McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Master of Commerce (M.com) , Master of Business Administration (MBA) .
Chapters
| 101. |
The major liabilities of the commercial banks are |
| A. | junk bonds |
| B. | deposits |
| C. | loans |
| D. | swap bonds |
| Answer» B. deposits | |
| 102. |
The money market where securities are issued by governments to obtain funds for short term is classified as |
| A. | money market instruments |
| B. | capital market instruments |
| C. | counter instruments |
| D. | long term instruments |
| Answer» A. money market instruments | |
| 103. |
The federal funds, bankers acceptance, commercial paper and repurchase agreements are classified as |
| A. | counter instruments |
| B. | long term instruments |
| C. | money market instruments |
| D. | capital market instruments |
| Answer» C. money market instruments | |
| 104. |
In financial transactions, the risk that there will be no profit in selling of this asset is classified as |
| A. | price risk |
| B. | profit risk |
| C. | selling risk |
| D. | financial risk |
| Answer» A. price risk | |
| 105. |
The type of risk in which the value of liabilities and assets is affected by the exchange rate is classified a |
| A. | economic rates |
| B. | foreign exchange risk |
| C. | selling rate |
| D. | buying rates |
| Answer» B. foreign exchange risk | |
| 106. |
In commercial banks, the subordinate debentures and subordinate notes are considered as |
| A. | stated rates |
| B. | banks debentures |
| C. | banks liabilities |
| D. | banks deposits |
| Answer» C. banks liabilities | |
| 107. |
The type of financial security having payoffs which are connected to some securities Issued some time back is classified as |
| A. | linked security |
| B. | previous security |
| C. | payoff security |
| D. | derivative security |
| Answer» D. derivative security | |
| 108. |
A bond whose coupon rate is below the current market rate of interest will have a price: |
| A. | more than its maturity value of Rs.100. |
| B. | less than its maturity value. |
| C. | equal to its maturity value |
| D. | none |
| Answer» C. equal to its maturity value | |
| 109. |
A widening of the difference between the return on corporate bonds and on government bonds might suggest which of the following? |
| A. | The economy is on the brink of recession. |
| B. | Interest rates are going to rise in future. |
| C. | Government bonds are becoming more risky compared to corporate bonds. |
| D. | Investors should avoid government bonds. |
| Answer» A. The economy is on the brink of recession. | |
| 110. |
In a situation where share prices are generally depressed because long-term interest rates are expected to rise in future, a large firm looking for long-term finance would normally consider: |
| A. | issuing long-dated bonds. |
| B. | making a new share issue. |
| C. | borrowing from its bank on overdraft. |
| D. | borrowing in the interbank market. |
| Answer» A. issuing long-dated bonds. | |
| 111. |
Using a supply and demand framework, what is likely to happen to share prices in general if the central bank unexpectedly raises interest rates? |
| A. | The demand curve shifts to the left. |
| B. | The supply curve shifts to the left. |
| C. | Both curves shift outwa |
| Answer» A. The demand curve shifts to the left. | |
| 112. |
Using a supply and demand framework, what is likely to happen to share prices in general if the central bank raises interest rates in response to a fall in the exchange rate? |
| A. | The supply curve shifts to the left. |
| B. | No changes. |
| C. | Both curves shift inwa |
| Answer» B. No changes. | |
| 113. |
Which of the following actions might you expect lenders to take during periods of variable and unpredictable inflation? |
| A. | Reduce the amount of lending they are prepared to do. |
| B. | Increase the average length of loans they are willing to make. |
| C. | Increase the amount of lending they are prepared to do. |
| D. | Reduce the average length of loans they are willing to make. |
| Answer» D. Reduce the average length of loans they are willing to make. | |
| 114. |
In the 'walking stick' hypothesis, the yield curve slopes: |
| A. | down and then up |
| B. | down |
| C. | up |
| D. | up and then down |
| Answer» D. up and then down | |
| 115. |
Secondary markets |
| A. | engage in buying and selling that is out of the public view. |
| B. | are where governments go to finance ongoing operations. |
| C. | include centralized exchanges, over-the-counter markets, and electronic communication networks. |
| D. | include all of the above. |
| Answer» C. include centralized exchanges, over-the-counter markets, and electronic communication networks. | |
| 116. |
Financial institutions: |
| A. | provide access to the financial markets. |
| B. | are also known as financial intermediaries. |
| C. | include banks, insurance companies, securities firms, and pension funds. |
| D. | include all of the above. |
| Answer» B. are also known as financial intermediaries. | |
| 117. |
Debt markets: |
| A. | are markets for money. |
| B. | are markets for bonds, loans, and mortgages. |
