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MGT411 Virtual University MCQs BANK - MCQs Collection from Online Quizzes
MGT411 Money and Banking MCQs
MGT411 Money, Banking and Financial Markets Solved MCQs 30
Q#1 A central bank typically:
A) has a monopoly in issuing currency.
B) use monetary policy in attempts to stabilize economic growth and/or inflation.
C) serves as a "bankers' bank" that provides services to other banks.
D) All of the above are correct.
The Basics: How Central Banks Originated and Their Role Today.
Q#2 The primary reason for the existence of central banks today is to:
A) help finance wars.
B) serve as a bank for the government, accepting deposits and providing the government with checkable deposits.
C) control the money supply.
D) stabilize the prices of specific commodities.
The Basics: How Central Banks Originated and Their Role Today.
Q#3 Monetary policy in the countries that are part of the European Monetary Union is controlled by the:
A) European Central Bank.
B) central banks of each of the member countries.
C) Federal Reserve Board.
D) Bank ofEngland.
The Basics: How Central Banks Originated and Their Role Today.
Q#4 Which of the following tasks is NOT performed by a central bank as part of its role as a "bankers' bank?"
A) providing loans to banks during periods of financial stress
B) managing the payments system
C) controlling stock prices
D) accepting deposits from banks
Q#5 Central banks can serve as a lender of last resort because:
A) they have the ability to create money.
B) they are the only financial institution that is legally allowed to make loans during a financial panic.
C) the interest rates they charge are so high that banks are virtually never willing to borrow from the Fed.
D) banks are more likely to borrow money from their depositors during a financial panic.
The Basics: How Central Banks Originated and Their Role Today.
Q#6 Fedwire:
A) is a financial news network developed by the Federal Reserve Board.
B) is used for interbank transfers.
C) was once heavily used by banks, but is rarely used today since there is little need for interbank transfers now that the internet exists.
D) is used by the Fed solely to make loans to member banks.
The Basics: How Central Banks Originated and Their Role Today.
Q#7 Historical evidence indicates that theU.S. financial system is:
A) always very stable as long as the government does not imposed any regulations.
B) prone to periods of instability that have imposed substantial costs on society.
C) somewhat unstable, but this does not matter much since the social cost of the instability is always low.
D) as unstable today as it was in the late 1800s.
Stability: The Primary Objective of All Central Banks.
Q#8 One of the main objectives of a central bank is to:
A) reduce idiosyncratic risk in financial markets.
B) reduce systematic risk in financial markets.
C) encourage a low and stable rate of economic growth.
D) achieve a high and stable inflation rate.
Stability: The Primary Objective of All Central Banks.
Q#9 Central banks generally place a great deal of emphasis on maintaining a low and stable inflation rate because:
A) inflation lowers the information content of prices.
B) economic growth tends to decline as inflation rates rise.
C) inflation tends to be less predictable when inflation rates rise.
D) All of the above are correct.
Q#10 Central banks usually establish a positive inflation rate target rather than a zero inflation rate target because:
A) economic growth is higher when the inflation rate rises.
B) a positive inflation rate makes it possible for firms to reduce real wages without reducing nominal wages, leading to more efficient labor markets.
C) the Fed is a more profitable operation for the government when the inflation rate is positive.
D) a higher inflation rate results in a higher unemployment rate, and higher unemployment rates are preferred by policymakers.
Stability: The Primary Objective of All Central Banks.
Q#11 Which of the following is not a primary objective of the Fed?
A) low and stable inflation
B) high and stable real growth
C) financial system stability
D) maintaining low interest rates
Q#12 Exchange–rate stability is:
A) a more important goal for the Fed than it is for the central banks of smaller and more trade-oriented economies.
B) a less important goal for the Fed than it is for the central banks of smaller and more trade-oriented economies.
C) equally important as a goal for the Fed as it is for the central banks of smaller and more trade-oriented economies.
D) a primary objective of the Fed.
Q#13 Which of the following is not generally a characteristic of a successful central bank?
A) Central bank policy must be controlled by the same authorities.
B) Central bank decisions must be made in private and policy should not be publicly announced.
C) Decision making should be made by an individual, not a committee, to ensure consistency of goals.
D) The central bank should operate within a framework in which it has clear goals.
Q#14 Central bank independence is:
A) not very common in industrialized countries today.
B) a practice that was widely adopted by central banks for industrialized countries in the late 1800s.
C) a relatively recent historical phenomenon.
D) a policy that is practiced by the European Central Bank, but not the Fed.
Q#15 Empirical evidence suggests that a higher level of central bank independence results in:
A) higher average inflation rates than occur in countries with less independent central banks.
B) lower average inflation rates than occur in countries with less independent central banks.
C) the same average inflation rates that occur in countries with less independent central banks.
D) lower rates of economic growth than occurs in countries with less independent central banks.
Q#16 A source of conflict between monetary and fiscal policy decision makers is that:
A) fiscal policy decision makers place more emphasis on short-term objectives while monetary policy makers focus on long-term objectives.
B) it is easier, from a political standpoint, to pay for increased government spending by a monetary expansion than by raising taxes.
C) Both of the above are correct.
D) None of the above is correct.
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Virtual University MCQs BANK - MCQs Collection from Online Quizzes
MGT411-Quiz(1-40)solved
MGT411-Solved MCQLesson 1-40Cash become less desirable when ____________.
Interest rates rise
Riskiness of alternative holdings rises
Liquidity falls
None of the given optionsLesson 35As interest rates rise cash becomes less desirable, but if the riskiness of alternative holdings rises or liquidity falls, then it becomes more desirable.Banks borrow from the central bank this loan is called_________.
Discount loan
Collateralized loan
Personal loan
Corporate loanLesson 24Banks can also borrow by using a repurchase agreement or repo, which is a short-termcollateralized loan.The return on the bond is equal to which of the following?
Coupon rate + rate of capital gains
Current yield + rate of capital gainsCoupon rate - rate of capital gains
Current yield - rate of capital gainsLesson 14= Current Yield + Capital Gain (as a %)If the required reserve ratio is equal to 10%, a single bank can increase its loans up to a maximum amount equal to:
10% of its excess reserves
Its excess reserves
10 times its excess reserves
Its total reservesOne reason given for more central bankers releasing their decisions publicly is:
To give people time to understand it
Most people do not understand monetary policy so it really doesn't do any harm to release the decisions publicly
If monetary policy is going to be stabilizing speculation about central bankers decisions should be minimized
So that central banks across the world can coordinate their policiesThe current yield on a $10,000, 5% coupon bond selling for $8,000 is:
5.00%
6.25%
7.50%
8.00%=100000*5% /8000=100000*0.05/8000=6.25The money multiplier is negatively related to:
High-powered money
The excess reserve ratio
Discount borrowings from the Fed
Both high-powered money and excess reserve ratioIn the simple model of multiple deposit creation in which banks do not hold excess reserves, the increase in checkable deposits equals the product of the change in reserves and the:
Inverse of the excess reserve ratio
The simple money multiplier
Inverse of the simple money multiplier
Discount rateThe reserve requirement is simply the inverse of the simple money multiplier; if the reserve ratio increases, then the money multiplier will decrease.A typical bank will offer ______ type/s of checking accounts.
Only one type
Two types
Four types
Six or more typesLesson 24A typical bank will offer 6 or more types of checking accounts.Which of the following is the true about bank statement?
Total Bank Assets = Total Bank Liabilities + Bank Capital
Total Bank Liabilities = Bank Capital
Total Bank Assets +Total Bank Liabilities = Bank Capital
Total Bank Assets = Total Bank Liabilities - Bank CapitalLesson 23Combination of term life insurance and a savings account is called as ________.
Term life insurance
Whole life insurance
Group life insurance
None of the given optionLesson 27Whole life insurance: Combination of term life insurance and a savings account.The monetary liabilities of the Federal Reserve include:Government securities and discount loansCurrency in circulation and reservesGovernment securities and reservesCurrency in circulation and reservesFactors that cause the excess reserve ratio to rise include:
A rise in expected deposit outflows
A decline in market interest rates
A rise in market interest rates
Both rise in expected deposit outflows and decline in market interest rates of the aboveLesson 34The higher the interest rate, the lower banks’ excess reserves will be; the greater the concern over possible deposit withdrawals, the higher the excess reserves will be.The fact that a financial intermediary can use the same contract for many customers is an example of:Economies of ScopeThe Law of Diminishing Marginal ReturnsThe Law of Increasing Opportunity CostEconomies of ScaleLesson 21Much of what financial intermediaries do takes advantage of economies of scale.Which of the following financial instruments used primarily as store of value?OptionsStocksHome mortgageBondsA sale of government bonds by the Fed, all else the same:Increases the monetary baseIncreases the high-powered moneyIncreases the non-borrowed monetary baseNone of the given optionThe SALE of government bonds by the Fed REDUCES the supply of money by reducing the reserves available to private banks and thereby decreasing the amount of deposit expansion that is possible.If a bank has excess reserves of $15,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20%, then the bank has total reserves of:
$11,000$31,000$26,000$20,00080,000×20%=16,00016,000+15,000=31,000High-powered money less reserves equals:
Required reservesCurrency in circulationThe monetary baseThe non-borrowed monetary baseLesson 33Currency in the hands of the public and the reserves of the banking system are the two components of the monetary base, also called high-powered money. -
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MGT411 Solved Quizzes Chapter 8-9 Quiz
MGT411- QUIZ(lecture08-09)
1 The future value of $200 at a 5% per year interest rate at the end of one year is:
A) $195.00
B) $210.00
C) $197.50
D) None of the above.
2 Which of the following expresses 6.5%
A) 0.0065
B) 6.50
C) 0.650
D) 0.0650
6.5/100=0.065
3 Which of the following best expresses the proceeds a lender receives from a simple loan?
A) PV(1 + i)
B) FV/i
C) PV + i
D) PV/i
4 Mark borrows $8,000 and then repays $8,600 to ABC bank. What is the interest rate on Mark's loan?"
A) $600
B) 7.50%
C) 6.0%
D) None of the above
5 Which of the following best expresses the payment a lender receives for lending their money for four years:
A) PV(1+i)4
B) PV/(1 + i)4
C) 4PV
D) None of the above.
6 A lender is promised a $100 payment (including interest) one year from today. If the lender has a 8% opportunity cost of money, she should be willing to accept what amount today:
A) $100.00
B) $108.20
C) $92.59
D) $96.40
100/(1+.08) = 92.58
7 Mary deposits funds into a CD at her bank. The CD has an annual interest of 4.0%. If Mary leaves the funds in the CD for entire two years she will have $1081.60. What amount is Mary depositing:
A) $960.60
B) $900.00
C) $1005.00
D) $1000.00
FV=PV(1+i)^n
1081.60=PV(1+.04)^2
1081.60=PV(1.0816)
PV=1081.60/1.0816
PV=1000
8 The future value of $100 left in a savings account earning 4.5% for two and a half years is best expressed by:
A) $100(1.045)3/2
B) $100( 0.45)2.5
C) $100(1.045)2.5
D) $100 x 2.5 x (1.045)
9 The rule of 72 says that at 12% interest $100 should become $200 in about:
A) 72 months
B) 100 months
C) 12 years
D) 8.2 years
10 The longer the time (n) until the payment:
A) The lower the present value.
B) The higher the present value because time is valuable.
C) The lower must be the interest rate.
D) None of the above.
11 A change in the interest rate has:
A) A larger impact on the present value of a payment to be made far into the future than one to be made sooner.
B) Will not have a difference on the present value of two equal payments to be made at different times.
C) A smaller impact on the present value of a payment to be made far into the future than one to be made sooner.
D) None of the above.
12 An investment has grown from $100.00 to $160.00 or 60% over four years. What annual increase gives a 60% increase over four years:
A) 7.50%
B) 12.48%
C) 15.00%
D) 13.24%
FV=PV(1+i)^n
(1+i)^n=FV/PV
Multiply both sides with 1/4 , we will get,
(1+i)^4*1/4= (160/100)^1/4
1+i=(1.6)^1/4
i=1.24-1
= 0.1246 * 100 , = 12.468 Ans.
13 People with a high discount rate will require:
A) A higher interest rate to entice them to save.
B) Investment options with longer maturities.
C) A lower interest rate to entice them to save.
D) a and b
14 If the internal rate of return from an investment is less than the opportunity cost of funds:
A) The firm should make the investment.
B) The firm should not make the investment.
C) The firm should only make the investment using retained earnings.
D) None of the above.
15 A mortgage, where the monthly payments are not the same for the duration of the loan, is an example of:
A) A variable payment loan.
B) An installment loan.
C) A fixed payment loan.
D) An equity security.
The variable payment mortgage would be a mortgage on a fixed rate that allows you to vary your payment each month.
16 An investment carrying a current cost of $130,000 is going to generate $70,000 of revenue for each of the next three years. To calculate the internal rate of return we need to:
A) Calculate the present value of each of the $70,000 payments and multiply these and set this equal to $130,000.
B) Take the present value of $210,000 for three years from now and set this equal to $130,000.
C) Set the sum of the present value of $70,000 for each of the next three years equal to $130,000.
D) Subtract $130,000 from $210,000 and set this difference equal to the interest rate.
17 The price of a bond is determined by:
A) Taking the present value of the bond's final payment and subtracting the coupon payments.
