Top 350+ Solved Financial Markets and Institutions MCQ Questions Answer
Q. Which of the following types of financial assets represents a creditor relationship with anentity?
a. Stocks.
b. Options.
c. Futures.
d. Bonds.
Q. Which of the following sequences lists financial assets from least risky to most risky?
a. Stocks, bonds, derivatives.
b. Bonds, derivatives, stocks.
c. Derivatives, bonds, stocks.
d. Bonds, stocks, derivatives.
Q. Which of the following sequences lists financial assets from lowest expected return tohighest expected return?
a. Bonds, stocks, derivatives.
b. Bonds, derivatives, stocks.
c. Stocks, bonds, derivatives.
d. Derivatives, stocks, bonds.
Q. Which of the following types of assets represents ownership interest in a corporation?
a. Bonds
b. Stocks.
c. Futures.
d. Options.
Q. Financial assets are also called:
a. securities.
b. real assets.
c. tangible assets.
d. physical assets.
Q. If people are willing to lend at 7% when inflation is 2% and continue to lend the sameamounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to:
a. Extrapolative expectations
b. Risk aversion
c. Asymmetric information
d. Money illusion
Q. The reason that finding the present value of a future sum of money requires us to discountit, 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
Q. 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
Q. In the loanable fund’s theory of interest determination, an increase in the productivity ofcapital equipment should lead to:
a. A reduction in the amount of saving
b. More employment
c. Higher interest rates
d. Higher prices
Q. 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
Q. 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
Q. According to the liquidity preference theory of interest, an increase in uncertainty, otherthings being equal, will:
a. Decrease output and employment
b. Increase risk aversion
c. Reduce the demand for money
d. Raise interest rates
Q. 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
Q. 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
Q. According to --------- theory of interest, the rate of Interest is the price of credit which isdetermined by the demand and supply for loanable funds.
a. Loanable Fund theory
b. Productivity theory
c. Abstinence theory
d. None of these