| C. | are markets for stocks. |
| D. | are markets for either stocks or bonds. |
| Answer» B. are markets for bonds, loans, and mortgages. | |
| 118. |
Centralized exchanges: |
| A. | are electronic systems that bring buyers and sellers together for electronic execution. |
| B. | are markets where claims based on an underlying asset are traded for payment at a later date. |
| C. | are markets where financial claims are bought and sold for immediate cash payment. |
| D. | are secondary markets where buyers and sellers meet in the same location. |
| Answer» D. are secondary markets where buyers and sellers meet in the same location. | |
| 119. |
Debt and equity markets: |
| A. | are markets where financial claims are bought and sold for immediate cash payments. |
| B. | are decentralized secondary markets where dealers stand ready to buy and sell securities electronically. |
| C. | are markets where newly issued securities are so |
| Answer» A. are markets where financial claims are bought and sold for immediate cash payments. | |
| 120. |
The internal rate of return is: |
| A. | the interest rate at which money is borrowed for investment. |
| B. | the interest that allows a profit. |
| C. | profit divided by investment amount. |
| D. | the interest rate that equates the present value of an investment with its cost. |
| Answer» D. the interest rate that equates the present value of an investment with its cost. | |
| 121. |
Coupon bonds: |
| A. | require borrowers to pay the lender coupon payments until maturity, when the borrower pays the principle. |
| B. | require borrowers to pay lenders coupon payments until maturity. |
| C. | require borrowers to pay lenders principle and interest at maturity. |
| D. | require only interest payments until maturity when principle and interest are paid. |
| Answer» A. require borrowers to pay the lender coupon payments until maturity, when the borrower pays the principle. | |
| 122. |
The present value of a coupon bond is: |
| A. | the present value of the coupon payments plus the future value of the principle payment. |
| B. | the sum of the coupon payments and the principle payment. |
| C. | the sum of the coupon payments. |
| D. | the present value of the coupon payments and the present value of the principle payment. |
| Answer» D. the present value of the coupon payments and the present value of the principle payment. | |
| 123. |
The real interest rate: |
| A. | is the nominal interest rate + inflation. |
| B. | greater than the nominal interest rate when inflation is greater than0. |
| C. | is the interest rate expressed in current dollar terms. |
| D. | is the inflation adjusted interest rate. |
| Answer» D. is the inflation adjusted interest rate. | |
| 124. |
The nominal interest rate indicates that: |
| A. | people care only about the number of dollars. |
| B. | people care about what dollars can buy. |
| C. | people want compensated only for inflation. |
| D. | people only require the opportunity cost as payment when lending. |
| Answer» B. people care about what dollars can buy. | |
| 125. |
The commercial paper issued with low interest rate thus the commercial paper is categorized as |
| A. | payables rating |
| B. | commercial rating |
| C. | poor credit rating |
| D. | better credit rating |
| Answer» D. better credit rating | |
| 126. |
The maximum maturity days of holding commercial paper are |
| A. | 170 days |
| B. | 270 days |
| C. | 120 days |
| D. | 5 days |
| Answer» B. 270 days | |
| 127. |
In borrowing and lending of federal funds, the federal funds rate is result of function between |
| A. | assets and liability |
| B. | cost and marketing |
| C. | supply and demand |
| D. | income and expense |
| Answer» C. supply and demand | |
| 128. |
The demand for heavy loans can cause |
| A. | excess funds for banks |
| B. | deficiencies for banks |
| C. | organized reservation |
| D. | competitive reservations |
| Answer» B. deficiencies for banks | |
| 129. |
The agreement which incurs the transaction between two parties and promise held that second party will sell security at specific maturity is classified as |
| A. | repurchasing commercial notes |
| B. | repurchase bills |
| C. | purchase agreement |
| D. | reverse repurchase agreement |
| Answer» D. reverse repurchase agreement | |
| 130. |
Which among the following was set up by RBI in 1988 jointly with public sector banks and all India Financial Institutions to develop the money market & provide liquidity to money market instruments as sequel to Vaghul Working Group recommendations? |
| A. | Discount and Finance House of India Ltd (DFHI) |
| B. | Central Depository Services (India) Limited (CDSL) |
| C. | Financial Intelligence Unit India (FIU-I |
| Answer» A. Discount and Finance House of India Ltd (DFHI) | |
| 131. |
Which among the following is correct regarding BPLR or bench mark prime lending rate? |
| A. | It is lowest interest rate below PLR charged by a bank from the best customer of the financial year |
| B. | It is highest interest rate above PLR charged by a bank from the any customer of the financial year |
