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Thread: Solved paper MGT411- Money & Banking Fall 2009 Final Term

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    28 Solved paper MGT411- Money & Banking Fall 2009 Final Term

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    FINALTERM EXAMINATION
    Fall 2009
    MGT411- Money & Banking

    Question No: 1 ( Marks: 1 ) - Please choose one
    Stock exchange is an example of:

    ► Financial companies
    ► Financial institution
    Financial market
    ► Bank

    Question No: 2 ( Marks: 1 ) - Please choose one
    In electronic transfer the most common method is to send money through a system maintained by Federal reserve called __________.

    ► Fedex
    ► Fedwire
    ► Fedtransfer
    ► Fedmoney

    Question No: 3 ( Marks: 1 ) - Please choose one
    Financial markets enable the transfer of risk by:

    ► Not allowing risk averse investors access to U.S. Treasury bond markets
    ► Making sure that higher default risk is offset by greater liquidity
    Allowing firms less willing to bear risk to transfer risk to others who are more willing to bear risk
    ► Enabling even unsophisticated investors to purchase highly complex investment

    Question No: 4 ( Marks: 1 ) - Please choose one
    Risk sharing is the characteristic of which one of the following?

    ► Checks
    ► Checking accounts
    ► Money
    Bonds

    Question No: 5 ( Marks: 1 ) - Please choose one
    Suppose there are two investments, A and B, investment A has low standard deviation where as investment B has high standard deviation. What would you think that most people will choose?

    Investment A
    ► Investment B
    ► Indifference between them
    ► Insufficient information to decide

    Question No: 6 ( Marks: 1 ) - Please choose one
    If the annual interest rate is 6% (.06); the price of a one year Treasury bill would be:

    ► $94.00
    $94.33
    ► $95.25
    ► $96.10
    Question No: 7 ( Marks: 1 ) - Please choose one
    If YTM equals the coupon rate the price of the bond is __________.

    ► Greater than its face value
    ► Lower than its face value
    Equals to its face value
    ► Insufficient information is given

    Question No: 8 ( Marks: 1 ) - Please choose one
    The return on the bond is equal to which of the following?

    ► Coupon rate + rate of capital gains
    ► Current yield + rate of capital gains
    ► Coupon rate - rate of capital gains
    ► Current yield - rate of capital gains

    Question No: 9 ( Marks: 1 ) - Please choose one
    An increase in the expected inflation shifts the bond supply to the _________

    ► Right
    ► Left
    ► No change
    ► None of the given options

    Question No: 10 ( Marks: 1 ) - Please choose one
    Which of the following ratings shows “Highest quality and credit worthiness”?

    ► AAA
    ► AA
    ► BB
    ► A

    Question No: 11 ( Marks: 1 ) - Please choose one
    Which of the following patterns of term structure occur most frequently?

    ► Ascending yield curve
    ► Descending yield curve
    Flat yield curve
    ► Humped yield curve

    Question No: 12 ( Marks: 1 ) - Please choose one
    Which one of the following is NOT true for the expectation hypothesis?

    ► 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

    Question No: 13 ( Marks: 1 ) - Please choose one
    According to the liquidity premium theory of the term structure, when the yield curve has its usual slope, the market expects

    ► 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 No: 14 ( Marks: 1 ) - Please choose one
    The Segmented Markets Theory of term structure suggests that:

    Investors have strong preferences for bonds of a particular maturity
    ► Investors have no preference for short-term bonds over long-term bonds, or vice versa
    ► Interest rates on long-term bonds strongly influence the demand for short-term bonds
    ► Bonds of different maturities are perfect substitutes for each other

    Question No: 15 ( Marks: 1 ) - Please choose one
    Funds of depository institution are primarily used in which of the following?


    ►Corporate bonds, Government bonds, Stocks, Mortgage
    Cash, Loan, Securities
    ► Stocks, Government bonds, corporate bonds, commercial papers
    ► Commercial papers, Bonds

    Question No: 16 ( Marks: 1 ) - Please choose one
    Which one of the following refers to the risk assessment and loss reimbursement guarantee by the individual risk experts of the relevant field?

    Underwriting process
    ► Insurance process
    ► Research process
    ► None of the given options

    Question No: 17 ( Marks: 1 ) - Please choose one
    Regulators of credit unions are which of the following?

    ► Office of thrift Supervision
    State authorities
    ► National Credit Union Administration
    ► Federal Reserve System

    Question No: 18 ( Marks: 1 ) - Please choose one
    Central banks perform all of the following functions EXCEPT:


    ► Issue currency
    ► Operate a payments system
    ► Control the availability of money and credit
    Manage fiscal policy

    Question No: 19 ( Marks: 1 ) - Please choose one
    One advantage a central bank has over other businesses including banks is that___________.


