MGT411 – Money & Banking
Online Quiz # 3
Solved by Omer Chaudhry <omer.chaudhry7@gmail.com>
(vuZs Solution Team)
January 14, 2010
 |
| http://groups.google.com/group/vuZs |
| Visit this group |
__________ 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
A typical bank will offer ________ type/s of checking accounts.
Select correct option:
Only one type
Two types
Four types
Six or more types
Without the ability of financial intermediaries to pool the resources of small savers:
Select correct option:
The economy would likely grow faster
People would likely save more
The risk associated with lending would increase
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
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
___________ 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
Nontransactions Deposits:
These include savings and time deposits and account for nearly two-thirds of all commercial
bank liabilities.
http://groups.google.com/group/vuZs
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
Which one of the following is NOT true for the expectation hypothesis?
Select correct option:
Risk free interest rate can be computed
There is uncertainty in the future
Identifying yield of bond today that will be available next year
It focuses on risk free interest rate and the risk premium
Expectations Hypothesis
The risk-free interest rate can be computed, assuming that there is no uncertainty about the
future
Question # 9 of 15 ( Start time: 05:13:38 AM )
If bond's rating is lower, what will be its price?
Select correct option:
Higher
Lower
Equal to
No change
One argument for an independent central bank is:
Select correct option:
Without independence competent people would not take a position in a central bank
Successful monetary policy requires a long time horizon usually well beyond the next election of most public officials
Politicians have a long-run focus that is not well tuned to addressing economic problems
Central bankers have a short run focus that usually corrects problems faster
Successful monetary policy requires a long time horizon, which is inconsistent with the need of
politicians to focus on short-term goals.
Which one of the following agencies assesses the default risk of different issuers?
Select correct option:
Insurance companies
Bond issuing
Credit rating
Recruitment agencies
Which of the following is the measure of likelihood that an event will occur?
Select correct option:
Risk
Probability
Frequency
Outcom
Beside default risk which one if the following factor affects the return on bond?
Select correct option:
Taxes
Monetary policy
Junk bonds
Debt
Which of the following is the least liquid of all?
Select correct option:
Money
Bonds & stocks
Lands & buildings
None of the given options
A bank can usually offer a saver a higher return for the same risk because:
Select correct option:
The bank can usually purchase assets at a higher cost than any one saver
The bank can pool the resources of larger savers and purchase lower denominated assets
Economies of scale can be applied by the bank in its purchase of assets
None of the given options
