Mgt411 Collection of Old Papers

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FINALTERM EXAMINATION
FALL 2007 Marks: 60
MGT411 - MONEY & BANKING (Session - 4 ) Time: 150min
StudentID/LoginID: ______________________________
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Monday, March 10, 2008
INSTRUCTIONS:
Please read the following instructions carefully before attempting any question:
All questions are compulsory.
This exam consists of 15 Multiple Choice Questions (MCQ’s) carrying 1 mark each, 5
fill in the blanks carrying 1 mark each, 5 True/Falls carrying 1 mark each, 3 short
questions carrying 5 marks each and 2 descriptive long questions carrying 10 marks
each.
For each MCQ, read the choices available and select the choice which you consider is
the correct answer.
You are required to show all the working of short questions as well as Descriptive
question.
This examination is closed book, closed notes, closed neighbors.
Use of calculator is allowed.
Use of mobile phone during the exams is not allowed.
Do not ask any question about the contents of this examination from anyone.
You may wish to pace yourself with your own watch, but the Supervisor will be the
official timekeeper of the test.
Failure to comply with the Supervisor’s directions will result in your test being
cancelled. Please comply with supervisor’s directions to avoid any unpleasant event.
For Teacher's use only
Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19 20
Marks
Question 21 22 23 24 25 26 27 28 29 30
Marks
Question No: 1 ( Marks: 1 ) - Please choose one
The difference between a bank's reserves and their required reserves is:
► Equity.
► Excess reserves.
► Net interest income.
► Nothing, they are the same thing.
If information in a financial market is asymmetric, this means:
► Borrowers and lenders have perfect information.
► Borrowers would have more information than lenders.
► Borrowers and lenders have the same information.
► Lenders lack any information.
A bond denominated in a currency other than that of the country in which it is sold
is called a(n):
► Foreign bond.
► Eurobond.
► Equity bond.
► Currency bond.
Which of the following is a depository institution?
► Life insurance company.
► Credit union.
► Pension fund.
► Finance company.
Which of the following cannot be described as indirect finance?
► You take out a mortgage from your bank.
► An insurance company lends money to General Motors Corporation.
► You borrow $1000 from your best friend.
► You buy shares in a mutual fund.
One way for a bank to deal with liquidity risk is :

► To hold sufficient excess reserves.
► Charge all borrowers from the same industry an average rate for that industry.
► Avoid making loans to borrowers from a broad spectrum.
► Limit the number of loans made in any year.
Financial intermediaries:
► Channel funds from savers to borrowers
► Greatly enhance economic efficiency
► Have been a source of many financial innovations
► All of the given options.
Common stocks (or corporate stocks):
►
Represent an IOU on the part of the issuing firm.
► Entitle the holder to contractual payments.
► Were a poor investment over the period 1982-1996.
► Allow the holder to share in the earnings of the firm.

The money aggregate M1 does not include:
► Currency in the hands of the public.
► Traveler's cheques that have been issued.
► Currency in the vaults of commercial banks.
► Demand deposits at commercial banks.
At monthly interest rate of 0.3%, Rs.8,000 will produce an income of:
► 30
► 24
► 50
► 15
The money multiplier is negatively related to:
► High-powered money.
► The excess reserve ratio.
► Discount borrowings from the Fed.

► None of the given options.
If nominal income increases, the demand for money:
► Increases.
► Decreases.
► Remains constant.
► None of the given options.
Money appears to have a major influence on:
► Inflation.
► The business cycle.
► Interest rates.
► All of the given options.
Monetary policy is best described as:
► Attempts to keep inflation constant.
► Determining the denominations and supply of a country's currency.
► One of the most important functions of Congress.

