MGT411 MCQ2 from Quiz # 2 Solved

MGT411 MCQ2 from Quiz # 2 Solved 2022

he____________ are an assessment of the creditworthiness of the corporate issuer. 
Select correct option: 

Bond yield

Bond price 

Bond risk
Bond ratings 

Which of the following statement is true for the given sentence, "that tax affects the bond return"? 
Select correct option: 

Because only interest income they receive from bond is taxable 
Because principal amount and interest income they receive from bond is taxable
Because bond holders are taxpayers
Because all bond is sold with a condition that tax will be deducted from its return

The second important factor that affects the return on a bond is taxes, Bondholders must pay income tax on the interest income they receive from privately issued

The relationship between the price and the interest rate for a zero coupon bond is best described as: 
Select correct option: 

Volatile
Stable
Non-existent  
Incerse

When stock prices reflect fundamental values: 
Select correct option: 

All investors will experience capital gains
All companies will have an easier task of obtaining financing for investment projects
The allocation of resources will be more efficient 
The overall level of the stock market should move higher continuously

Coupon bonds make the annual payments which are called as ___________. 
Select correct option: 

Annual payments
Fixed payments
Coupon payments
Maturity payment

  

If information in a financial market is asymmetric, this means: 
Select correct option: 

Borrowers and lenders have perfect information
Borrowers would have more information than lenders 
Borrowers and lenders have the same information
Lenders lack any information

If YTM equals the coupon rate the price of the bond is __________. 
Select correct option: 

Greater than its face value
Lower than its face value
Equals to its face value
Insufficient information

The Financial Systems makes it easier to trade because it: 
Select correct option: 

Facilitate Payments 
Channels Funds from Savers to Borrowers 
Enables Risk Sharing 
All of the given options

Debt instruments is categorized on the basis of which one of the following? 
Select correct option: 

Loan maturity period 
Interest rates
Mode of payment of interest
Amount of the debt taken

The return on holding a bond till its maturity is called: 
Select correct option: 

Coupon rate
Yield to maturity
Current yield
Internal rate of return 

Which of the following are used to monitor and stabilize the economy? 
Select correct option: 

Stock exchanges
Commercial Banks
Central Banks 

Financial institutions

Previously financial markets are located in which of the following? 
Select correct option: 

Coffee houses or Taverns .
Stock exchanges
Bazaar
Coffee houses and Stock exchanges
Financial Markets

To buy and sell financial instruments quickly and cheaply. Evolved from coffeehouses to trading places (Stock exchanges) to electronic networks

Transactions are much more cheaper now. Markets offer a broader array of financial instruments than were available even 50 years ago

Requiring a large deductible on the part of an insured is one way insurers treat the problem of: 
Select correct option: 

    Free-riding

 

Moral hazard Adverse selection The Lemons market

 

 

 

for more contents visit

http://groups.google.com/group/vuZs

 

Which one of the following is the procedure of finding out the Present Value (PV)? 
Select correct option: 

Discounting
Compounding
Time value of money
Bond pricing

_____________ are organized to eliminate the need of costly information gathering. 
Select correct option: 

Central bank
Commercial banks
Stock exchange
Insurance companies

  

With direct finance we mean which of the following? 
Select correct option: 

Individuals (or firms) borrow directly from the savers
Individuals (or firms) borrow directly from banks.
Individuals deposit savings directly in banks. 
Firms deposit savings directly in banks. 

Yield curves show which of the followings? 
Select correct option: 

The relationship between bond interest rates (yields) and bond prices
The relationship between liquidity and bond interest rates (yields)
The relationship between risk and bond interest rates (yields)

The relationship between time to maturity and bond interest rates (yields)  

In a financial market where information is symmetric: 
Select correct option: 

The same information would be known by both parties in a transaction 
One party to a transaction knows information the other party does not
The ability to obtain information is available to only one party
All of the given options

Other things remaining equal, the liquidity premium theory is based upon the idea that ____________. 
Select correct option: 

Investors prefer long-term bonds
Investors prefer short-term bonds 
Investors are indifferent between short-term and long-term bonds
Investors prefer intermediate-term bonds

  

Spreading involves: 
Select correct option: 

Finding assets whose returns are perfectly negatively correlated
Building a portfolio of assets whose returns move together
Investing in bonds and avoiding stocks during bad times
Adding assets to a portfolio that move independently