MGT411 Midterm Past Paper 2010 Session 1

Composed by Faheem Saqib · 2010, 2009 and Quizzes · Rep at · Spring 2010 · Time: 60 min Marks: 44 · StudentID: · Center: · ExamDate: · 6/5/2010 12:00:00 AM

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Q1. Which of the following statement truly represents the main difference between debit card and store value card? (1 marks)

1. Debit card is operated by ATM machine while Store value card doesn’t
2. Debit card appearance is different from Store value card
3. Debit card is not specific for user but store value card is specific
4. Debit card is specific for user but store value card is not

Correct answer: Debit card is operated by ATM machine while Store value card doesn’t

Q2. The Consumer Price Index (CPI): (1 marks)

1. Tends to overstate inflation due to substitution bias
2. Tends to understate actual inflation
3. Is more accurate than the GDP deflator
4. Is based on basket of goods that changes monthly with consumer expenditures

Correct answer: Tends to understate actual inflation

Q3. Which of the following is NOT a financial instrument? (1 marks)

1. A share of General Motors stock
2. A tuition bill
3. A U.S. Treasury bond
4. A home insurance policy

Correct answer: A tuition bill

Q4. A derivative instrument: (1 marks)

1. Gets its value and payoff from the performance of the underlying instrument
2. Is a high risk financial instrument used by highly risk averse savers
3. Comes into existence after the underlying instrument is in default
4. Should be purchased prior to purchasing the underlying security

Correct answer: Gets its value and payoff from the performance of the underlying instrument

Q5. The financial intermediary that obtains funds largely through premium payments and uses those funds to purchase corporate bonds and mortgages is: (1 marks)

1. Credit unions
2. Mutual funds
3. Life insurance companies
4. Pension funds

Correct answer: Life insurance companies

Q6. Which one of the following financial instrument is NOT primarily used as store of value? (1 marks)

1. Banks loans
2. Asset-backed securities
3. Insurance contracts
4. Stocks

Correct answer: Insurance contracts

Q7. Which one of the following is NOT an example of Centralized exchange? (1 marks)

1. New York Stock Exchange
2. NASDAQ
3. Large exchanges in London
4. Large exchanges in Tokyo

Correct answer: Large exchanges in London

Q8. Which of the following market allowed networks of dealers that are connected electronically? (1 marks)

1. New York Stock Exchange
2. NASDAQ
3. Large exchanges in London
4. Large exchanges in Tokyo

Correct answer: NASDAQ

Q9. Risk sharing is the characteristic of which one of the following? (1 marks)

1. Checks
2. Checking accounts
3. Money
4. Bonds

Correct answer: Bonds

Q10. The future value of $200 at a 5% per year interest rate at the end of one year is: (1 marks)

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

Correct answer: $210.00

Q11. What will be the Future Value (FV) of $1000 in 5 years at 5% interest rate? (1 marks)

1. $1300.00
2. $1276.28
3. $1999.99
4. $1500.52

Correct answer: $1276.28

Q12. 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

Correct answer: Market interest rates below the coupon rate

Q13. _________ measures the probability of worst outcome in any investment project. (1 marks)

1. Variance