MGT411 mid term solve paper November 2011

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Question No: 1 ( Marks: 1 ) - Please choose one
Financial instruments are evolved just as ___________.
► Currency
► Stock
► Bond
► Commodity
Question No: 2 ( Marks: 1 ) - Please choose one
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
Question No: 3 ( Marks: 1 ) - Please choose one
Which of the following is a drawback of Fiat money?
► Fewer resources are used to produce money
► The quantity of money can be determined by rational human judgment
► [COLOR="Red"]A corrupt Government might issue excessive amount of money thus causing
inflation[/COLOR]
► Fiat money doesn’t have any drawback
Question No: 4 ( Marks: 1 ) - Please choose one
Which one of the following is NOT true for money?
► Money is an asset
► Money is a standard mode of payment
► Money is same as wealth
► Money is readily spend able asset


Question No: 5 ( Marks: 1 ) - Please choose one
A
derivative instrument:
► Gets its value and payoff from the performance of the underlying instrument
► Is a high risk financial instrument used by highly risk averse savers
► Comes into existence after the underlying instrument is in default
► Should be purchased prior to purchasing the underlying security
Question No: 6 ( Marks: 1 ) - Please choose one
Financial intermediaries provide small lender-savers all of the following advantages EXCEPT:
► Greater liquidity
► Lower transaction cost
► Lower risk
► Higher return
Question No: 7 ( Marks: 1 ) - Please choose one
The
future value of $100 left in a savings account earning 4.5% for two and a half years is best
expressed by:
► $100(1.045)3/2
► $100( 0.45)2.5
► $100(1.045)2.5
► 100 x 2.5 x (1.045)
Question