BBA-MIDTERM TEST-A-D1-3

BBA-MIDTERM TEST-A-D1-3 - FIN 301 Financial Markets and...

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FIN 301 Financial Markets and Institutions MID-TERM TEST Class: D 1-3____ Name:___________________ Student I.D.:________________________ A Multiple Choice (60%) ( ) 1. The gross domestic product is the A) the value of all wealth in an economy. B) the value of all goods and services sold to other nations in a year. C) the market value of all final goods and services produced in an economy in a year. D) the market value of all intermediate goods and services produced in an economy in a year. ( ) 2. The measure of the aggregate price level that is most frequently reported in the media is A) GDP deflator B) producer price index C) consumer price index D) personal consumption expenditure deflator ( ) 3. The primary assets of depository institutions are A) deposits. B) business loans. C) mutual funds. D) commercial paper. ( ) 4. The purpose of the disclosure requirements of the Securities and Exchange Commission is A) increase the information available to investors. B) prevent bank panics. C) improve monetary control. D) protect investors against financial losses. ( ) 5. If an individual moves money from a savings deposit account to a money market deposit account, A) M1 decreases and M2 stays the same. B) M1 stays the same and M2 increases. C) M1 stays the same and M2 stays the same. D) M1 increases and M2 decreases. ( ) 6. A credit market instrument that pays the owner a fixed coupon payment every year until the maturity date and then repays the face value is called a A) simple loan. B) fixed-payment loan. C) coupon bond. 1
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D) discount bond. ( ) 7. In which of the following situations would you prefer to be the borrower? A) The interest rate is 9 percent and the expected inflation rate is 7 percent. B) The interest rate is 4 percent and the expected inflation rate is 1 percent. C) The interest rate is 13 percent and the expected inflation rate is 15 percent. D) The interest rate is 25 percent and the expected inflation rate is 50 percent. ( ) 8. If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, which bond would you prefer to have been holding? A) A bond with one year to maturity B) A bond with five years to maturity C) A bond with ten years to maturity D) A bond with twenty years to maturity ( ) 9. Which of the following are generally true of bonds? A) The only bond whose return equals the initial yield to maturity is one whose time to maturity is the same as the holding period. B) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods. C) The longer a bond's maturity, the smaller is the size of the price change associated with an interest rate change. D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds.
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BBA-MIDTERM TEST-A-D1-3 - FIN 301 Financial Markets and...

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