    ► It receives all of its funding from the government
    ► It doesn't have stockholders
    It can control its balance sheet at its own will
    ► It doesn't have a board of directors

    Question No: 20 ( Marks: 1 ) - Please choose one
    If required reserves are expressed by RR ; the required reserve rate by rD and deposits by D; the simple deposit expansion multiplier is expressed as:


    ► rDD
    ► (1/rD) D
    1/rD
    ► rD times 10

    Question No: 21 ( Marks: 1 ) - Please choose one
    The central bank makes which type of loans?


    ► Primary credit
    ► Secondary credit
    ► Seasonal credit
    All of the given options

    Question No: 22 ( Marks: 1 ) - Please choose one
    According to Milton Friedman, central banks should set the money growth at:


    Constant rate
    ► Increasing rate
    ► Decreasing rate
    ► None of the given options

    Question No: 23 ( Marks: 1 ) - Please choose one
    The quantity of money people hold for transactions purpose depends on which of the following?


    ► Their nominal income
    ► The cost of holding money
    ► The availability of substitutes
    All of the given options

    Question No: 24 ( Marks: 1 ) - Please choose one
    Interest rate risk arises as a result of which one of the following consequences?

    ► It arises when banks make additional profit by using derivatives
    ► It arises when loan is not repaid
    ► It arises because of sudden demands of funds
    It arises when two sides of the balance sheet do not match up

    Question No: 25 ( Marks: 1 ) - Please choose one
    Bank-X's outstanding loans all have fixed interest rates, with maturities in excess of two years. Bank-X's deposit liabilities all have shorter maturity-no more than six months. Bank-X most obviously is facing:

    ► Liquidity risk
    ► Operational risk
    Interest rate risk
    ► Credit risk

    Question No: 26 ( Marks: 1 ) - Please choose one
    One thing that is true about economic policy in the U.S. is that:

    Monetary and Fiscal policy often times conflict
    ► Fiscal and monetary policy never conflict
    ► Monetary policy ultimately controls fiscal policy
    ► Fiscal policy ultimately controls monetary policy


    Question No: 27 ( Marks: 1 ) - Please choose one
    Which of the following type/s of transaction/s affect the balance sheets of both the central bank and the banking system?

    ► An open market operation
    ► Central bank’s extension of a discount loan
    All of the given options
    ► A foreign exchange intervention

    Question No: 28 ( Marks: 1 ) - Please choose one
    The use of lagged reserve accounting usually makes the demand for reserves:

    ► Highly unpredictable to the point of volatility
    ► Nearly constant with hardly any change at all
    Predictable
    ► Subject to daily changes by the Fed


    Question No: 29 ( Marks: 1 ) - Please choose one
    The portfolio demand for money reflects which of the following?

    ► The money we hold for our everyday transactions
    ► The money we hold to purchase stocks and bonds and other financial securities
    ► The portion of wealth people desire to hold in the form of money
    None of the given option

    Question No: 30 ( Marks: 1 ) - Please choose one
    The FOMC targets the federal funds rate, but if they are going to alter the course of the economy they must influence which one of the following?

    ► The money growth rate as well
    ► The long-term nominal interest rate as well
    The real interest rate as well
    ► The nominal exchange rate as well

    Question No: 31 ( Marks: 1 ) - Please choose one
    Which one of the following statement is true for investment if all other factors are held constant?

    ► An investment with less risk should sell for a lower price and offer a lower return
    ► An investment with more risk should sell for a lower price and offer a higher return
    An investment with less risk should sell for a lower price and offer a higher return
    ► An investment with more risk should offer a lower return and sell for a higher price

    Question No: 32 ( Marks: 1 ) - Please choose one
    Which of the following are without maturity dates?

    ► Zero coupon bonds
    ► Coupon securities
    Consols
    ► Preferred Bonds

    Question No: 33 ( Marks: 1 ) - Please choose one
    Banking is a combination of businesses designed___________.

    ► To deliver Services
    ► To pool the savings
    ► To make the loans
    All of the given options

    Question No: 34 ( Marks: 1 ) - Please choose one
    Well run banks have ________________.


    ► High interest income
    ► High interest margin
    High interest income and high interest margin
    ► Low interest income and low interest margin

    Question No: 35 ( Marks: 1 ) - Please choose one
    If a customer makes a withdrawal of $3 million, from where the bank will deduct this withdrawal?



    ► From capital
    ► From cash at hand
    From reserves
    ► Other assets

    Question No: 36 ( Marks: 1 ) - Please choose one
    Why banks do not like to meet their deposit outflows by contracting the asset side of the balance sheet.


    Because it will shrink the size of the bank
    ► Because it will shrink the size of the total assets
    ► Because it will increase the liabilities of the bank
    ► None of the given options

    Question No: 37 ( Marks: 1 ) - Please choose one
    Which of the following technique is necessary for making profit in a bank?


    ► Interest rate on liabilities must be lower
    ► Interest rate on deposits must be higher
    ► Interest rate on deposits must be higher than the interest rate on the liabilities
    Interest rate on deposits must be lower than the interest rate on the liabilities

    Question No: 38 ( Marks: 1 ) - Please choose one
    What is the impact of growth of international banking?

