Finance Exam Questions and Answers

For anyone who is planning to undertake finance exams. Practicing with finance question and answer is one of the keys to success. Here are some examples of finance questions and their answers to help out. 

1.What are the best discount brokers in India?

Zerodha 

ProStocks

5Paisa

Fyers 

Upstox

TradingBells

2. Define cash flow analysis

Cash flow analysis helps companies and businesses determine. The amount of money available to run a complete transaction and business operations. It also helps companies know details of cash inflows and outflows

3. What is discount brokerage?

A discount brokerage is a business that allows investors and traders to purchase and sell securities. But does not provide services such as advice, research, or other investment services. This makes discount brokerages charge lower fees. Traders and investors who use discount brokerages do not usually have interaction with a real broker. 

4. What is an annuity?

An annuity is a contract between a policyholder and an insurance company, in which the policyholder makes a lump-sum payment or series of payments. Then in return, receives regular disbursements, either immediately or at some point in the future.

5. What is the formula for calculating future value? 

Future value is defined as the value of an asset at a specific date. 

Formula:

FV = PV x (1+r)*n

FV =  Future Value 

PV = Present Value 

r = rate of return

n = number of periods

6. Name the benefits of full-service brokerage 

1. They provide access to investment research products. These research products give in-depth information and analysis on various investment instruments.
2. They help in providing advice on specific investments and strategies to their customers. This helps their customers accomplish wealth-building goals.
3. They provide guidance and have a personal relationship with their customer.

7. What are the different types of cash flow?

1. Operating activities 
2. Investing activities 
3. Financing activities

8. Explain direct and indirect financing

Direct financing is defined as a type of financing where borrowers borrow funds directly from the financial market without using a third-party service.

Indirect financing is defined as a type of financing where borrowers borrow funds from the financial market through indirect means. They borrow those funds through a financial intermediary.

9. What are the advantages of going public?

1. Establish the value for securities. 
2. Increases access to capital-raising opportunities in both public and private financings. 
3. It makes it easy to buy and sell the company’s shares.
4. Can help to expand investors’ base.
5. Can help in enhancing liquidity for investors. This is because securities can be traded through a public market. 

10. What is trading at a discount?

Trading at a discount occurs when an option is trading below its intrinsic value. 

11. Define temporary sources of financing 

A temporary source of financing is the type of financing. That includes short-term and current financing which are not classified as spontaneous. Temporary sources of financing include finance company loans, bank loans, and many more. 

12. What do you mean by the par value of the bond? 

The par value of a bond also known as face amount or face is the amount of money that bond issuers promise to repay bondholders at the maturity date of the bond.

13. Explain what equity is 

Equity is the ownership of an asset that might be attached to liabilities or debt. It can also be defined as the ownership of an asset after all the debts associated with that asset have been subtracted. It represents the value that would be returned to a company’s shareholders after all the company’s debts were paid off. 

14. What is a bond?

A bond is essentially a written promise that the amount loaned to the issuer will be repaid. There are different types of bonds and they include corporate bonds, inflation-linked bonds, subordinated bonds, and many more. Bonds can either be in mutual funds or in private investing where bonds are issued to private companies or municipality. They are also not necessarily issued at their par value.

15. Mention the types of financial intermediaries 

1. Investment intermediary(mutual funds, venture capitalists, and finance companies)
2. Depository institutions 
3. Contractual savings institutions 

16. What is the concept of value for money?

The concept of the time value for money is that the money you have now is worth more than the identical sum in the future. This is due to its potential earning capacity. 

The time value for money is important because it enables investors to make a more informed decision about what to do with their money. The concept also helps them understand the best option for them based on interest, inflation, risk and return. 

The questions and answers given above are mainly on finance and investment basics. Therefore, it is important to carry out more research and study on finance questions.