Money banking and finance 1- A lender is promised a $100 payment (including inte

Question

Money banking and finance

1- A lender is promised a $100 payment (including interest) oneyear from today. If the

lender has an 8% opportunity cost of money, he should be willingto accept what amount

today?

A. $100.00

B. $108.20

C. $92.59

D. $96.40

2- The higher the Future Value (FV) of the payment, the higherwill be the:

A. Discount rate

B. Present value

C. Liquidity

D. Cost of borrowing

3- The procedure of finding out the Present Value (PV) is knownas:

A. Discounting

B. Compounding

C. Time value of money

D. Bond pricing

4 ---------------- tells us after how much time period theamount of money will become

double.

A. Real interest rate

B. Nominal interest rate

C. Rule of 72

D. Time value of money

5- The interest rate used in the present value calculation isoften referred to as:

A. Discount rate

B. Inflation rate

C. Nominal rate

D. None of the given option

6- The procedure of finding out the Future Value (FV) is knownas:

A. Discounting

B. Compounding

C. Time value of money

D. Bond pricing

7- The price of a bond is the ---------------- of itspayments.

A. Present Value

B. Future Value

C. Coupon rate

D. Principal amount

8- The ---------------is defined as the probability weightedaverage of the squar

deviations of the possible outcomes from their expectedvalue.

A. Standard deviation

B. Variance

C. Mean

D. Median

9- The difference between real and nominal interest rateis

A. The cost of borrowing

B. The effect of inflation

C. The price of bonds

D. None of the given option

10- The Future Value (FV) of $1000 in 5 years at 5% interestrate will be:

A. $1000.00

B. $1276.28

C. $999.99

D. $1500.52

11- Stock exchange is an example of:

A. Financial instrument

B. Financial institution

C. Financial market

D. Bank

12- Which of the following is NOT an example of financialinstitutions?

A. Banks

B. Securities firms

C. Stock exchanges

D. Insurance companies

13. Which of the following are used to monitor and stabilize theeconomy?

A. Governments

B. Commercial Banks

C. Central Banks

D. Financial institutions

14. Financial instruments are evolved just as much as_____________.

A. Currency

B. Stocks

C. Bonds

D. Commodity

15. Previously financial markets are located in which of thefollowing?

A. Coffee houses or Taverns

B. Stock exchanges

C. Bazaar

D. Coffee houses and Stock exchanges

16. We need __________ to carry out day to day transactions

A. Money

B. Bonds

C. Stocks

D. Loans

17- Among the following which one is less liquid asset?

A. Checking account

B. Car

C. Share

D. Debit card

18- Which of the following is the final mode of payment?

A. Money

B. ATM

C. Cheque

D. Yet to discover

19- Debit card works in the same way as which one of thefollowing?

A. Cheque

B. Credit card

C. Store value card

D. Pay order

20- Banks use to handle transactions among themselves, throughwhich one of the

following?

A. Debit card

B. Electronic transfers

C. Credit card

D. Store value card

Explanation / Answer

1)      C. $92.59

2)      A. Discountrate

3)      A.Discounting

4)      C. Rule of72

7)      C. Couponrate

8)      B.Variance

9)      B. The effectof Inflation

10)    B. $1,276.28

11)    C. Financial Market

12)   C. Stock Exchanges

13)    C. Central Banks

14)    C. Bonds

15)    D. Coffee houses andStock exchanges

16)    A. Money

17)    D. Debit Card

18)    C. Cheque

19)   C. Store value card

20)    B. Electronictransfers

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