MGT411 Midterm Solved Papers in One File

MGT411- MIDTERM EXAMINATION Money & Banking

Time: 60 min Marks: 44

Q1. Among the following reasons, which is the most appropriate cause of inefficiency of the barter system over monetary system? (1 marks)

۩ Barter system involves commodities

۩ Barter system involves double coincidence of wants

۩ Barter system lacks a system for future payments ۩ Barter system lacks a system for storage of value

Barter is an alternative to using money but it doesn’t work very well. Barter requires a “double coincidence of wants,” meaning that in order for trade to take place both parties must want what the other has.

Q2. For the valuation of goods and for quoting prices under the barter system the general formula which is used for n goods is ___________. (1 marks)

۩ n (n+1)/ 2 ۩ n (n-1)* 2 ۩ n (n-1)/ 2

۩ (n-1)/ 2

Q3. Price of 100 goods under the barter system would be _________. (1 marks)

۩ 5050 ۩ 19800

۩ 4950

۩ 20200

Q4. In electronic transfer the most common method is to send money through a system maintained by Federal reserve called __________. (1 marks)

۩ Fedex

۩ Fedwire

۩ Fedtransfer ۩ Fedmoney One wire transfer system used generally to transfer large dollar amounts instantaneously and which is provided by the US Federal Reserve System

Q5. E money is really a form of which one of the following? (1 marks)

۩ Paper money ۩ Fiat money ۩ Government money

۩ Private money

Q6. Repurchase agreements are: (1 marks)

۩ The most liquid of all money market instruments ۩ In use for hundreds of years ۩ Loans of deposits at the Federal Reserve

۩ Short term loans with Treasury bills as collateral

Q7. Bonds that are issued by Government are called _________. (1 marks)

۩ Government bonds

۩ Treasury bonds

۩ Corporate bonds ۩ Callable bonds

Q8. Which of the following is the difference that lies between the options and futures? (1 marks)

۩ Options is not binding whereas future is binding

۩ Futures carry risks but Options didn’t carry risk ۩ Centralized clearinghouses guarantee futures but not options contracts ۩ There is no difference between options and futures options are what you are not bound to select but you are bound to go through what is happening in future.