MGT411 Final Term Objective

FINALTERM EXAMINATION · Spring 2010 · MGT411 Solved paper wd refrence. by Portal · team... · NOTE: Solve these papers by ur self no One · responsible fOr any cOntent

Q1. _____________ are organized to eliminate the need of costly information gathering. (1 marks)

Central banks

Stock exchanges

Insurance companies

Q2. Which one of the following financial instrument is NOT primarily used as store of (1 marks)

value?

Banks loans Asset-backed securities

Insurance contracts

Stocks

Q3. Which one of the following is NOT an example of Centralized exchange? New York Stock Exchange (1 marks)

NASDAQ Large exchanges in London

Large exchanges in Tokyo

Q4. A borrower is promised a $100 payment (including interest) one year from today. (1 marks)

If the lender has an 8% opportunity cost of money, he should be willing to accept what amount today? Rs.100.00 Rs.108.20

Rs.92.59

Rs.96.40

Q5. _________ measures the probability of worst outcome in any investment project. (1 marks)

Variance Standard deviation

Value at risk ( page # 35 )

Hedging

Q6. The risk premium for an investment: (1 marks)

Increases with risk

Is a fixed amount added to the risk free return Is negative for U.S. Treasury Securities Is negative for risk averse investors

Q7. The current yield on a $10,000, 5% coupon bond selling for $8,000 is: (1 marks)

6.25%

7. 50%
8. 00%
9. 00%

Q8. In which of the following bonds we may ignore the default risk? Privately issued bonds (1 marks)

Government issued bonds

Bonds issued by Corporate

Q9. A graph in which time to maturity is along x-axis and yield to maturity is along yaxis (1 marks)

is called __________. Government curve SWAP curve

1. Yield curve ( PAGE # 54 Lec 17 )

LIBOR curve A plot of the term structure, with the yield to maturity on the vertical axis and the time to maturity on the horizontal axis, is called the yield curve.

Q10. According to the liquidity premium theory of the term structure, when the yield (1 marks)

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 page 59

Short-term interest rates to drop sharply Short-term interest rates does not change

Q11. Other things remaining equal, the liquidity premium theory is based upon the idea (1 marks)

that ____________.

Investors prefer long-term bonds page 59

Investors prefer short-term bonds Investors are indifferent between short-term and long-term bonds Investors prefer intermediate-term bonds

Q12. A stand by letter of credit is a form of: (1 marks)

Loan

Insurance

Security Deposits

Q13. Which one of the following is the similiraity between pension funds and insurance (1 marks)

companies?

Pooling the savings of many investors

Spreading risk

Accepting deposits Both pool the savings of many investors and spread risk

Q14. Which one of the following is included in the functions of both Finance company (1 marks)

as well as Government Sponsored Enterprise?

Consumer loans Farm loans Business loans

1. Mortgages ( page # 89 Lec # 28 ) see in table last 2 rows

Q15. Which one of the following is extended usually overnight to sound institutions on (1 marks)

a very short-term basis?

Primary credit ( Page # 113 )

Secondary credit Seasonal credit

Q16. If Md reflects money demand, then we can write the equation for money demand (1 marks)

as: