MGT411 Final Term Past Paper 2010

(Regard) · FINALTERM EXAMINATION · Spring 2010 · MGT411- Money & Banking (Session - 1)

Q1. The loans made between borrowers and lenders: (1 marks)

1. Are liabilities to the lenders and assets to the borrowers since the borrower obtains the funds
2. Are assets to the lenders and liabilities of the borrowers since the promises are made to the lenders
3. Are assets to the borrowers as he obtains funds and also the liability to the borrowers as he has to pay it
4. Are not part of either's assets or liabilities until the loans are repaid

Q2. The future value of $200 at a 5% per year interest rate at the end of one year is: (1 marks)

(Regard)

1. $195.00
2. $210.00
3. $197.50
4. $100

Q3. If at 5% interest rate, $100 payment has a PV of $90.70. Then what will be the PV value of $200 payment? (Without applying formula). (1 marks)

1. $45.35
2. $272.1
3. $181.4
4. $362.8

Q4. The interest rate that is involved in _____________ calculation is referred to as discount rate (1 marks)

1. Present value
2. Future value
3. Intrinsic value

(Regard)

1. Discount value
2. Ans
3. Present value

Q5. If a bond sells at a premium, where price exceeds face value, then we would expect to see: (1 marks)

1. Market interest rate the same as the coupon rate
2. Market interest rates above the coupon rate
3. Market interest rates below the coupon rate
4. None of the given options

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

1. Increases with risk
2. Is a fixed amount added to the risk free return
3. Is negative for U.S. Treasury Securities
4. Is negative for risk averse investors