B) Taking the present value of the coupon payments and adding this to the face value.
C) Taking the present value of the bond's final payment.
D) Taking the sum of the present values of the future payments
18 If a bond has a face value of $1,000 and the bondholder receives coupon payments of $35.00 semi-annually, the bond's coupon rate is:
A) 3.5%
B) 7.0%
C) 7.5%
D) Cannot be determined from the information provided.
35×2=7070/1000=0.070.07×100=7%19 Which formula below best expresses the nominal interest rate, (r)?
A) i = r – πe
B) r = i + πe
C) i = r + πe
D) πe = i + r
20 From the Fisher equation we see the relationship between the nominal interest rate and expected inflation is:
A) Direct and one-to-one.
B) Direct but more than one-to-one.
C) Inverse.
D) There is no relationship between these two variables.
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MGT411 Money and Banking Solved MCQs from Quiz #
MGT411 – Money & Banking
Online Quiz # 3
If bond’s rating is lower, what will be its price?
Select correct option:
Higher
Lower
Equal to
No change
High State Bank purchases some U.S. Treasury bonds. We would view such bonds as being free of:
Select correct option:
Credit risk
Interest rate risk
Reinvestment risk
All of the given options
Which of the following is a role of a financial institution acting as a financial intermediary?
Select correct option:
Pooling the resources of small savers
Formulating oversight regulations
Sending out free calendars at the holidays
Lobbying legislators
Considering the Liquidity Premium Theory, if investors expect short term interest rates to decrease:
Select correct option:
The yield curve must have a positive slope
The yield curve must be inverted
The yield curve could be flat
The slope of the yield curve should actually increase
___________ include savings and time deposits and account for nearly two-thirds of all commercial bank liabilities.
Select correct option:
Non transactions Deposits
Borrowings
Checkable Deposits
Discount loans
Liquidity is the risk that is arises as a result of which one of the following consequences?
Select correct option:
It arises when loan is not repaid
It arises because of sudden demands of funds
It arises when two sides of the balance sheet do not match up
It arises when banks make additional profit by using derivatives
Which one of the following is true for financial intermediaries?
Select correct option:
Channel funds from savers to borrowers
Greatly enhance economic efficiency
Have been an source of many financial innovations
All of the given options
According to the rule of 72 for reasonable rates of return, the time it takes to __________ the money will be t =72/i%
Select correct option:
Doubles
Triples
halves
3/4
__________ is the interest rate at which the present value annual reveneu equals the cost of the investment.
Select correct option:
Fixed rate of interest
Internal rate of return
Variable rate of interest
Nominal rate of interest
Which of the following would be included in a definition of risk?
Select correct option:
Risk is a not measure of uncertainty
Risk is unavoidable
Risk doesn't have a time horizon
Risk seldom involves some future payoff
_____________ are organized to eliminate the need of costly information gathering.
Select correct option:
Central bank
Commercial banks
Stock exchanges
Insurance companies
You receive a check for $100 two years from today. The discounted present value of this $100 is:
Select correct option:
$100/(1+i)
$100*(1+i)^2
$100*(1+i)
$100/(1+i)^2
What is true relationship between return and risk?
Select correct option:
Lower the risk greater the return
Greater the risk greater the return
Greater the risk the return will remain constant
No relationship between them
A risk-averse investor will:
Select correct option:
Always prefer an investment with a lower expected return
Always prefer an investment with a certain return to one with the same expected return but any amount of uncertainty
Always require a certain return
Always focus exclusively on the expected return
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MGT411 MCQs (e) from Quiz # 2 solved
MGT411 Solved MCQ5 from Quiz #2
The fact that common stockholders are residual claimants means:
Select correct option:
The stockholders receive the remains after everyone else is paid
The stockholders are paid any past due dividends before other claims are paid
The common stockholders are responsible for all corporate debts
Which one of the following is true for financial intermediaries?
Select correct option:
Channel funds from savers to borrowers
Greatly enhance economic efficiency
Have been an source of many financial innovations
All of the given options
relationship between the price and the interest rate for a zero coupon bond is best described as:
Select correct option:
Volatile
Stable
Non-existent
Inverse
Reference: The price of a bond and the interest rate move in opposite directions
Consumer Price Index (CPI) measures the:
Select correct option:
Changes in the quantity
Changes in the prices
Changes in the cost
Changes in the profit
Reference: CPI :Measure of the overall level of prices
Core principles of Money and Banking include each of the following except?
Select correct option:
People act rationally
Time has value
Information is the basis for decisions
Risk requires compensation
The longer the time (n) until the payment:
Select correct option:
The lower the present value
The higher the present value because time is valuable
The lower must be the interest rate
Time has no effect on present value
When stock prices reflect fundamental values:
Select correct option:
All investors will experience capital gains
All companies will have an easier task of obtaining financing for investment projects
The allocation of resources will be more efficient
The overall level of the stock market should move higher continuously
Reference: So long as stock prices accurately reflect fundamental values, this resource allocation mechanism works well
What will be the result of the difference of real and nominal interest rate?
Select correct option:
The cost of borrowing
The effect of inflation
The price of bonds
The return of bonds
If the annual interest rate is 6%, the price of a 1-year Treasury bill with $100 face value would be:
Select correct option:
$94.00
$94.33
$95.25
$96.10
Which of the following would probably NOT earn an A rating from Standard & Poor's:
Select correct option:
30 years bond issued by the U.S. Treasury
New vegetarian fast-food chain
90 days T-Bills issued by the U.S. Treasury
Both 30 years bond and 90 days T-Bills issued by U.S. Treasury
There is no guarantee that a bond issuer will make the promised payments is known as which one of the following?
Select correct option:
Default risk
Inflation risk
Interest rate risk
Systematic risk
If a bond sells at a premium, where price exceeds face value, then we would expect to see:
Select correct option:
Market interest rate the same as the coupon rate
Market interest rates above the coupon rate
Market interest rates below the coupon rate
All of the given options
Reference: So, When Market Interest Rate < Coupon Interest Rate, Market Value (or Price) of Bond >Par Value. Because when market is offering lower rate of return then the bond then the bond becomes
valuable. This is known as a Premium Bond. Pg no.68 MGT201 H.outsWhich of the following is a role of a financial institution acting as a financial intermediary?
Select correct option:
Pooling the resources of small savers
Formulating oversight regulations
Sending out free calendars at the holidays
Lobbying legislators
Reference: The most straightforward economic function of a financial intermediary is to pool the resources of many small savers Pg no.71 MGT411 H.outs
Financial Systems makes it easier to trade because it:
Select correct option:
Facilitate Payments
Channels Funds from Savers to Borrowers
Enables Risk Sharing
All of the given options
Which of the following is the measure of likelihood that an event will occur?