► Attempts to keep inflation low and stable and growth high and stable.
The five core principles of Money and Banking include each of the following
except?
► All people act rationally.
► Time has value.
► Information is the basis for decisions.
► Risk requires compensation.
The use of credit cards increases the M1 money supply.
► True
► False
The New York Stock Exchange (NYSE) is an example of a financial market.
► True
► False
On PLS account, profit ratio is lower than current account.
► True
► False

Life insurance companies invest in short term investments.
► True
► False
Stock market is a secondary market.
► True
► False
Question No: 21 ( Marks: 1 )
The bonds which are issued by Corporations are known as _____________.
______________is used for the purchases on internet.
PV x (1+i) = ______________.
The interest rate used in the present value calculation is known as _____________.
Sum of probability times pay off = _____________.
a. Differentiate between debit and credit cards?

b. Consider a 6% coupon bond with face value of $100. If the bond is sold at $98
then what will be the current yield and yield to maturity of this bond?
(Marks: 2+3)

Define financial institution. Why a system without financial institution would not
work very well?
Briefly explain the ways to calculate the bank profitability.

(Marks: 2.5 +2.5)
A. Problem of adverse selection is caused by the Information asymmetries, give

any two examples of adverse selection in the financial market, what will be the
result of adverse selection?
B. Explain that how the problem of adverse selection can be solved in the financial
market?
Marks(6+4)
Sort out M1, M2 and M3 from the list below and calculate total value of M1, M2 and
M3.
The Monetary Aggregates

Monetary Aggregates Value as of August 2004
(U.S.$ billion)
+ Repurchase agreements 516.6
+ Savings deposits including money market 3415.3
deposit accounts
+ Other checkable deposits 328.5
+ Retail money market mutual fund shares 735.5
+ Eurodollars 344.5
+ Small-denomination time deposits 794.7
+ Demand deposits 315.3
+ Large-denomination time deposits 1,036.3
+ Traveler’s checks 7.6
+ Currency in the hands of the public 686.2
+ Institutional money market mutual fund 1,104.7
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MIDTERM EXAMINATION
FALL 2007 Marks: 40
MGT411 - MONEY & BANKING (Session - 5 ) Time: 120min
StudentID/LoginID: ______________________________
Student Name: ______________________________
Center Name/Code: ______________________________
Exam Date: Monday, November 26, 2007
INSTRUCTIONS:
Please read the following instructions carefully before attempting any question:
All questions are compulsory.
This exam consists of 10 Multiple Choice Questions (MCQs) carrying 1 mark each; 5
True False carrying 1 mark each; 3 Short Questions carrying 5 marks each; and 1
descriptive question –carrying 10 marks.
For each MCQ, read the available choices carefully and select the most appropriate
choice which you consider is the correct answer, by clicking on the appropriate check
box.
To answer True False questions click the option which you consider is correct.
Remember not to spend too much time on any one objective type question since all
objective type questions carry equal marks; it is important to manage your time
according to the marks allocated to each question.
Save your answer before proceeding to the next question.
Do not click the “Finish” button while solving your paper. Once you clicked the “Finish”
button, you will not be able to access your paper again. Click it at the end of your
paper. That means you have submitted your complete paper.
A clock is given in the exam software. Software will automatically close at the end of
given time.
Use of mobile phone is strictly prohibited. Switch off your mobile phone during the
exam.
Failure to comply with the Supervisor’s directions will result in your test being
cancelled. Please comply with supervisor’s directions to avoid any unpleasant event.
Use of calculator is allowed.
For Teacher's use only
Question 1 2 3 4 5 6 7 8 9 10 Total
Marks
Question 11 12 13 14 15 16 17 18 19
Marks
Question
Marks
After the specific time period, total repayment of loan is:
► Less than the amount of loan.
► Greater than the amount of loan.
► Equal to the amount of loan.
► None of the given options
The GDP deflator is calculated as:
► Nominal GDP/Real GDP
► Real GDP/Nominal GDP
► Nominal GDP – Real GDP
► Real GDP – Nominal GDP
The variance is generally less useful than the standard deviation because:
► It is easier to calculate.
► Variance is a measure of risk while standard deviation is a measure of return.
► Standard deviation is calculated in the same units as payoffs but variance is

not.
Time affects the value of:
► Financial Instruments
► Financial Markets
► Financial Institutions
► Central Banks
If the yield is greater than the coupon rate:
► The price is greater.
► The price is lower.
► No effect on price.
► All of the given options
______________investor will always prefer an investment with a certain return:

► A risk-averse.
► A risk-loving.
► Risk- neutral.
Treasury bill is an example of:
► Zero-coupon bonds.
► Fixed payment loans.
► Coupon Bonds.
► Consols.
The price of a 6-month Treasury Bill is-------------than the price of a 1-year Treasury
Bill.
► Lower
► Higher
► Equal to

