Deck 9: Financial Concepts and Institutions

Question 1

The reason that finding the present value of a future sum of money requires us to discount it, is that:

A)Inflation will reduce its purchasing power
B)We can't be certain of receiving it
C)We don't know when we shall receive it
D)Waiting deprives us of its use

Answer 1

Waiting deprives us of its use

Question 2

If interest rates rise, the present value of any future earnings is bound to:

A)Fall
B)Rise
C)Suffer from inflation
D)Increase in risk

Answer 2

Fall

Question 3

In the loanable fund's theory of interest determination, an increase in the productivity of capital equipment should lead to:

A)A reduction in the amount of saving
B)More employment
C)Higher interest rates
D)Higher prices

Answer 3

Higher interest rates

Question 4

If savers decide to save more, ceteris paribus, the loanable funds theory predicts:

A)A reduction in investment and interest rates
B)An increase in investment and interest rates
C)Higher economic growth
D)A reduction in interest rates and more investment

Question 5

According to the Fisher hypothesis, the nominal rate of interest consists of:

A)A stable real rate plus a variable risk premium
B)A real rate plus a liquidity premium plus a risk premium
C)A stable real rate plus a variable inflation premium
D)An inflation premium plus a liquidity premium

Question 6

According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:

A)Decrease output and employment
B)Increase risk aversion
C)Reduce the demand for money
D)Raise interest rates

Question 7

The ability of central banks to influence short-term interest rates rests upon:

A)Government policy
B)Their role as lenders of last resort
C)Their supervisory role
D)Sales of government bonds

Question 8

A central bank which sets the short-term rate of interest must:

A)Buy treasury bills
B)Meet the resulting demand for reserves
C)Sell government bonds
D)Change the reserve ratios

Question 9

According to --------- theory of interest, the rate of Interest is the price of credit which is determined by the demand and supply for loanable funds.

A)Loanable Fund theory
B)Productivity theory
C)Abstinence theory
D)None of these

Question 10

According to ------- theory interest arises on account of the productivity of capital.

A)Loanable Fund theory
B)Productivity theory
C)Abstinence theory
D)Classical theory

Question 11

The Time- Preference Theory of Interest was expounded by-----------

A)John Rae
B)Alfred Marshall
C)JM Keynes
D)JB Clark

Question 12

----------- defined Interest as "an index of the community's preference for a dollar of present over a dollar of future income."

A)Fisher
B)Alfred Marshall
C)JM Keynes
D)JB Clark

Question 13

According to ---------- theory, Interest is the reward for the productive use of the capital which is equal to the marginal productivity of physical capital.

A)Loanable Fund theory
B)Productivity theory
C)Abstinence theory
D)Classical theory

Question 14

Loanable Fund theory is also known as-----------

A)Classical theory
B)Neo-classical theory
C)Demand and Supply theory
D)Productivity theory

Question 15

Neo- Classical theory of interest was expounded by------------

A)Prof. Fisher
B)Alfred Marshall
C)Knot Wicksel
D)JB Clark

Question 16

According to Keynes, Interest is purely a 'monetary phenomenon'.

A)Fisher
B)Alfred Marshall
C)JM Keynes
D)JB Clark

Question 17

Who propounded liquidity preference theory of interest?

A)Prof.Fisher
B)Alfred Marshall
C)JM Keynes
D)JB Clark

Question 18

----------- is called as "Real Theory of Interest"

A)Classical theory
B)Neo-classical theory
C)Demand and Supply theory
D)Productivity theory

Question 19

Technical consultancy Organisations were set up by........................

A)IFCI
B)IDBI
C)RBI
D)SEBI

Question 20

........................ assists mainly to industrial undertakings in the private sector

A)IFCI
B)IDBI
C)ICICI
D)SEBI

Question 21

................known as Brettonwood twins

A)IDBI and IFCI
B)IDBI and UTI
C)IBRD and IMF
D)RBI and SEBI

Question 22

World bank is also known as........................

A)IMF
B)ADB
C)IBRD
D)UNICEF

Question 23

World bank was set up in ........................

A)1945
B)1946
C)1947
D)1948

Question 24

IMF commenced financial operation on........................

A)1945
B)1946
C)1947
D)1948

Question 25

Which of the following gives long term finance?

A)IDBI
B)ICICI
C)IFCI
D)All the above

Question 26

Find the odd one out

A)commercial paper
B)share certificate
C)certificate of deposit
D)Treasury bill.

Question 27

The process of managing the sales ledger of a client by a financial service company is called

A)forfaiting
B)factoring
C)leasing
D)None of these.

Question 28

Mutual funds are very popular in

A)USA
B)UK
C)Japan
D)India

Question 29

In India, the company which actually deals with the corpus of the mutual fund is called

A)sponsor company
B)trustee company
C)asset management company
D)Mutual fund Company.

Question 30

The first bank in India to start factoring business is

A)Canara bank
B)SBI
C)Punjab National Bank
D)Allahabad Bank.

Question 31

An asset with a physical value is called

A)Financial asset
B)Non financial asset
C)Fictitious asset
D)Fixed asset

Question 32

An asset which derives its value because of a contractual claim is

A)Financial asset
B)Non financial asset
C)Fictitious asset
D)Fixed asset

Question 33

Gold is -----------asset

A)Financial asset
B)Non financial asset
C)Fictitious asset
D)Intangible asset

Question 34

Cash is --------------asset

A)Financial asset
B)Non financial asset
C)Fictitious asset
D)Intangible asset

Question 35

-------------is a whole sale market for short term debt instrument.

A)capital market
B)forex market
C)money market
D)any of the above

Question 36

Money lent in the inter-bank market for 15 days or more is called -----------

A)Call money
B)Term money
C)Money at short notice
D)All the above

Question 37

Call money is a loan given for a period of

A)15 days
B)30 days
C)1 day
D)1 year

Question 38

When money lent for more than a day but up to a fortnight is called

A)Call money
B)Term money
C)Money at short notice
D)None of the above

Question 39

CBLO stands for

A)Collateralised Borrowing and Lending Obligation
B)Central Banks Lending Obligation
C)Commercial Borrowing and Lending Option
D)Corporate Borrowing and Lending organisation

Question 40

The NSDL established in

A)August 1996
B)August 1998
C)January 1996
D)January 1998

Question 41

In a private placement the maximum number of investors shall not exceed

A)51
B)49
C)100
D)25

Question 42

Merchant banks in India started in

A)1955
B)1969
C)1972
D)1992

Question 43

Merchant banks concept in India introduced by

A)SBI
B)PNB
C)ANZ Grindlays
D)City bank

Question 44

SENSEX is the index of

A)BSE
B)NSE
C)OTCEI
D)CSE

Question 45

NIFTY is the index of

A)BSE
B)NSE
C)OTCEI
D)CSE

Question 46

The first Indian equity index is

A)Nifty
B)Sensex
C)Dollex
D)Defty