Select correct option:
Risk
Probability
Frequency
Outcom
The concept of limited liability says a stockholder of a corporation:
Select correct option:
Is liable for the corporation's liabilities, but nothing more
Cannot receive dividends that exceed their investment
Cannot own more than fiver percent of any public corporation
Cannot lose more than their investment
Reference: Because of limited liability, investor’s losses cannot exceed the price they paid for the
stock Pg no.63 MGT411 H.outsThe risk premium for an investment:
Select correct option:
Increases with risk
Is a fixed amount added to the risk free return
Is negative for U.S. Treasury Securities
Is negative for risk averse investors
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MGT411 MCQs From Quiz# 7 solved
MGT411-Money & Banking
following NOT true for financial institutions?
It reduces the transaction cost
It reduce the information cost
It reduces the asymmetric information
It doesn’t make long term loans
Current accounts of commercial bank lies in which money aggregate definition?
Currency
M1
M2
M3
Commercial bank is a bank whose principal functions are to receive demand deposits and to make short-term loans. It is a Bank that makes loans to businesses, consumers, and non business institutions.
The price of a coupon bond can best be described as:
The present value of the face value
The future value of the coupon payments and the face value
The present value of the coupon payments
Both The present value of the face value and of the coupon payments
The money aggregate M2 includes each of the following EXCEPT:
Small denomination time deposits.
Retail Money Market Mutual fund shares
U.S. Treasury bills
M1
M2 is the measure of the money supply that includes M1, plus savings and small time deposits, overnight repos at commercial banks, and non-institutional money market accounts.
According to the rule of 72 for reasonable rates of return, the time it takes to ________ the money will be t =72/i%
Doubles
Triples
halves
3/4
The default premium:
Is positive for a U.S. Treasury bond
Must always be less than 0 (zero)
Is also known as the risk spread
Is assigned by a bond rating agency
Which of the following is NOT a depository financial institution?
Credit Union
Savings and Loan
Commercial bank
Life Insurance Company
A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at reasonable rates, and providing other financial services to its members.
A savings and loan association (or S&L), also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans.
Commercial bank is an institution which accepts deposits, makes business loans, and offers related services. Commercial banks also allow for a variety of deposit accounts, such as checking, savings, and time deposit.
Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness.
What is primary cause of inflation?
Energy crises
Gold reserve shortage
Issue excessive currency
Rising cost of input
A corrupt or pressured government might issue excessive amounts of money, thereby unleashing severe inflation.
Which characteristic are common both in money and securities
Transfer of risk, store of value
Unit of account, mean of payment
Mean of payment, transfer of risk
Store of value, mean of payment
If YTM is less than the coupon rate the price of the bond is________.
Greater than its face value
Lower than its face value
Equals to its face value
All of the given options
The longer the time (n) until the payment:
The lower the present value
The higher the present value because time is valuable
The lower must be the interest rate
Time has no effect on present value
Mr A need 1000000 to buy a car for his personal use he contact with bank that give his loan this would be called:
Direct finance
Indirect finance
Facilitate payment
All of above
A risk-averse investor will:
Always prefer an investment with a lower expected return
Always prefer an investment with a certain return to one with the same expected return but any amount of uncertainty
Always require a certain return
Always focus exclusively on the expected return
GDP deflator is called
Retailer price index
Consumer price index
Producer price index
None of above
The GDP deflator, also called the implicit price deflator for GDP, measures the price of output relative to its price in the base year. It reflects what’s happening to the overall level of prices in the economy.
When the price of a bond is above face value:
The yield to maturity will be above the coupon rate
The yield to maturity is below the coupon rate
The yield to maturity will equal zero
The yield to maturity will equal the coupon rate
Bond Price < Face Value:
Coupon Rate < Current Yield < Yield to Maturity
Bond Price = Face Value:
Coupon Rate = Current Yield = Yield to Maturity
Bond Price > Face Value:
Coupon Rate > Current Yield > Yield to Maturity
A zero coupon bond:
Does not pay any coupon payments because the issuer is in default
Pays coupons only once a year versus the usual twice a year
Promises a single future payment
Pays coupons only if the bond price is below face value
A ________ is a promise to make a series of payments on specific future date.
Stock
Bond
Loan
Cheque
A bond is a promise to make a series of payments on specific future date.
Economic development measured by
Real GDP/population
Real GDP/ nominal GDP
Real GDP/Real GNP
None of above
Economic growth is conventionally measured as the percentage increase in gross domestic product (GDP) or gross national product (GNP) during one year.
Which one the following is NOT the way to manage liquidity risk?
By holding sufficient excess reserves
Through diversification
By adjusting assets
By adjusting liabilities
Which of the following is the true about bank statement?
Total Bank Assets = Total Bank Liabilities + Bank Capital
Total Bank Liabilities = Bank Capital
Total Bank Assets +Total Bank Liabilities = Bank Capital
Total Bank Assets = Total Bank Liabilities - Bank Capital
A typical bank will offer ______ type/s of checking accounts.
Only one type
Two types
Four types
Six or more types
If a bond sells at a premium, where price exceeds face value, then we would expect to see:
Market interest rate the same as the coupon rate
Market interest rates above the coupon rate
Market interest rates below the coupon rate
All of the given options
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MGT411 Solved MCQ5 from Quiz #2
Spreading involves:
Select correct option:
Finding assets whose returns are perfectly negatively correlated
Building a portfolio of assets whose returns move together
Investing in bonds and avoiding stocks during bad times
Adding assets to a portfolio that move independently
Internal Rate of Return is _________.
Select correct option:
Present value of investment
Future value of its investment +Cost of investment
Cost of investment
Present value of investment + cost of investment
Which of the following best describes checks?
Select correct option:
A means of payment
Money
Not a promise of any kind
Not acceptable by the U.S. Government for payment of taxes.
A business cycle downturn shifts the bond supply to the:
Select correct option:
Right
Left
No change
None of the given options
According to the liquidity premium theory of the term structure, when the yield curve has its usual slope, the market expects
Select correct option:
Short-term interest rates to rise sharply
Short-term interest rates to stay near their current levels
Short-term interest rates to drop sharply
Short-term interest rates does not change
Which of the following represents the fisher’s equation?
Select correct option:
Nominal interest rate = real interest rate + inflation
Nominal interest rate + inflation = real interest rate
Nominal interest rate = real interest rate - inflation
Nominal interest rate = real interest rate / inflation
Bonds that are issued by Government are called _________.
Select correct option:
Government bond
Treasury bond
Corporate bond
Callable Bonds
What will the yield curve look like if future short-term interest rates are expected to rise sharply?
