MGT411 Quiz 1 Set 2

Q1. What is true about the relationship between standard deviation and risk?

1. No relation between them
2. Greater the standard deviation risk remains the same
3. Greater the standard deviation greater will be the risk
4. Greater the standard deviation lower will be the risk

Correct answer: Greater the standard deviation greater will be the risk

Q2. The amount an investor receives at maturity is called ----------.

1. Par value
2. All of the given options
3. Face value
4. Principal value

Correct answer: All of the given options

Q3. Which of the following expression is right?

1. Nominal interest rate = periodic interest rate / number of compounding periods per year
2. Nominal interest rate = periodic interest rate X number of compounding periods per year
3. Nominal interest rate = number of compounding periods per year / periodic interest rate
4. Nominal interest rate = periodic interest rate + number of compounding periods per year

Correct answer: Nominal interest rate = periodic interest rate X number of compounding periods per year

Q4. Original buyer in a repurchase agreement who actually sells the securities is called ----

1. Purchaser
2. Lender
3. Borrower
4. Secured

Correct answer: Borrower

Q5. All of the following parameter are necessary to calculate Future Value and Present Value Except?

1. Amount
2. Time period
3. Interest rate
4. Real interest rate

Correct answer: Real interest rate

Q6. Most of the people among us are ___________.

1. Risk enhancers
2. Risk lovers
3. Risk averse
4. Risk takers

Correct answer: Risk averse

Q7. What is the difference between warrant and check?

1. Warrant is not necessarily payable on demand but check is payable on demand
2. None of above
3. Check is cleared from bank but warrant is not cleared by bank
4. Check is not necessarily payable on demand but warrant is payable on demand

Correct answer: Warrant is not necessarily payable on demand but check is payable on demand

Q8. Mark borrows $8,000 and then repays $8,600 to ABC bank. What is the amount of interest in this payment?

1. $400
2. $600
3. $500
4. $100

Correct answer: $600

Q9. Which one of the following is a component of wealth that is held in a readily spendable form?

1. Income
2. Stocks
3. Bonds
4. Money

Correct answer: Money

Q10. When we add more independent source of risk (investments) in our portfolio; risk of the portfolio is

1. Amplified
2. Decreased
3. Unavoidable
4. Increased

Correct answer: Decreased