| C. | Both (a) & (b) |
| D. | None of the above |
| Answer» A. It is lowest interest rate below PLR charged by a bank from the best customer of the financial year | |
| 132. |
Which among the following coined the term “Second generation Reforms”? |
| A. | World Bank |
| B. | International Monetary Fund |
| C. | Reserve bank of India |
| D. | SBI |
| Answer» B. International Monetary Fund | |
| 133. |
The commercial paper issued with low interest rate thus the commercial paper are categorized as |
| A. | payables rating |
| B. | commercial rating |
| C. | poor credit rating |
| D. | better credit rating |
| Answer» D. better credit rating | |
| 134. |
In primary markets, first time issued shares to be publicly traded in stock markets is considered as |
| A. | traded offering |
| B. | public markets |
| C. | issuance offering |
| D. | initial public offering |
| Answer» D. initial public offering | |
| 135. |
Transaction cost of trading of financial instruments in centralized market is classified as |
| A. | flexible costs |
| B. | low transaction costs |
| C. | high transaction costs |
| D. | constant costs |
| Answer» B. low transaction costs | |
| 136. |
Stocks or shares that are sold to investors without transacting through financial institutions are classified as |
| A. | direct transfer |
| B. | indirect transfer |
| C. | global transfer |
| D. | pension transfer |
| Answer» A. direct transfer | |
| 137. |
Type of financial security which have linked payoff to another issued security is classified as |
| A. | linked security |
| B. | derivative security |
| C. | payable security |
| D. | non-issuing security |
| Answer» B. derivative security | |
| 138. |
In primary markets, property of shares which made it easy to sell newly issued security is considered as |
| A. | increased liquidity |
| B. | decreased liquidity |
| C. | money flow |
| D. | large funds |
| Answer» A. increased liquidity | |
| 139. |
Liquidity status of certificate of deposit which is more negotiable is considered as |
| A. | certified liquidity |
| B. | term liquidity |
| C. | more liquid |
| D. | less liquid |
| Answer» C. more liquid | |
| 140. |
Commercial paper issued with low interest rate thus commercial paper are categorized as |
| A. | payables rating |
| B. | commercial rating |
| C. | poor credit rating |
| D. | better credit rating |
| Answer» D. better credit rating | |
| 141. |
Maximum maturity days of holding commercial paper are |
| A. | 170 days |
| B. | 270 days |
| C. | 120 days |
| D. | 5 days |
| Answer» B. 270 days | |
| 142. |
In borrowing and lending of federal funds, federal funds rate is result of function between |
| A. | assets and liability |
| B. | cost and marketing |
| C. | supply and demand |
| D. | income and expense |
| Answer» C. supply and demand | |
| 143. |
A "hybrid" fund is one that: |
| A. | invests in both bonds and stocks |
| B. | started as a closed-end investment company, but changed to a mutual fund |
| C. | has different "loads" for different classes of investors in the fund |
| D. | can serve as an investment vehicle, but also provides check-writing privileges. |
| Answer» C. has different "loads" for different classes of investors in the fund | |
| 144. |
The first mutual fund was established in the: |
| A. | 1890s |
| B. | 1920s |
| C. | 1940s |
| D. | 1960s |
| Answer» D. 1960s | |
| 145. |
A mutual fund that invests solely in stocks would be categorized as a/an: |
| A. | bond fund |
| B. | fixed income fund |
| C. | money market fund |
| D. | equity fund |
| Answer» B. fixed income fund | |
| 146. |
A large number (about 25%) of long-term mutual funds are _____________ funds, buying securities in proportions similar to those of a major stock index. |
| A. | small cap |
| B. | large cap |
| C. | fixed income |
| D. | index |
| Answer» D. index | |
| 147. |
The bulk of the nation's money supply is created within the private banking system and is sometimes called: |
| A. | inside money |
| B. | net money |
| C. | base money |
| D. | outside money |
| Answer» B. net money | |
| 148. |
A type of bank account designed to compete with money market mutual funds, and having limited check-writing services, is known as: |
| A. | wholesale CDs |
| B. | demand deposit |
| C. | repurchase agreement |
| D. | NOW account |
| Answer» A. wholesale CDs | |
| 149. |
__________would encompass fees received by the bank, but not revenues coming from interest charges on loans. |
| A. | Net interest margin |
| B. | Spread |
| C. | Non interest income |
| D. | Non interest expense |
| Answer» B. Spread | |
| 150. |
Another name used for a bank income statement is: |
| A. | report of income |
| B. | statement of retained earnings |
| C. | overhead efficiency report |
| D. | report of condition |
| Answer» D. report of condition | |
Done Studing? Take A Test.
Great job completing your study session! Now it's time to put your knowledge to the test. Challenge yourself, see how much you've learned, and identify areas for improvement. Don’t worry, this is all part of the journey to mastery. Ready for the next step? Take a quiz to solidify what you've just studied.