Select correct option:
It will steeply slope upward
It will be horizontal
It will slightly slope upward
It will slope downward
The interest rate that is involved in _____________ calculation is referred to as discount rate
Select correct option:
Present value
Future value
Intrinsic value
Discount value
Which one of the following is true for the relationship between the yield of taxable and tax exempt bond?
Select correct option:
Higher the tax rate wider the gap between the yield of taxable and tax exempt bond
Taxable bond yield is always greater than tax exempt bond
Higher the tax rate shorter the gap between yield of taxable and tax exempt bond
Lower the tax rate wider the gap between yield of taxable and tax exempt bond
You start with a $1000 portfolio; it loses 40% over the next year, the following year it gains 50% in value; At the end of two years the worth of your portfolio will be:
Select correct option:
$900
$600
$1000
$1100
first year gain = 1000*.40 = 400
second year loss = 1000*.5 = 500
Total gain or loss after two year = 400-500 = -100
1000-100 = 900
.
What is true relationship between return and risk?
Select correct option:
Lower the risk greater the return
Greater the risk greater the return
Greater the risk the return will remain constant
No relationship between them
Which of the following is NOT included in the definition of M1?
Select correct option:
Traveler’s checks
Demand deposits
Currency
Gold coins issued by treasury
The Financial Systems makes it easier to trade because it:
Select correct option:
Facilitate Payments
Channels Funds from Savers to Borrowers
Enables Risk Sharing
All of the given options
Which one of the following agencies assesses the default risk of different issuers?
Select correct option:
Insurance companies
Bond issuing
Credit rating
Recruitment agencies
In which of the following bonds we may ignore the default risk?
Select correct option:
Privately issued bonds
Government issued bonds
Bonds issued by Corporate
All of the given options
Which of the following best describes default risk?
Select correct option:
The chance the issuer will be unable to make interest payments or repay principal
The chance the issuer will retire the debt early
The chance the issuing firm will be sold to another firm
The chance the issuer will sell more debt
Coupon bonds make the annual payments which are called as ___________.
Select correct option:
Annual payments
Fixed payments
Coupon payments
Maturity payment
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Virtual University MCQs BANK - MCQs Collection from Online Quizzes
MGT411 MCQ5 from Quiz # 2 Solved
MGT411 Solved MCQ5 from Quiz #2
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eco401 midterm solved subjective papers by moaazQuestion # 1 of 20 ( Start time: 08:59:18 PM ) Total M - 1
Which of the following best expresses the payment a lender receives for lending their money for four years?
Select correct option:
PV(1+i)4
PV/(1 + i)4
4PV
PV/(1 - i)4
Question # 2 of 20 ( Start time: 08:59:55 PM ) Total M - 1
Bonds that are issued by Government are called _________.
Select correct option:
Government bond
Treasury bond
Corporate bond
Callable Bonds
Question # 3 of 20 ( Start time: 09:00:14 PM ) Total M - 1
__________ is the interest rate at which the present value annual reveneu equals the cost of the investment.
Select correct option:
Fixed rate of interest
Internal rate of return
Variable rate of interest
Nominal rate of interest
Question # 4 of 20 ( Start time: 09:00:38 PM ) Total M - 1
In which of the following bonds we may ignore the default risk?
Select correct option:
Privately issued bonds
Government issued bonds
Bonds issued by Corporate
All of the given options
Question # 5 of 20 ( Start time: 09:00:53 PM ) Total M - 1
Most of the people among us are ___________.
Select correct option:
Risk lovers
Risk enhancers
Risk averse
Risk tolerating
Question # 7 of 20 ( Start time: 09:01:26 PM ) Total M - 1
A risk-averse investor will:
Select correct option:
Always prefer an investment with a lower expected return
Always prefer an investment with a certain return to one with the same expected return but any amount of uncertainty
Always require a certain return
Always focus exclusively on the expected return
Question # 8 of 20 ( Start time: 09:01:51 PM ) Total M - 1
Which of the following is NOT included in the definition of M1?
Select correct option:
Traveler’s checks
Demand deposits
Currency
Gold coins issued by treasury
Question # 9 of 20 ( Start time: 09:02:04 PM ) Total M - 1
Which one of the following is true for financial intermediaries?
Select correct option:
Channel funds from savers to borrowers
Greatly enhance economic efficiency
Have been an source of many financial innovations
All of the given options
Question # 10 of 20 ( Start time: 09:02:32 PM ) Total M - 1
The lowest rating for an investment grade bond assigned by Moody's is:
Select correct option:
BBB
ABB
Baa
Aaa
Question # 11 of 20 ( Start time: 09:03:58 PM ) Total M - 1
If YTM is less than the coupon rate the price of the bond is __________.
Select correct option:
Greater than its face value
Lower than its face value
Equals to its face value
All of the given options
Question # 12 of 20 ( Start time: 09:05:29 PM ) Total M - 1
What will be the effect on the present value if we double the future value of the payment?
Select correct option:
It will decrease the value by one-half
It will increase the value by one-half
It will equally increase the value i.e. doubles the value
It will have no effect on the value
Question # 13 of 20 ( Start time: 09:06:06 PM ) Total M - 1
Which one of the following is the narrowest definition of money?
Select correct option:
C
M1
M2
M3
Question # 14 of 20 ( Start time: 09:06:50 PM ) Total M - 1
We need __________ to carry out day to day transactions.
Select correct option:
Money
Bonds
Stocks
Loans
Question # 15 of 20 ( Start time: 09:07:01 PM ) Total M - 1
Which one of the following is the strategy of reducing overall risk by making two investments which are totally independent of each other?
Select correct option:
Spreading the risk
Standard deviation
Hedging the risk
Variance
Question # 16 of 20 ( Start time: 09:08:07 PM ) Total M - 1
The Segmented Markets Theory of term structure suggests that:
Select correct option:
Investors have strong preferences for bonds of a particular maturity (This is correct)
Investors have no preference for short-term bonds over long-term bonds, or vice versa
Interest rates on long-term bonds strongly influence the demand for short-term bonds
Bonds of different maturities are perfect substitutes for each other
Question # 17 of 20 ( Start time: 09:09:36 PM ) Total M - 1
The process of financial intermediation:
Select correct option:
Creates a net cost to an economy but is unavoidable
Is used primarily in underdeveloped countries
Is always used when a borrower needs to obtain funds
Increases the economy's ability to produce
Question # 18 of 20 ( Start time: 09:09:56 PM ) Total M - 1
What will the yield curve look like if future short-term interest rates are expected to rise sharply?
Select correct option:
It will steeply slope upward
It will be horizontal
It will slightly slope upward
It will slope downward
Question # 19 of 20 ( Start time: 09:10:37 PM ) Total M - 1
Sum of all the probabilities should be equal to which one of the following?
