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(solution)- Business Multiple Choice Questions


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The Question

1.?Idiosyncratic risk is:?

Common to everyone.

Represented by Beta.

Specific to a particular business.

Due to changes in the interest rate.

2.?Bond prices (and yields) are determind by supply and demand in the bond market. The demand for bonds increases when:?

Wealth falls

Expected future interests rises

Expected inflation falls

Government needs to borrow more

3.?The current yield is:??

Coupon rate divided by price

Coupon rate divided by face value

Coupon rate divided by principle value

Present value of bond future payments at a price of zero

4.?The term structure of interest rates is the relationship between time to maturity and:??

Coupon to yield maturity (CPN)

Current yield to maturity (CYM)

Average yield to maturity (AYM)

Yield to maturity (YTM)

5.?Financial markets are essential to the operation of our economic system because they do all but one of the following:?

Derive their value from an underlying security

Offer savers and borrowers liquidity

Pool and communicate information through prices

Allow for the sharing of risk

6.?Stock prices are a central element in a market economy because they:??

Provide equity

Crashes distort the economy

Ensure resources flow to profitable areas

Act as the other side of bonds

7.?The intrinsic and time value of an option depend on all but:??

Strike price

Original price of option

Price and volatility of underlying asset

Time to expiration

8.?The real exchange rate is strongly related to the:??

Purchasing power parity

Technical specifications

Inflation differential

Government yield rate

9.?Adverse selection means:??

Borrower may not use the borrowed funds productively

Borrower safeguards the funds in an improper location

Least creditworthy borrowers are the ones who borrow

The problem of distinguishing a good credit risk from a bad credit risk.

10.?The risks faced by banks in day-to-day operations include:??




All of the above

11.?Banks assets are all but:??





12.?Banks make a profit for their owners. Banks typically measure their own profitability by all except:?

Interest coverage??

Net interest income??

Net interest margin??

Return on assets

13.?All of the following are non-depository institutions except:


Insurance companies

Pension funds

Finance companies

14.?A bank run can place a bank into which of the following positions???




None of the above

15.?Government is involved in every part of the financial system. Government officials may intervene in the financial system in order to do all but:??

Protect small depositors??

Protect large depositors??

Safeguard the stability of the financial system??

Government can intervene to do all of the above

16.?Functions of the modern central bank is to do all but:

Adjust interest rates and other tools to control quantity of money and credit in the economy

Assure a free market economy without regulation

Oversee the financial system

Lend to sound banks during times of stress

17.?Which of the following does not describe the Federal Open Market Committee (FOMC):??

Sets interest rates?

Has 12 voting members?

Is controlled largely by the chair??

Meets every month

18.?Money multiplier depends on:??

Reserve requirement

Banks' desire to hold excess reserves

Public's desire to hold currency

All of the above

19.?The six core principles include all but:

Time has value

Risks requires compensation

Instability improves welfare

Markets develop prices and allocate resources

20.?Changes in the amount of money in the economy are related to changes in all but:

Interest Rates

Diversity Rates

Inflation Rates

Monetary Policy


Solution details

Solution #00090803

(solution)- Business Multiple Choice Questions.zip

Business Multiple Choice Questions Answers

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xxxxxxxxxxxxxx xxxxxxxxxxxxx xxxx is:


xxxxxx to everyone.


Represented xx Beta.


Specific to x particular xxxxxxxxx


Due to xxxxxxx in the xxxxxxxx xxxxx


2.?????? xxxx prices xxxx xxxxxxx xxx xxxxxxxxx by xxxxxx and demand in the bond market. The xxxxxx for xxxxx increases when:??????????


Wealth falls


Expected xxxxxx interests xxxxx


xxxxxxxx inflation falls


xxxxxxxxxx xxxxx to borrow xxxx


3.?????? xxx xxxxxxx yield xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


xxxxxx rate xxxxxxx by price


xxxxxx xxxx divided by face xxxxx


Coupon xxxx divided xx principle xxxxx


xxxxxxx xxxxx of xxxx future xxxxxxxx at a price of xxxx


xx?????? The term structure of interest rates is the xxxxxxxxxxxx between time to xxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


Coupon to yield maturity xxxxx


xxxxxxx yield to xxxxxxxx (CYM)


Average xxxxx to xxxxxxxx (AYM)


Yield to maturity xxxxx


xxxxxxxxxxxxxx Financial xxxxxxx xxx essential xx xxx operation xx xxx economic xxxxxx xxxxxxx they do xxx but one xx the xxxxxxxxxxxxxxxxxxxxxxxx


xxxxxx their xxxxx from xx underlying xxxxxxxx


Offer xxxxxx and borrowers liquidity


Pool xxx communicate xxxxxxxxxxx xxxxxxx xxxxxx


xxxxx xxx xxx sharing of risk


6.xxxxxxxxxxxx xxxxx prices xxx a central xxxxxxx in x market xxxxxxx because xxxxx?????????????????????????


Provide equity


xxxxxxx xxxxxxx the economy


xxxxxx resources flow xx xxxxxxxxxx areas



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Jul 19, 2017





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