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
Developed financial system is essential for
Select correct option:
Proper allocation of resources
Expansion of businesses and increase in production level
Increase in the growth rate of GDP
All of above
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
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
Which of the following NOT true for financial institutions?
Select correct option:
It reduces the transaction cost
It reduce the information cost
It reduces the asymmetric information
It doesn’t make long term loans
A zero coupon bond:
Select correct option:
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
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
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%
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 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
What is difference between warrant and check?
Select correct option:
Check is cleared from bank but warrant is not cleared by bank
Check is not necessarily pay able on demand but warrant is payable on demand
Warrant is not necessarily pay able on demand but check is payable on demand
None of above
The 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
The bond rating of a security refers to which of the followings?
Select correct option:
The size of the coupon payment relative to the face value
The return a holder is likely to receive
The likelihood the lender/borrower will be repaid by the borrower/issuer
The years until the bond matures
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
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.
Which of the variable measured in point of time?
Select correct option:
Flow variable
Stock variable
Both flow variable and stock variable
None of above
Economic development measured by
Select correct option:
Real GDP/population
Real GDP/ nominal GDP
Real GDP/Real GNP
None of above
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
Which of the following is the least liquid of all?
Select correct option:
Money
Bonds & stocks
Lands & buildings
None of the given options
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
Systematic risks affect everyone and it can be minimized by
Select correct option:
Individual efforts
Business
Manufacturer
Improvement in overall economic performance of economy
Most of the people among us are ___________.
Select correct option:
Risk lovers
Risk enhancers
Risk averse
Risk tolerating
Financial instruments can’t be used
Select correct option:
For settlement of obligations
As store of value
To quote prices
For transfer the risk of market fluctuations from one party to another
Which is broadly used as money aggregate?
Select correct option:
M1
M2
M3
None of Above
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
Saving occurs normally in ……….
Select correct option:
Early age
Middle age
Old age
None of above
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 inves tment
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
The__________ are an assessment of the creditworthiness of the corporate issuer.
Select correct option:
Bond yield
Bond ratings
Bond risk
Bond price
Mr A need 1000000 to buy a car for his personal use he contact with bank that give his loan this would be called
Select correct option:
Direct finance
Indirect finance
Facilitate payment
All of above
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
Which of the following is NOT a depository financial institution?
Select correct option:
Credit Union
Savings and Loan
Commercial bank
Life Insurance Company
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
Financial instruments are evolved just as __________.
Select correct option:
Currency
Stock
Bond
Commodity
We need ________ to carry out day to day transactions.
Select correct option:
Money
Bonds
Stocks
Loans
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
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 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
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 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
Most of the people among us are _________.
Select correct option:
Risk lovers
Risk enhancers
Risk averse
Risk tolerating
_________ is the value today of a payment that is promised to be made in the future.
Select correct option:
Future value
Present value
Agreed value
None of the given options
A financial instrumnet in which a borrower obtains resources from a lender immediately in exchange for a promised set of payments in the future is called as_________.
Select correct option:
Bond
Bank Loan
Home Mortgage
Futures Contract
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
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