Select correct option:
Zero
One
Two
Three
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MGT411 MCQs From Quiz solved
Question # 1 of 20 ( Start time: 05:44:09 PM ) Total M - 1
___________ is the strategy of reducing overall risk by making two investments with opposing risks.
Select correct option:
Spreading the risk
Standard deviation
Hedging the risk
Variance
Question # 2 of 20 ( Start time: 05:44:45 PM ) Total M - 1
The lowest rating for an investment grade bond assigned by Moody's is:
Select correct option:
BBB
ABB
Baa
Aaa
Which one of the following is the narrowest definition of money?
Select correct option:
C
M1
M2
M3
Question # 4 of 20 ( Start time: 05:46:15 PM ) Total M - 1
The price of a coupon bond can best be described as:
Select correct option:
The present value of the face value
The future value of the coupon payments and the face value
The present value of the coupon payments
Both The present value of the face value and of the coupon payments
Question # 5 of 20 ( Start time: 05:46:53 PM ) Total M - 1
We need __________ to carry out day to day transactions.
Select correct option:
Money
Bonds
Stocks
Loans
Question # 6 of 20 ( Start time: 05:47:16 PM ) Total M - 1
The process of financial intermediation:
Select correct option:
Creates a net cost to an economy but is unavoidable
Is used primarily in underdeveloped countries
Is always used when a borrower needs to obtain funds
Increases the economy's ability to produce
Question # 7 of 20 ( Start time: 05:47:51 PM ) Total M - 1
Considering the Liquidity Premium Theory, if investors expect short term interest rates to decrease:
Select correct option:
The yield curve must have a positive slope
The yield curve must be inverted
The yield curve could be flat
The slope of the yield curve should actually increase
Question # 8 of 20 ( Start time: 05:48:41 PM ) Total M - 1
Which one of the following is true for the relationship between the yield of taxable and tax exempt bond?
Select correct option:
Higher the tax rate wider the gap between the yield of taxable and tax exempt bond
Taxable bond yield is always greater than tax exempt bond
Higher the tax rate shorter the gap between yield of taxable and tax exempt bond
Lower the tax rate wider the gap between yield of taxable and tax exempt bond
Question # 9 of 20 ( Start time: 05:49:13 PM ) Total M - 1
Which of the following expresses 6.5%?
Select correct option:
0.0065
6.50
0.650
0.0650
Question # 10 of 20 ( Start time: 05:50:19 PM ) Total M - 1
What will be the result of the difference of real and nominal interest rate?
Select correct option:
The cost of borrowing
The effect of inflation
The price of bonds
The return of bonds
Question # 11 of 20 ( Start time: 05:50:40 PM ) Total M - 1
Other things remaining equal, the liquidity premium theory is based upon the idea that ____________.
Select correct option:
Investors prefer long-term bonds
Investors prefer short-term bonds
Investors are indifferent between short-term and long-term bonds
Investors prefer intermediate-term bonds
Question # 12 of 20 ( Start time: 05:51:25 PM ) Total M - 1
The Segmented Markets Theory of term structure suggests that:
Select correct option:
Investors have strong preferences for bonds of a particular maturity
Investors have no preference for short-term bonds over long-term bonds, or vice versa
Interest rates on long-term bonds strongly influence the demand for short-term bonds
Bonds of different maturities are perfect substitutes for each other
Question # 13 of 20 ( Start time: 05:52:23 PM ) Total M - 1
Often a bank will require a loan officer to make personal visits on customers with loans outstanding. This is encouraged because:
Select correct option:
The bank worries about competitors trying to steal their customers
The bank wants to make sure the business is still there
The bank likely has excess funds available and hopes to make another loan to the business
This is an effective monitoring technique and should reduce moral hazard
Question # 14 of 20 ( Start time: 05:53:10 PM ) Total M - 1
If the tax rate is higher than gap between yield on taxable and tax exempt bond?
Select correct option:
Shorter
Wider
No gap
Any thing can be possible
Question # 15 of 20 ( Start time: 05:53:46 PM ) Total M - 1
Investors will hold higher compensation for the __________ investment.
Select correct option:
More risky
Less risky
Fixed return
Less dividend
Question # 16 of 20 ( Start time: 05:54:14 PM ) Total M - 1
Which of the following are used to monitor and stabilize the economy?
Select correct option:
Stock exchanges
Commercial Banks
Central Banks
Financial institutions
Question # 17 of 20 ( Start time: 05:54:38 PM ) Total M - 1
The theory of efficient market states that prices of financial instruments reflect:
Select correct option:
All available information
Some of the information
No information
Imperfect information
Question # 18 of 20 ( Start time: 05:55:37 PM ) Total M - 1
With direct finance we mean which of the following?
Select correct option:
Individuals (or firms) borrow directly from the savers
Individuals (or firms) borrow directly from banks.
Individuals deposit savings directly in banks.
Firms deposit savings directly in banks.
Question # 19 of 20 ( Start time: 05:56:08 PM ) Total M - 1
Which of the following best describes the relationship between Bond prices and yields?
Select correct option:
Move together inversely
Bond yields do not change since the coupon is fixed
Move together directly
Are independent of each other
Question # 20 of 20 ( Start time: 05:56:35 PM ) Total M - 1
The fact that common stockholders are residual claimants means:
Select correct option:
The stockholders receive their dividends before any other residuals are paid
The stockholders receive the remains after everyone else is paid
The stockholders are paid any past due dividends before other claims are paid
The common stockholders are responsible for all corporate debts
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MGT411 Solved MCQ2 from Quiz #2
The____________ are an assessment of the creditworthiness of the corporate issuer.
Select correct option:
Bond yieldBond price
Bond risk
Bond ratingsWhich of the following statement is true for the given sentence, "that tax affects the bond return"?
Select correct option:
Because only interest income they receive from bond is taxable
Because principal amount and interest income they receive from bond is taxable
Because bond holders are taxpayers
Because all bond is sold with a condition that tax will be deducted from its returnThe second important factor that affects the return on a bond is taxes, Bondholders must pay income tax on the interest income they receive from privately issued
The relationship between the price and the interest rate for a zero coupon bond is best described as:
Select correct option:
Volatile
Stable
Non-existent
IncerseWhen stock prices reflect fundamental values:
Select correct option:
All investors will experience capital gains
All companies will have an easier task of obtaining financing for investment projects
The allocation of resources will be more efficient
The overall level of the stock market should move higher continuously
Coupon bonds make the annual payments which are called as ___________.
Select correct option:
Annual payments
Fixed payments
Coupon payments
Maturity paymentIf information in a financial market is asymmetric, this means:
Select correct option:
Borrowers and lenders have perfect information
Borrowers would have more information than lenders
Borrowers and lenders have the same information
Lenders lack any information
If YTM equals the coupon rate the price of the bond is __________.
