Question No: 1 ( Marks: 1 ) - Please choose one
Wider the range of outcomes wider will be the ___________.
► Risk
► Cost
► Probability
► Loss
Question No: 2 ( Marks: 1 ) - Please choose one
Which of the following statement is true?
► Increasing the FV by any percentage will change the PV by same percentage in opposite direction
► Increasing the FV by any percentage will change the PV by same percentage in same direction
► Increasing the FV by any percentage will not change the PV by any percentage
► None of the given options
Question No: 3 ( Marks: 1 ) - Please choose one
A change in the interest rate:
► Has a larger impact on the present value of a payment to be made far into the future than one to be made sooner
► Will not have a difference on the present value of two equal payments to be made at different times
► Has a smaller impact on the present value of a payment to be made far into the future than one to be made sooner
► None of the given options
Question No: 4 ( Marks: 1 ) - Please choose one
The interest rate used in the present value calculation is often referred as:
► Discount rate
► Inflation rate
► Nominal rate
► Deflation rate
Question No: 5 ( Marks: 1 ) - Please choose one
__________ pool money from individuals and invest in differ net portfolio and return is distributed in different share holders.
► Mutual funds
► Investment banks
► Brokers
► Finance companies
Question No: 6 ( Marks: 1 ) - Please choose one
Which of the following institution takes direct deposit from customer and gives loan to customer directly?
► Zarai Tarkaytee Bank LTD
► Soneri Bank
► Khushali Bank
► Credit union
Question No: 7 ( Marks: 1 ) - Please choose one
The statement "risk requires compensation" implies:
► People always accept risk
► People will only accept risk when they are rewarded for doing so
► People do not take risk
► People will pay to avoid risk
Question No: 8 ( Marks: 1 ) - Please choose one
Financial instruments are used to transfer which of the following?
► Both Risk and Resources
► Risk
► Resources
► Mortgages
Question No: 9 ( Marks: 1 ) - Please choose one
The Dividend-Discount Model of stock valuation:
► Takes the annual dividend, adds it to the expected future selling price and divides by the number of years to get the current price
► Takes the net present value of expected dividends and add it to the future sale price of the stock
► Takes the net present value of the expected future price of the stock and add the annual dividend
► Is an application of the net present value formula
Question No: 10 ( Marks: 1 ) - Please choose one
You start with a $1000 portfolio; it loses 40% over the next year, the following year it gains 50% in value; At the end of two years the worth of your portfolio will be:
► $900
► $600
► $1000
► $1100
Question No: 11 ( Marks: 1 ) - Please choose one
The risk premium of a bond will:
► Higher for investment-grade bonds than for high-yield bonds
► Positive but small if the risk of default is zero
► Decrease when the default risk rises
► Increase when the risk of default rises
Question No: 12 ( Marks: 1 ) - Please choose one
Term structure of interest rate can be explained by which one of the following?
► Tax difference
► Expectation hypothesis
► Liquidity premium theory
► Both by expectation hypothesis and liquidity premium theory
Question No: 13 ( Marks: 1 ) - Please choose one
A graph in which time to maturity is along x-axis and yield to maturity is along y-axis is called __________.
► Government curve
► SWAP curve
► Yield curve
► LIBOR curve
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following statement is true about two bonds having same default rate and tax status but different maturity dates?
► It creates no effect on yield of bonds
► Both of them have different yield
► Liquidity risk factor should be taken into consideration
► It is impossible that default risk and tax status of two bonds are same
Question No: 15 ( Marks: 1 ) - Please choose one
If the tax rate is higher than gap between yield on taxable and tax exempt bond?
► Shorter
► Wider
► No gap
► Any thing can be possible
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following ratings shows “Highest quality and credit worthiness”?
► AAA
► AA
► BB
► A
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the following best describes default risk?
► The chance the issuer will be unable to make interest payments or repay principal
► The chance the issuer will retire the debt early
► The chance the issuing firm will be sold to another firm
► The chance the issuer will sell more debt
Question No: 18 ( Marks: 1 ) - Please choose one
In which of the following bonds we may ignore the default risk?
► Privately issued bonds
► Government issued bonds
► Bonds issued by Corporate
► All of the given options
Question No: 19 ( Marks: 1 ) - Please choose one
A business cycle downturn shifts the bond supply to the:
► Right
► Left
► No change
► None of the given options
Question No: 20 ( Marks: 1 ) - Please choose one
The relationship between the price and the interest rate for a zero coupon bond is best described as _________.
► Volatile
► Stable
► Inverse
► No relationship
Question No: 21 ( Marks: 1 ) - Please choose one
The return on holding a bond till its maturity is called:
► Coupon rate
► Yield to maturity
► Current yield
► Fixed return
Question No: 22 ( Marks: 1 ) - Please choose one
Treasury bonds & corporate bonds are the examples of__________ bonds.
► Zero-coupon bonds
► Coupon bonds
► Consols
► Fixed payment
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