MCQ Bank

Subjects

All Subjects 248 ACC311

F:210

210 ACC31Q

ACC501 — PDF

Is subject ke saare MCQs ek PDF file mein download karne ke liye request karein.

248 result(s)

ACC501 Final Term AI Solved

Q220

Which of the following security represents the ownership interest in the firm?

A) Bond
B) Equity
C) All of the given options
D) Debt

AI Explanation

Equity securities represent ownership interests in a firm. Bonds and debt represent claims against the firm rather than ownership.

ACC501 Final Term AI Solved

Q221

A bondholder has a right to redeem the bond at par on the coupon payment date after some specified period of time. This right is called:

A) Correct answer is not given
B) Call option
C) Call provision
D) Put provision

AI Explanation

A put provision gives the bondholder the right to sell or redeem the bond back to the issuer at a specified price. A call provision instead gives the issuer the right to repurchase the bond.

ACC501 Final Term AI Solved

Q222

The coupon rate of a floating-rate bond is capped and upper and lower rates are called:

A) Limit
B) Float
C) Surplus
D) Collar

AI Explanation

A collar sets both an upper and lower limit on the coupon rate of a floating-rate bond. These limits are commonly called the cap and floor.

ACC501 Final Term AI Solved

Q223

The price of a Rs. 1,000-face value bond is Rs. 910. What will be the yield to maturity if there is a coupon payment of Rs. 90 for 6 years?

A) Equal to 9%
B) Cannot be determined without more information
C) Lower than 9%
D) Greater than 9%

AI Explanation

The bond sells below its Rs. 1,000 face value while paying a Rs. 90 coupon, giving a 9% coupon rate. Because a bond selling at a discount has a yield to maturity higher than its coupon rate, the YTM is greater than 9%.

ACC501 Final Term AI Solved

Q224

Which of the following is basic purpose of sinking fund?

A) Repayment of Bonds
B) Repayment of Shares
C) Payment of Dividend
D) Payment of Salaries

AI Explanation

A sinking fund is established to accumulate money for retiring debt, particularly bonds, at maturity or according to a repayment schedule. Its basic purpose is therefore repayment of bonds.

ACC501 Final Term AI Solved

Q225

Which of the following type of bond pays no coupon at all and are offered at a price that is much lower than its stated value?

A) Floating-rate bonds
B) Government bonds
C) Zero coupon bonds
D) Euro bonds

AI Explanation

Zero coupon bonds make no periodic coupon payments. They are issued at a substantial discount to their face value and provide the investor's return through appreciation to par at maturity.

ACC501 Final Term AI Solved

Q226

The market price of a Rs. 1,000-face value bond is Rs. 1,000. What will be the yield to maturity if there is a coupon payment of Rs. 90 for 5 years?

A) Equal to 9%
B) Lower than 9%
C) Cannot be determined with the given information
D) Greater than 9%

AI Explanation

When a bond sells exactly at its Rs. 1,000 face value, its yield to maturity equals its coupon rate. The Rs. 90 annual coupon is 9% of the Rs. 1,000 face value.

ACC501 Final Term AI Solved

Q227

All of the following securities are also called debt securities EXCEPT:

A) Shares
B) Debentures
C) Notes
D) Bonds

AI Explanation

Bonds, notes, and debentures are debt securities because they represent borrowed funds owed by the issuer. Shares represent ownership equity rather than debt.

ACC501 Final Term AI Solved

Q228

Which of the following equation of the relationship between real and nominal interest describes by Fisher?

A) 1 + r = 1 + R x 1 + h
B) 1 + h = 1 + R x 1 + r
C) 1 + R = 1 + r / 1 + h
D) 1 + R = 1 + r x 1 + h

AI Explanation

Fisher's relationship is commonly expressed as (1 + nominal rate) = (1 + real rate)(1 + inflation rate). Thus, the given expression with R as the nominal rate, r as the real rate, and h as inflation is correct.

ACC501 Final Term AI Solved

Q229

Which of the following is the credit rating agency in Pakistan?

A) Standard and Poor’s
B) Moody’s
C) All of the given options
D) PACRA

AI Explanation

The Pakistan Credit Rating Agency (PACRA) is a credit rating agency operating in Pakistan. Standard & Poor's and Moody's are major international rating agencies.

ACC501 Final Term AI Solved

Q230

If a firm is allowed to miss a coupon payment on a bond in a year in which it reports an operating loss, the bond is most likely a(n) _______ bond.

A) Zero coupon
B) Floating-rate
C) Put
D) Income

AI Explanation

An income bond permits the issuer to omit interest payments when it does not have sufficient earnings, such as during an operating loss. The missed coupon may be paid later depending on the bond's terms.

ACC501 Final Term AI Solved

Q231

Which of the following statement is TRUE regarding debt?

A) Unpaid debt can result in bankruptcy or financial failure.
B) Debt provides the voting rights to the bondholders.
C) Corporation’s payment of interest on debt is fully taxable.
D) Debt is an ownership interest in the firm.

AI Explanation

Failure to meet debt obligations can lead to default, financial distress, or bankruptcy. Bondholders generally do not have ordinary voting rights, and interest payments are typically tax deductible to the corporation.

ACC501 Final Term AI Solved

Q232

Which of the following is NOT the responsibility of bond trustee?

A) Make sure the terms of indenture are obeyed
B) Announcement of dividend
C) Manage the sinking fund
D) Represent the bondholders in default

AI Explanation

A bond trustee protects bondholders by ensuring the indenture is followed, managing sinking-fund requirements, and representing bondholders in default. Announcing dividends is a corporate responsibility, not a trustee's responsibility.

ACC501 Final Term AI Solved

Q233

Between the two identical bonds having different coupon, the price of the ________ bond will change less than that of ________ bond.

A) None of the given options
B) Higher-coupon; lower-coupon
C) Lower-coupon; higher-coupon
D) Long-term; short-term

AI Explanation

For otherwise identical bonds, higher-coupon bonds generally have shorter duration and are therefore less sensitive to changes in interest rates. Lower-coupon bonds have greater price sensitivity.

ACC501 Final Term AI Solved

Q234

Which of the following entity manages the sinking fund?

A) Chief Executive Officer
B) Board of Directors
C) Board of Governors
D) Bond trustee

AI Explanation

The bond trustee administers the sinking fund on behalf of bondholders. The trustee helps ensure that funds are properly accumulated and used according to the bond indenture.

ACC501 Final Term AI Solved

Q235

Which of the following short-term rating by PACRA denotes a strong capacity for timely repayment?

A) A2
B) A1
C) A1+
D) A3

AI Explanation

PACRA's A1 short-term rating indicates a strong capacity for timely repayment of financial commitments. A1+ represents the highest short-term rating category, while A2 and A3 indicate progressively weaker capacity.

ACC501 Final Term AI Solved

Q236

Payment of interest on debt securities is fully tax deductible item because:

A) Fixed nature cost
B) It’s a cost of doing business
C) Debt is not owner’s money
D) Paid out of profit

AI Explanation

Interest on debt is generally treated as a business expense for tax purposes, making it tax deductible. This reduces the corporation's taxable income and creates an interest tax shield.

ACC501 Final Term AI Solved

Q237

Between the two identical bonds having different maturity periods, the price of the ________ bond will change less than that of ________ bond.

A) lower-coupon; higher-coupon
B) None of the given options
C) long-term; short-term
D) short-term; long-term

AI Explanation

Long-term bonds have greater duration and are more sensitive to changes in interest rates. Therefore, the price of a short-term bond changes less than the price of an otherwise identical long-term bond.

ACC501 Final Term AI Solved

Q238

Expectation of a ______ inflation rate will push long term interest rates ______ than short term rates reflected by an upward term structure.

A) Higher; higher
B) Higher; lower
C) Lower; higher
D) None of the given options

AI Explanation

If investors expect higher inflation in the future, they generally demand higher interest rates as compensation for reduced purchasing power. This can produce an upward-sloping term structure, with long-term rates higher than short-term rates.

ACC501 Final Term AI Solved

Q239

ABC Company issues 5 year bonds having following characteristics:
Rs. 1,000 face value, initial price Rs. 497 and yield to maturity is 15%.
Bonds issued by ABC Company falls under which one of the following type of bonds?

A) Convertible bonds
B) Floating-rate bonds
C) Zero coupon bonds
D) Government bonds

AI Explanation

A zero-coupon bond makes no periodic coupon payments and is issued at a substantial discount to its face value. The Rs. 497 issue price relative to the Rs. 1,000 face value is consistent with this structure.