Select correct option:
Greater than its face value
Lower than its face value
Equals to its face value
Insufficient information
The Financial Systems makes it easier to trade because it:
Select correct option:Facilitate Payments
Channels Funds from Savers to Borrowers
Enables Risk Sharing
All of the given optionsDebt instruments is categorized on the basis of which one of the following?
Select correct option:Loan maturity period
Interest rates
Mode of payment of interest
Amount of the debt taken
The return on holding a bond till its maturity is called:
Select correct option:
Coupon rate
Yield to maturity
Current yield
Internal rate of return
Which of the following are used to monitor and stabilize the economy?
Select correct option:
Stock exchanges
Commercial Banks
Central BanksFinancial institutions
Previously financial markets are located in which of the following?
Select correct option:
Coffee houses or Taverns .
Stock exchanges
Bazaar
Coffee houses and Stock exchanges
Financial MarketsTo buy and sell financial instruments quickly and cheaply. Evolved from coffeehouses to trading places (Stock exchanges) to electronic networks
Transactions are much more cheaper now. Markets offer a broader array of financial instruments than were available even 50 years ago
Requiring a large deductible on the part of an insured is one way insurers treat the problem of:
Select correct option:
Free-riding
Which one of the following is the procedure of finding out the Present Value (PV)?
Select correct option:
Discounting
Compounding
Time value of money
Bond pricing
_____________ are organized to eliminate the need of costly information gathering.
Select correct option:
Central bank
Commercial banks
Stock exchange
Insurance companiesWith direct finance we mean which of the following?
Select correct option:
Individuals (or firms) borrow directly from the savers
Individuals (or firms) borrow directly from banks.
Individuals deposit savings directly in banks.
Firms deposit savings directly in banks.
Yield curves show which of the followings?
Select correct option:
The relationship between bond interest rates (yields) and bond prices
The relationship between liquidity and bond interest rates (yields)
The relationship between risk and bond interest rates (yields)
The relationship between time to maturity and bond interest rates (yields)
In a financial market where information is symmetric:
Select correct option:
The same information would be known by both parties in a transaction
One party to a transaction knows information the other party does not
The ability to obtain information is available to only one party
All of the given options
Other things remaining equal, the liquidity premium theory is based upon the idea that ____________.
Select correct option:
Investors prefer long-term bonds
Investors prefer short-term bonds
Investors are indifferent between short-term and long-term bonds
Investors prefer intermediate-term bondsSpreading involves:
Select correct option:
Finding assets whose returns are perfectly negatively correlated
Building a portfolio of assets whose returns move together
Investing in bonds and avoiding stocks during bad times
Adding assets to a portfolio that move independently -
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MGT411 Solved MCQ1 from Quiz #2
The Financial Systems makes it easier to trade because it:
Select correct option: Facilitate Payments
Channels Funds from Savers to Borrowers
Enables Risk Sharing
All of the given options
The process of financial intermediation:
Select correct option:
Creates a net cost to an economy but is unavoidable
Is used primarily in underdeveloped countries
Is always used when a borrower needs to obtain funds
Increases the economy's ability to produce
What is true relationship between return and risk?
Select correct option:
Lower the risk greater the return
Greater the risk greater the return
Greater the risk the return will remain constant
Financial instruments are evolved just as ____________.
Select correct option:
Currency
Stock
Bond
Commodity
Beside default risk which one if the following factor affects the return on bond?
Select correct option:
Taxes
Monetary policy
Junk bonds
Debt
The second important factor that affects the return on a bond is taxes
Which of the following is the measure of likelihood that an event will occur?
Select correct option:
Risk
Probability
Frequency
According to the liquidity premium theory of the term structure, when the yield curve has its usual slope, the market expects
Select correct option:
Short-term interest rates to rise sharply
Short-term interest rates to stay near their current levels
Short-term interest rates to drop sharply
Short-term interest rates does not change
Home loans and car loans are the example of which one of the following?
Select correct option:
Mortgage loans
Pledge
Fixed Payment Loans
Fixed Payment Loans
They promise a fixed number of equal payments at regular intervals. Home mortgages and car loans are examples of fixed payment loans.
Which one of the following is the procedure of finding out the Present Value (PV)?
Select correct option:
Discounting
Compounding
Time value of money
Bond pricing
Considering the Liquidity Premium Theory, if investors expect short term interest rates to decrease:
Select correct option:
The yield curve must have a positive slope
The yield curve must be inverted
The yield curve could be flat
The slope of the yield curve should actually increase
Most of the people among us are ___________.
Select correct option:
Risk lovers
Risk enhancers
Risk averse
Risk tolerating
A risk-averse investor will:
Select correct option:
Always prefer an investment with a lower expected return
Always prefer an investment with a certain return to one with the same expected return but any amount of uncertainty
Always require a certain return
Always focus exclusively on the expected return
The liquidity premium theory suggests that yield curves should usually be:
Select correct option:
Up-sloping
Inverted
Flat
Up-sloping through year 1, then flat thereafter
Wider the range of outcome wider will be the ___________.
Select correct option:
Risk
Profit
Probability
Measuring Risk
Most of us have an intuitive sense for risk and its measurement; The wider the range of outcomes the greater the risk
The return on holding a bond till its maturity is called:
Coupon rate
Yield to maturity
Current yield
Fixed return
If information in a financial market is asymmetric, this means:
Select correct option:
Borrowers and lenders have perfect information
Borrowers would have more information than lenders
Borrowers and lenders have the same information
Lenders lack any information
According to the rule of 72 for reasonable rates of return, the time it takes to __________ the money will be t =72/i%
Select correct option:
Doubles
Triples
Halves
3/4
Stock market bubbles can lead to:
Select correct option:
An inefficient allocation of resources
Stock market crashes
Patterns of volatile returns from the stock market
All of the given options
Which one of the following is true for the relationship between the yield of taxable and tax exempt bond?
Select correct option:
Higher the tax rate wider the gap between the yield of taxable and tax exempt bond
Taxable bond yield is always greater than tax exempt bond
Higher the tax rate shorter the gap between yield of taxable and tax exempt bond
Lower the tax rate wider the gap between yield of taxable and tax exempt bond
change
The Dividend-Discount Model of stock valuation:
Select correct option:
Takes the annual dividend, adds it to the expected future selling price and divides by the number of years to get the current price
Takes the net present value of expected dividends and add it to the future sale price of the stock
Takes the net present value of the expected future price of the stock and add the annual dividend
Is an application of the net present value formula
In which of the following bonds we may ignore the default risk?
