Money and Banking - Assignment Solution

1. B
2. B
3. A
4. A
5. C
6. B
7. C
8. A
9. C
10. B
11. C
12. B
13. C
14. A
15. B
16. A
17. D
18. A
19. A
20. B

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MONEY BANKING
1- A lender is promised a $100 payment (including interest) one year from today. If the lender has an 8% opportunity cost of money, he should be willing to 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 higher will 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 known as:
A. Discounting B. Compounding C. Time value of money D. Bond pricing


4 ---------------- tells us after how much time period the amount 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 is often 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 known as:
A. Discounting B. Compounding C. Time value of money D. Bond pricing


7- The price of a bond is the ---------------- of its payments.
A. Present Value B. Future Value C. Coupon rate D. Principal amount


8- The ---------------is defined as the probability weighted average of the squared deviations of the possible outcomes from their expected value.
A. Standard deviation B. Variance C. Mean D. Median


9- The difference between real and nominal interest rate is
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% interest rate 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 financial institutions?
A. Banks B. Securities firms C. Stock exchanges D. Insurance companies


13. Which of the following are used to monitor and stabilize the economy?
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 the following?
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 the following?
A. Cheque B. Credit card C. Store value card D. Pay order


20- Banks use to handle transactions among themselves, through which one of the following?
A. Debit card B. Electronic transfers C. Credit card D. Store value card



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