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We have different option to invest the money, similarly we may deposit to earn the
interest such Interest rate exist owing to -----.
A. Opportunity cost
B. Fixed cost
C. Variable cost
D. Semi- variable cost
2. If the bond price is less than its face value, what will be the relationship among
current yield, coupon rate and YTM?
A. Current yield < coupon rate < Yield to Maturity
B. Yield to maturity > current yield >coupon rate
C. Coupon Rate > Current Yield > Yield to Maturity
D. Coupon Rate = Current Yield = Yield to Maturity
3. Arbitrageurs in the stock markets and in foreign exchange markets are classified
under
A. Risk neutral
B. Risk averse
C. Risk lover
D. Value at risk
5. When the bond demand curve shift the leftward what will happen?
A. Bond demand increases
B. Bond demand decreases
C. Bond demand constant
D. All of above
A shift in the demand curve to the left or right represents a change in consumer
preferences. A shift to the right indicates that an item has become more commercially
desirable and that a larger number will be sold at a given price. A shift to the left is just
the opposite, indicating that a marketplace good is less desirable and that fewer items
will be sold at a given price.
6. You deposit money into your bank account, which of the following entry Bank will
pass in its books of account?
A. Debit cash account
B. Debt your account
C. Reverse the entry
D. Debit assets account
8. Core principles of Money and Banking include each of the following except?
A. People act rationally
B. Time has value
C. Information is the basis for decisions
D. Risk requires compensation
In 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 rate
The 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 types
Lesson 24
A 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 Capital
Lesson 23
Combination of term life insurance and a savings account is called as ________.
Term life insurance
Whole life insurance
Group life insurance
None of the given option
Lesson 27
Whole life insurance: Combination of term life insurance and a savings account.
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
$20,000
80,00020%=16,000
16,000+15,000=31,000
High-powered money less reserves equals:
Required reserves
Currency in circulation
The monetary base
The non-borrowed monetary base
Lesson 33
Currency 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.
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
The current yield on a $10,000, 5% coupon bond selling for $8,000 is:
Risk
Profit
Probability
Lose
Question # 7 of 20 ( Start time: 08:04:42 PM )
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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 )
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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 )
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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 )
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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.