term interest bearing instruments like t-bills, CD's, and Call money. These funds are designed to provide investors with a safe and liquid investment option that offers a higher return than traditional savings accounts. By investing in these short term instruments, money market funds aim to preserve capital and generate income for investors. This strategy allows investors to have easy access to their funds while still earning a competitive rate of return.

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  • 39. 

    Classifications of shares based on market capitalization does not include

    • A.

      Small capitalization

    • B.

      Mid capitalization

    • C.

      Micro capitalization

    • D.

      Large capitalization

    Correct Answer
    C. Micro capitalization
    Explanation
    The classifications of shares based on market capitalization include small capitalization, mid capitalization, and large capitalization. However, micro capitalization is not included in these classifications. Micro capitalization refers to companies with the smallest market capitalization, typically below $300 million. This category is often considered riskier and less established compared to small or mid-cap companies.

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  • 40. 

       If the post tax rate of return on an investment is 8% and the inflation rate is 5% the real rate of return is_______________.

    • A.

      3.5%

    • B.

      3%

    • C.

      13%

    • D.

      -3%

    Correct Answer
    B. 3%
    Explanation
    The real rate of return is calculated by subtracting the inflation rate from the post-tax rate of return. In this case, the inflation rate is 5% and the post-tax rate of return is 8%, so the calculation would be 8% - 5% = 3%. Therefore, the real rate of return is 3%.

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  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • May 25, 2009
    Quiz Created by
    Mannish_sharma
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