MGT411 Quiz 1 Set 4

Q1. Which of the following expression is right?

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

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

Q2. Suppose you will receive a check for $100 two years from today. The discounted present value of this $100 is:

1. $100*(1+i)
2. $100/(1+i)
3. $100*(1+i)2
4. $100/(1+i)2

Correct answer: $100/(1+i)2

Q3. Standard Deviation is more useful as compare to Variance because it is measured in the ------------ as the payoffs.

1. Indifferent units
2. Same units
3. Risk units
4. Same probability

Correct answer: Same units

Q4. The money aggregate M2 includes each of the following EXCEPT:

1. Retail Money Market Mutual fund shares
2. Small denomination time deposits
3. M1
4. U.S. Treasury bills

Correct answer: U.S. Treasury bills

Q5. Value at risk (VAR) focuses ---------- outcome of the investment

1. Good
2. Better
3. Worst
4. Best

Correct answer: Worst

Q6. Sum of all the probabilities should be equal to which one of the following?

1. Two
2. One
3. Three
4. Zero

Correct answer: One

Q7. Which of the following are used to monitor and stabilize the economy?

1. Commercial Banks
2. Financial institutions
3. Stock exchanges
4. Central Banks

Correct answer: Central Banks

Q8. Sum of all probabilities must be equal to ----.

1. 1
2. None of the given options
3. -1
4. 100

Correct answer: 1

Q9. Which of the following is(are) step(s) while calculating variance?

1. Subtract expected value from each possible payoff
2. All of the given options
3. Square the result and multiply by its probability
4. Compute expected value

Correct answer: All of the given options

Q10. If a bond sells at premium, where price exceeds face value, then we would expect to see:

1. All of the given options
2. Market interest rates below the coupon rate
3. Market interest rate the same as the coupon rate
4. Market interest rates above the coupon rate

Correct answer: Market interest rates below the coupon rate