    ► It increase the competition in the banking market
    ► It increase the efficiency of banking market
    ► Profits are harder to come as borrowers and depositors have more options
    All of the given options

    Question No: 39 ( Marks: 1 ) - Please choose one
    Managing _______ is a major concern for today’s banks.


    Trading risk
    ► Interest rate risk
    ► Systematic risk
    ► Other risk

    Question No: 40 ( Marks: 1 ) - Please choose one
    Which of the following provides a payment to the policyholder’s beneficiaries in the event of the insured’s death at any time during the policy term?



    Life insurance
    ► Term life insurance
    ► Whole life insurance
    ► Causality insurance

    Question No: 41 ( Marks: 1 ) - Please choose one
    Which of the following is included in the government-sponsored enterprise?


    ► Small and Medium Enterprise (SME)
    ► House Building Finance Corporation (HBFC)
    ► Khushhali Bank
    All of the given options

    Question No: 42 ( Marks: 1 ) - Please choose one
    Which of the following are the primary uses of funds of Finance Company?


    ► Cash, loans, securities
    ► Corporate bonds, government bonds
    ► Commercial paper, bonds, mortgages
    Bonds, bank loans, commercial paper

    Question No: 43 ( Marks: 1 ) - Please choose one
    Which of the following situation in a central bank can wreak havoc on the economic and financial system of a country?


    ► Weak fiscal policy
    ► Extreme political pressure
    ► Incompetence of the central banks
    Extreme political pressure and incompetence of the central banks

    Question No: 44 ( Marks: 1 ) - Please choose one
    Which function was the Central Bank originally designed to perform?


    Control the money supply
    ► Clearing checks
    ► Acting as lender of last resort
    ► All of the above

    Question No: 45 ( Marks: 1 ) - Please choose one
    Which of the following are costs of high and/or unexpected inflation?


    ► Increased uncertainty
    ► Higher nominal interest rates
    ► Hurts net creditors
    All of the above

    Question No: 46 ( Marks: 1 ) - Please choose one
    Which of the following side of a balance sheet represent that central bank is a government’s bank?


    ► Asset side of the balance sheet
    ► Liabilities side of the balance sheet
    ► Equity side of the balance sheet
    The whole balance sheet

    Question No: 47 ( Marks: 1 ) - Please choose one
    The legal requirement of reserve of a bank is called________.



    ► Actual reserve
    Required reserve
    ► Excess reserve
    ► None of the given option

    Question No: 48 ( Marks: 1 ) - Please choose one
    If a bank holds excess reserve it depends upon which of the following?


    ► Cost of holding the excess reserve
    ► Benefit of holding excess reserve
    ► Duration of holding excess reserve
    Cost and benefit of holding excess reserve

    Question No: 49 ( Marks: 1 ) - Please choose one
    The number of times each rupee is used (per unit of time) in making payments is called the_________.


    Velocity of money
    ► Quantity of money
    ► Exchange of money
    ► Aggregate money

    Question No: 50 ( Marks: 1 ) - Please choose one
    Portfolio demand for money goes up as the riskiness of the alternative __________

    Falls
    ► Rises
    ► Remain stable
    ► Cannot be determined

    Question No: 51 ( Marks: 1 ) - Please choose one
    Monetary policy makers react to changes in current inflation by changing the __________


    ► Effective interest rate
    ► None of the given options
    Real interest rate
    ► Nominal interest rate

    Question No: 52 ( Marks: 1 ) - Please choose one
    With a higher inflation target, the central bank will set a lower current __________ at every level of current inflation, shifting the monetary policy reaction curve to the right.


    Real interest rate
    ► Nominal interest rate
    ► Effective interest rate
    ► None of the given options

    Question No: 53 ( Marks: 1 ) - Please choose one
    Who set the relationship between current inflation and real interest rate?



    Monetary policy makers
    ► Fiscal policy makers
    ► Budget makers
    ► Monetary policy maker or fiscal policy maker

    Question No: 54 ( Marks: 1 ) - Please choose one
    Inflation falls and output rises until the economy returns to the point where current output _______ potential output and inflation equals the central bank’s target.



    Equals
    ► Greater than
    ► Lower than
    ► Incomplete information

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    28 Here are some more solved Final Term Paper of MGT411

    solved Final Term Paper of MGT411
    Attached Files Attached Files
    Last edited by viki; 08-03-2010 at 12:10 AM.
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    28 Here Are Some more Papers of MGT411

    I am not responsible for any of the mistake made in the assignment solutions, MCQ's Solutions, GDB Solutions or any other solution which i provide the students of VU. I just try to help the students while giving the idea's Simply the rest of the work they have to do on there own. They must make the changes and then submit the solution


    7 Papers Of MGT411 Solved All in One
    Finalterm Papers Solved MGT411 500 Objective
    Finalterm Papers Solved MGT411 Subjective
    Attached Files Attached Files
    Last edited by viki; 08-03-2010 at 12:52 AM.
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