0804 FM (CFA550) - Question Paper Financial Markets...

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1 Question Paper Financial Markets (CFA550): April 2008 Answer all 75 questions. Marks are indicated against each question. Total Marks : 100 1. Which of the following statements is/are true with respect to the credit function of the Indian financial system? I. It involves mobilizing of savings in a way to provide potential profit and low risk outlet. II. It ensures a smooth flow of funds from savings into investments in order to stabilize the economy. III. It ensures the transformation of savings to necessary credit for investment and spending purposes. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (II) above (e) All (I), (II) and (III) above. (1 mark) <Answer> 2. Which of the following markets is/are not regulated by RBI? I. Money Market. II. Capital Market. III. Forex Market. IV. Credit Market. (a) Only (II) above (b) Only (III) above (c) Both (I) and (IV) above (d) Both (II ) and (III) above (e) Both (II) and (IV) above. (1 mark) <Answer> 3. Which of the following statements is false with respect to Corporate Fixed Deposits? (a) Corporate Fixed Deposits have a higher degree of default risk than bank deposits (b) Corporate Fixed Deposits do not enjoy risk cover from Deposit Insurance Corporation (c) Corporate Fixed Deposits are unsecured (d) Disclosure of the information relating to financial performance and position is purely at the discretion of the company (e) At the time of repayment due to liquidation, corporate fixed deposits are ranked pari passu with other unsecured liabilities. (1 mark) <Answer> 4. Which of the following statements is not true with respect to Treasury Bills? (a) Treasury Bills are issued to meet short term requirements of Government (b) Treasury Bills enable the RBI to perform Open Market Operations (c) Investors prefer Treasury Bills because of high liquidity and assured returns (d) Treasury Bills are eligible for meeting CRR requirements (e) Treasury Bills are issued at discount and redeemed at par. (1 mark) <Answer> 5. Which of the following transactions is an example of transactions in an open market? (a) A bought out deal (b) A car loan (c) Public issue of securities (d) Housing finance (e) Private placement. (1 mark) <Answer>
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2 6. Which of the following statements is/are true , with respect to Open Market Operations (OMOs) by RBI? I. Open market purchase of guilts by RBI will ease the liquidity of banks; the open market sale of the same will suck their liquidity. II. To pull down the interest rates, RBI can set the prices of securities at higher levels in the OMO. III. RBI can also alter the interest rate structure using the OMOs. (a) Only (I) above (b) Both (I) and (II) above (c) Both (I) and (III) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. (1 mark) <Answer> 7. Prime Ltd. wants to roll over its non convertible portion of Partly Convertible Debentures. Within how many month(s) prior to the date of redemption, the company will have to obtain fresh credit rating?
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This note was uploaded on 07/20/2010 for the course ICFAI CFA taught by Professor Cfa during the Fall '09 term at Indian School of Business.

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0804 FM (CFA550) - Question Paper Financial Markets...

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