Business IQ - Test Your Finance, Vocabulary, Investing Knoweldge
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 MilkenExplanation
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.Rate this question:
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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 CubanExplanation
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.Rate this question:
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- 3.
Warren Buffett owns:
- A.
AIG
- B.
Geico
- C.
AllState
- D.
Progressive
Correct Answer
B. GeicoExplanation
Warren Buffett owns Geico because it is listed as one of the companies he owns in the given list.Rate this question:
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- 4.
Warren Buffets mentor
- A.
Bill Gates
- B.
Charlie Munger
- C.
Benjamin Graham
Correct Answer
C. Benjamin GrahamExplanation
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.Rate this question:
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- 5.
Andrew Carnegie made his fortune in:
- A.
Manufacturing
- B.
Finance
- C.
Steel
- D.
Railroads
Correct Answer
C. SteelExplanation
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.Rate this question:
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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. OilExplanation
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.Rate this question:
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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 FundExplanation
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.Rate this question:
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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 IslandsExplanation
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.Rate this question:
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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. JapanExplanation
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.Rate this question:
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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 FranciscoExplanation
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.Rate this question:
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- 11.
City with the most energy companies
- A.
Chicago
- B.
New York
- C.
Houston
- D.
Los Angeles
Correct Answer
C. HoustonExplanation
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.Rate this question:
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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.Rate this question:
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- 13.
These terminals frequent the desks of Wall Street
- A.
Linux
- B.
IBM
- C.
Bloomberg
- D.
Dell
Correct Answer
C. BloombergExplanation
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.Rate this question:
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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 ManagementExplanation
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.Rate this question:
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- 15.
World leader in database software
- A.
Oracle
- B.
Microsoft
- C.
SAP
- D.
BMC Software
Correct Answer
A. OracleExplanation
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.Rate this question:
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- 16.
What economic system would best be described as laissez-faire?
- A.
Socialism
- B.
Capitalism
- C.
Communism
Correct Answer
B. CapitalismExplanation
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.Rate this question:
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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 fundsExplanation
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.Rate this question:
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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 OilExplanation
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.Rate this question:
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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 HathawayExplanation
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.Rate this question:
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- 20.
A company that is owned by another:
- A.
Start up
- B.
Subsidiary
- C.
Corporation
- D.
LLC
Correct Answer
B. SubsidiaryExplanation
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.Rate this question:
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- 21.
Black Scholes is a way to value:
- A.
Private placements
- B.
Options
- C.
Bonds
- D.
Derivatives
Correct Answer
B. OptionsExplanation
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.Rate this question:
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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. 5000Explanation
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.Rate this question:
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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. $2000Explanation
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.Rate this question:
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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 centsExplanation
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.Rate this question:
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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%.Rate this question:
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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. REITExplanation
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.Rate this question:
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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 PrincipleExplanation
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.Rate this question:
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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 flowExplanation
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.Rate this question:
- 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 sameExplanation
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.Rate this question:
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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. SUMExplanation
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.Rate this question:
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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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Current Version
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Mar 22, 2023Quiz Edited by
ProProfs Editorial Team -
Apr 18, 2009Quiz Created by
Howardroark
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