0901 FM (CFA550) - Question Paper Financial Markets...

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Page 1 of 27 Question Paper Financial Markets (CFA550): January 2009 Answer all 73 questions. Marks are indicated against each question. Total Marks : 100 1. Which of the following statements is/are true with respect to various intermediaries operating in financial markets? I. Custodians are intermediaries in the credit market. II. The cost of lending and borrowing decreases due to the presence of intermediaries. III. Primary dealers aid the RBI in conducting open market operations. (a) Only (I) above (b) Only (III) above (c) Both (I) and (II) above (d) Both (II) and (III) above (e) All (I), (II) and (III) above. (1 mark) <Answer> 2. An economy has no external borrowings in its system. Its financial liabilities are equal to financial assets. If its financial liabilities include stock issued to the outsiders, its real assets are financed by (a) Borrowings (b) Financial assets (c) Financial liabilities (d) Capital (e) Savings. (1 mark) <Answer> 3. The 91-days treasury bills of Rs.100 each are currently selling in the market at Rs.98.13. These bills are said to have been sold at annual discount of approximately (a) 8.50% (b) 8.25% (c) 8.00% (d) 7.64% (e) 7.50%. (1 mark) <Answer> 4. Which of the following is not the objective of a borrower in the capital market? (a) Minimum lead time for acquiring the money (b) Access to funds up to the desired period of time (c) Adequate coverage for the various risk exposures (d) Minimum terms and conditions attached with the usage of funds (e) Low rate of interest. (1 mark) <Answer> 5. Which of the following statements is/are not true with respect to various risks associated with money market investments? I. The level of exposure of money market instruments to inflation risk is usually more. II. The risk that arises at the time of redemption of money market investments due to the decline in interest rates is reinvestment risk. III. Market risk associated with money market investment can be minimized by enhancing liquidity. (a) Only (I) above (b) Only (II) above (c) Only (III) above (d) Both (I) and (III) above (e) Both (II) and (III) above. (1 mark) <Answer>
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Page 2 of 27 6. Mr. Nimit, working with an organization is eligible to receive pension under defined benefit plan. In this regard, which of the following statements is/are not true ? I. He will have an option to receive pension amount even before his retirement. II. The amount of pension to be received is directly related to the contribution made by him. III. If the pension fund loses money in investments or earns lower than benchmark return, he bears the loss. (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. Which of the following strategies of hedge funds is an example of ‘Hard-to-value’ strategy?
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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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0901 FM (CFA550) - Question Paper Financial Markets...

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