Financial Markets and Institutions MCQs and Notes

R

Rakesh Kumar • 28.44K Points
Instructor II

Q 1. Aloan:

(A) is an asset for both the lender and the borrower.

(B) is an asset for the lender and a liability for the borrower.

(C) is a liability for the lender and an asset for the borrower

(D) is a liability for both the lender and the borrower.

R

Rakesh Kumar • 28.44K Points
Instructor II

Q 2. In indirect finance:

(A) lenders loan to borrowers.

(B) an institution borrows from the lender and provides funds to the borrower.

(C) occurs between a borrower and lender, with or without an intermediary.

(D) the borrower is required to have collateral.

R

Rakesh Kumar • 28.44K Points
Instructor II

Q 3. The sale of government bonds overseas:

(A) causes a fall in the domestic money supply.

(B) causes a deficit in the balance of payments.

(C) causes a smaller increase in interest rates than the sale of bonds to the domestic banking sector.

(D) causes a smaller increase in interest rates than the sale of bonds to the domestic private sector.

R

Ranjeet • 34.60K Points
Instructor I

Q 4. Interest rate expectations have been thought to be an important influence on bond sales because:

(A) government bond-holders are, by and large, are income risk averse.

(B) interest rates have always been very unstable.

(C) the bond market is dominated by people interested mainly in capital gains.

(D) government bond-holders hold extrapolative expectations.

R

Ram Sharma • 193.84K Points
Coach

Q 5. If the public debt can be financed without adding to inflation or causing interest rates to rise, it is said to be:

(A) only a burden on future generations.

(B) following the golden rule of the public finances.

(C) in primary balance.

(D) sustainable

A

Admin • 36.93K Points
Coach

Q 6. The public debt of a country is not necessarily a burden on the economy to the extent that:

(A) it grows less rapidly than GDP.

(B) people receive good public services.

(C) people are happy to hold government bonds.

(D) it can be financed without adding to inflation.

A

Admin • 36.93K Points
Coach

Q 7. Moral hazard caused by regulation can only be removed from financial transactions if:

(A) regulations are regularly revised to keep pace with the changing circumstances of the market.

(B) the regulations prevent agency capture.

(C) all regulation is self-regulation.

(D) participants in the finance industry do not feel protected by the regulations.

P

Priyanka Tomar • 35.28K Points
Coach

Q 8. Statutory regulation is likely to create larger compliance costs than self-regulation because:

(A) self-regulation does not involve lawyers and the courts.

(B) consumers are better able to assess risk under self-regulation.

(C) statutory regulators are often over-cautious.

(D) statutory regulation is controlled by consumers.

V

Vijay Sangwan • 28.62K Points
Instructor II

Q 9. The regulation of the banking industry is of particular importance in modern economies because:

(A) banks are large and very profitable.

(B) everyone in the economy has a bank account.

(C) banks employ many people.

(D) banks provide the principal means of payment for the economy.

V

Vinay • 28.75K Points
Instructor II

Q 10. Which of the following are functions of a financial system? 1. The operation of a payments system. 2. Providing the means of portfolio adjustment. 3. Helping to reduce unemployment. 4. Channelling funds between lenders and borrowers. 5. Helping speculators to bet on price movements.

(A) 1 and 5

(B) 2, 3 and 5

(C) 1, 2 and 4

(D) 2 to 5