Changes in the amount of money in the economy are related to changes in:
► Interest rates
► Economic growth
► Inflation
► All of the given options
Which of the following is true for a nation’s central bank?
► It makes important decisions about the nation's tax and public spending
policies.
► It lends only to the nation's largest and most important business firms.
► It has many interactions with the nation's citizens and businesses.
► It is responsible for conducting the nation's monetary policy.
Financial institutions provide access to financial markets:
► True
► False
Cheques are used as a final payment:
► True
► False
Inflation affects the purchasing power of a dollar:
► True
► False
Risk arises from certainty about the future:
► True
► False
An asset is liquid if it can be easily converted into money and illiquid if it is costly
to convert:
► True
► False
Describe the basic types of money. Which one is commonly used now a days?
By how many ways we can diversify the risk? Briefly explain them.
Differentiate between E-Money and Stored Value Cards in detail.

Which of these $100 face value 1-year bonds will have a higher yield to maturity?
a. 7% coupon bond selling for $90
b. 10% coupon bond selling for $120
c. 12% coupon bond selling for $130
(Marks: 03+03+03+01)

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WWW.vujannat.ning.

Student Name: ______________________________

Center Name/Code: ______________________________

Exam Date: Monday, March 10, 2008

 All questions are compulsory.

 This examination is closed book, closed notes, closed neighbors.

 Use of calculator is allowed.

 Use of mobile phone during the exams is not allowed.

Question No: 1 ( Marks: 1 ) - Please choose one

► Net interest income.

► Nothing, they are the same thing.

Question No: 2 ( Marks: 1 ) - Please choose one

If information in a financial market is asymmetric, this means:

► Borrowers and lenders have perfect information.

► Borrowers would have more information than lenders.

► Borrowers and lenders have the same information.

► Lenders lack any information.

Question No: 3 ( Marks: 1 ) - Please choose one

Question No: 4 ( Marks: 1 ) - Please choose one

Which of the following is a depository institution?

► Life insurance company.

Question No: 5 ( Marks: 1 ) - Please choose one

Which of the following cannot be described as indirect finance?

► You take out a mortgage from your bank.

► An insurance company lends money to General Motors Corporation.

► You borrow $1000 from your best friend.

► You buy shares in a mutual fund.

Question No: 6 ( Marks: 1 ) - Please choose one

One way for a bank to deal with liquidity risk is :

► Avoid making loans to borrowers from a broad spectrum.

► Limit the number of loans made in any year.

Question No: 7 ( Marks: 1 ) - Please choose one

► Channel funds from savers to borrowers

► Greatly enhance economic efficiency

► Have been a source of many financial innovations

► All of the given options.

Question No: 8 ( Marks: 1 ) - Please choose one

Common stocks (or corporate stocks):

► Entitle the holder to contractual payments.

► Were a poor investment over the period 1982-1996.

► Allow the holder to share in the earnings of the firm.

Question No: 9 ( Marks: 1 ) - Please choose one

► Currency in the hands of the public.

► Traveler's cheques that have been issued.

► Currency in the vaults of commercial banks.

► Demand deposits at commercial banks.

Question No: 10 ( Marks: 1 ) - Please choose one

At monthly interest rate of 0.3%, Rs.8,000 will produce an income of:

Question No: 11 ( Marks: 1 ) - Please choose one

The money multiplier is negatively related to:

► The excess reserve ratio.

► Discount borrowings from the Fed.

Question No: 12 ( Marks: 1 ) - Please choose one

If nominal income increases, the demand for money:

► None of the given options.

Question No: 13 ( Marks: 1 ) - Please choose one

Money appears to have a major influence on:

► The business cycle.

► All of the given options.

Question No: 14 ( Marks: 1 ) - Please choose one

Monetary policy is best described as:

► Attempts to keep inflation constant.

► Determining the denominations and supply of a country's currency.

► One of the most important functions of Congress.

All questions are compulsory.

This examination is closed book, closed notes, closed neighbors.

Use of calculator is allowed.

Use of mobile phone during the exams is not allowed.