Banking Quiz – 67

BANKING QUIZ

1. Bonds without maturity dates are which of the followings?
a) Zero coupon bonds
b) Coupon securities
c) Consols
d) Preferred Bonds

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Answer c) Consols

2. Which of the following represents the fisher’s equation?
a) Nominal interest rate = real interest rate + inflation
b) Nominal interest rate + inflation = real interest rate
c) Nominal interest rate = real interest rate – inflation
d) Nominal interest rate = real interest rate / inflation

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Answer a) Nominal interest rate = real interest rate + inflation

3. The return on holding a bond till its maturity is called?
a) Coupon rate
b) Yield to maturity
c) Current yield
d) Internal rate of return

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Answer b) Yield to maturity

4. Wider the range of outcome wider will be the ___________.
a) Risk
b) Profit
c) Probability
d) Lose

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Answer a) Risk

5. The interest rate that is involved in _____________ calculation is referred to as discount rate?
a) Present value
b) Future value
c) Intrinsic value
d) Discount value

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Answer a) Present value

6. Bonds that are issued by Government are called _________.
a) Government bond
b) Treasury bond
c) Corporate bond
d) Callable Bonds

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Answer b) Treasury bond

7. If a bond sells at a premium, where price exceeds face value, then we would expect to see?
a) Market interest rate the same as the coupon rate
b) Market interest rates above the coupon rate
c) Market interest rates below the coupon rate
d) All of the given options

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Answer c) Market interest rates below the coupon rate

8. With direct finance we mean which of the following?
a) Individuals (or firms) borrow directly from the savers
b) Individuals (or firms) borrow directly from banks.
c) Individuals deposit savings directly in banks.
d) Firms deposit savings directly in banks.

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Answer a) Individuals (or firms) borrow directly from the savers

9. Investors will hold higher compensation for the __________ investment.
a) More risky
b) Less risky
c) Fixed return
d) Less dividend

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Answer a) More risky

10. Which of the following best expresses the proceeds a lender receives from a simple loan?
a) PV(1 + i)
b) FV/i
c) PV + i
d) PV/i

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Answer a) PV(1 + i)

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