Select correct option:
Privately issued bonds
Government issued bonds
Bonds issued by Corporate
All of the given options
The slope of the yield curve seems to predict the performance of the economy with:
Select correct option:
Usually 3 months lag
Usually two years lag
Usually within few weeks
Usually one year lag
The GDP deflator is calculated as___________.
Select correct option:
Nominal GDP/Real GDP *100
Real GDP/Nominal GDP
Nominal GDP – Real GDP
Real GDP – Nominal GDP
What is true about the relationship between standard deviation and risk?
Select correct option:
Greater the standard deviation greater will be the risk
Greater the standard deviation lower will be the risk
Greater the standard deviation risk remains the same
No relation between them
The concept of limited liability says a stockholder of a corporation:
Select correct option:
Is liable for the corporation's liabilities, but nothing more
Cannot receive dividends that exceed their investment
Cannot own more than fiver percent of any public corporation
Cannot lose more than their investment
Which of the following best describes the relationship between Bond prices and yields?
Select correct option:
Move together inversely
Bond yields do not change since the coupon is fixed
Move together directly
Are independent of each other
Which of the following best expresses the payment a lender receives for lending their money for four years?
Select correct option:
PV(1+i)4
PV/(1 + i)4
4PV
PV/(1 - i)4
If YTM is greater than the coupon rate the price of the bond is __________.
Select correct option:
Greater than its face value
Lower than its face value
Equals to its face value
All of the given options
Bond Price < Face Value:
Coupon Rate < Current Yield < Yield to Maturity
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MGT411 Solved MCQ2 from Quiz # 1
Chapter (1-15)
When a bond becomes more liquid relative to its alternatives, the demand curve for bonds shifts to the:
Select correct option:
Right
Left
No change
None of the given options
Consumer Price Index (CPI) measures the:
Select correct option:
Changes in the quantity
Changes in the prices
Changes in the cost
Changes in the profit
A risk-averse investor will:
Select correct option:
Always prefer an investment with a lower expected return
Always prefer an investment with a certain return to one with the same expected return but any amount of uncertainty
Always require a certain return
Always focus exclusively on the expected return
Which of the following best represent the true relationships between interest rates and bond prices?
Select correct option:
Move in the same direction
Move in opposite direction
Sometimes move in the same direction, some times in opposite direction
Have no relationship with each other (i.e. they are independent)
Which one of the following is a component of wealth that is held in a readily spendable form?
Select correct option:
Money
Bonds
Stocks
Income
The return on the bond is equal to which of the following?
Select correct option:
Coupon rate + rate of capital gains
Current yield + rate of capital gains
Coupon rate - rate of capital gains
Current yield - rate of capital gains
Time affects the value of which of the following?
Select correct option:
Financial Instruments
Financial Markets
Financial Institutions
Central Banks
Which of the following statement is true about the relation ship between bond ,coupon payment and interest?
Select correct option:
Coupon payments fall, the interest rate falls, and Bond price will rise
Coupon payments rises, the interest rate falls, and Bond price will rise
Coupon payments fall, the interest rate falls, and Bond price will fall
Coupon payments rise, the interest rate falls, and Bond price will fall
The current yield on a $10,000, 5% coupon bond selling for $8,000 is:
Select correct option:
5.00%
6.25%
7.50%
8.00%
= coupon payment/price (so coupon payment 5%of 10,000 = 500)
= 500/8000 = .0625 *100 = 6.25%
There is no guarantee that a bond issuer will make the promised payments is known as which one of the following?
Select correct option:
Default risk
Inflation risk
Interest rate risk
Systematic risk
What will be the result of the difference of real and nominal interest rate?
Select correct option:
The cost of borrowing
The effect of inflation
The price of bonds
The return of bonds
-
-
-
MGT411 Solved MCQ1 from Quiz #1
Question # 5 of 20 ( Start time: 08:03:08 PM )
Total M - 1
The return on holding a bond till its maturity is called:
Select correct option:
Coupon rate
Yield to maturity
Current yield
Internal rate of return
Question # 6 of 20 ( Start time: 08:03:27 PM )
Total M - 1
Wider the range of outcome wider will be the ___________.
Select correct option:
Risk
Profit
Probability
Lose
Question # 7 of 20 ( Start time: 08:04:42 PM )
Total M - 1
The interest rate that is involved in _____________ calculation is referred to as discount rate
Select correct option:
Present value
Future value
Intrinsic value
Discount value
Question # 8 of 20 ( Start time: 08:06:05 PM )
Total M - 1
Bonds that are issued by Government are called _________.
Select correct option:
Government bond
Treasury bond
Corporate bond
Callable Bonds
Question # 13 of 20 ( Start time: 08:13:26 PM )
Total M - 1
If a bond sells at a premium, where price exceeds face value, then we would expect to see:
Select correct option:
Market interest rate the same as the coupon rate
Market interest rates above the coupon rate
Market interest rates below the coupon rate
All of the given options
Question # 14 of 20 ( Start time: 08:14:49 PM )
Total M - 1
With direct finance we mean which of the following?
Select correct option:
Individuals (or firms) borrow directly from the savers
Individuals (or firms) borrow directly from banks.
Individuals deposit savings directly in banks.
Firms deposit savings directly in banks.
Question # 15 of 20 ( Start time: 08:16:14 PM )
Total M - 1
Investors will hold higher compensation for the __________ investment.
Select correct option:
More risky
Less risky
Fixed return
Less dividend
Question # 16 of 20 ( Start time: 08:17:16 PM )
Total M - 1
Which of the following best expresses the proceeds a lender receives from a simple loan?
Select correct option:
PV(1 + i)
FV/i
PV + i
PV/i
Question # 17 of 20 ( Start time: 08:18:11 PM )
Total M - 1
Select correct option:A financial instrument in which a borrower obtains resources from a lender immediately in exchange for a promised set of payments in the future is called as ___________.Bond
Bank Loan
Home Mortgage
Futures Contract
Question # 18 of 20 ( Start time: 08:19:18 PM )
Total M - 1
According to the rule of 72 for reasonable rates of return, the time it takes to __________ the money will be t =72/i%
Select correct option:
Doubles
Triples
halves
3/4
Question # 19 of 20 ( Start time: 08:19:37 PM )
Total M - 1
The return on the bond is equal to which of the following?
Select correct option:
Coupon rate + rate of capital gains
Current yield + rate of capital gains
Coupon rate - rate of capital gains
Current yield - rate of capital gains
Question # 20 of 20 ( Start time: 08:21:06 PM )
Total M - 1
A loan that is used to purchase the real estate is known as:
Select correct option:
Real estate loan
Home mortgages
Fixed payment loan
Home loan
If the annual interest rate is 6% (.06); the price of a one year Treasury bill would be:
$94.00
$94.33
$95.25
$96.10100/1.06=94.33
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