MGT411 Solved MCQ1 from Quiz #2
Solved by vuZs Solution Team
Zubair Hussain <zubair254@gmail.com>
Question # 1 of 20
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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
Question # 2 of 20
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 # 3 of 20
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
Question # 4 of 20
Financial instruments are evolved just as ____________.
Select correct option:
Currency
Stock
Bond
Commodity
Question # 5 of 20
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
Question # 7 of 20 ( Start time: 06:31:33 PM ) Total Marks: 1
Which of the following is the measure of likelihood that an event will occur?
Select correct option:
Risk
Probability
Frequency
Question # 8 of 20
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
Question # 9 of 20 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
Question # 10 of 20
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
Question # 12 of 20
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 # 14 of 20
Most of the people among us are ___________.
Select correct option:
Risk lovers
Risk enhancers
Risk averse
Risk tolerating
Question # 15 of 20
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 # 16 of 20
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
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Current yield
Fixed return
Question # 20 of 20
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
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