MCQOPTIONS
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MCQOPTIONS
This section includes 749 Mcqs, each offering curated multiple-choice questions to sharpen your Master of Arts in Economics (M.A. Economics) knowledge and support exam preparation. Choose a topic below to get started.
| 401. |
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 |
| Answer» D. 2 to 5 | |
| 402. |
Commodity exchanges enable producers and consumer to hedge their -----------given theuncertainty of the future. |
| A. | seasonal risk |
| B. | profit risk |
| C. | production risk |
| D. | price risk |
| Answer» E. | |
| 403. |
If people are willing to lend at 7% when inflation is 2% and continue to lend the sameamounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to: |
| A. | Extrapolative expectations |
| B. | Risk aversion |
| C. | Asymmetric information |
| D. | Money illusion |
| Answer» E. | |
| 404. |
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. |
| Answer» E. | |
| 405. |
In financial transactions, the risk that there will be no profit in selling of this assetis classified as |
| A. | price risk |
| B. | profit risk |
| C. | selling risk |
| D. | financial risk |
| Answer» B. profit risk | |
| 406. |
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. |
| Answer» E. | |
| 407. |
Money market deals with ..................... instruments. |
| A. | long term |
| B. | short term |
| C. | medium term |
| D. | all of these. |
| Answer» C. medium term | |
| 408. |
The central depositary ..................... the security on behalf of the investors |
| A. | Hold |
| B. | transfer |
| C. | both a & b above |
| D. | none of these |
| Answer» D. none of these | |
| 409. |
Which of the following financial intermediaries are depository institutions? |
| A. | A savings and loan association |
| B. | A commercial bank |
| C. | A credit union |
| D. | All of the above |
| Answer» E. | |
| 410. |
Primary and secondary markets: |
| A. | Compete with each other |
| B. | Complement each other |
| C. | Function independently |
| D. | Control each other |
| Answer» C. Function independently | |
| 411. |
CBLO stands for |
| A. | Collateralised Borrowing and Lending Obligation |
| B. | Central Banks Lending Obligation |
| C. | Commercial Borrowing and Lending Option |
| D. | Corporate Borrowing and Lending organisation |
| Answer» B. Central Banks Lending Obligation | |
| 412. |
Financial institutions are also known as ........................ |
| A. | Financial organisation |
| B. | Financial intermediaries |
| C. | Financial system |
| D. | Any of the above |
| Answer» C. Financial system | |
| 413. |
Which of the following is a cash asset? |
| A. | deposit created out of loans |
| B. | share |
| C. | bond |
| D. | Post office certificate. |
| Answer» B. share | |
| 414. |
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. |
| Answer» B. people receive good public services. | |
| 415. |
The nominal interest rate indicates that: |
| A. | people care only about the number of dollars. |
| B. | people care about what dollars can buy. |
| C. | people want compensated only for inflation. |
| D. | people only require the opportunity cost as payment when lending. |
| Answer» C. people want compensated only for inflation. | |
| 416. |
Accommodation bills are also known as ..................... bills |
| A. | kite bills |
| B. | wind bills |
| C. | supply bill |
| D. | both a & b |
| Answer» E. | |
| 417. |
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. |
| Answer» E. | |
| 418. |
___________ is regarded as “Hybrid securities”. |
| A. | Equity shares |
| B. | . Preference shares |
| C. | Debentures |
| D. | Treasury bills |
| Answer» C. Debentures | |
| 419. |
The largest industry group receiving venture capital funding is |
| A. | computer software. |
| B. | medical/health. |
| C. | computer hardware. |
| D. | none of the above. |
| Answer» E. | |
| 420. |
What you mean by “STRIPS” |
| A. | Separate Trade Register of Initial Public Securities offer |
| B. | Stock Trading Register of Interest and Principal Securities |
| C. | Separate Trading of Registered Interest and Principal of Securities |
| D. | Share Transfer and Registrar of Indian Public Securities issues |
| Answer» D. Share Transfer and Registrar of Indian Public Securities issues | |
| 421. |
An order for the purchase of securities at a fixed price is known as |
| A. | Limit order |
| B. | Open order |
| C. | Discretionary order |
| D. | Stop loss order |
| Answer» B. Open order | |
| 422. |
Financial institutions expect that |
| A. | moral hazard will occur, as the least desirable credit risks will be the ones most likely to seek out loans. |
| B. | opportunistic behavior will occur, as the least desirable credit risks will be the ones most likely to seek out loans. |
| C. | borrowers will commit moral hazard by taking on too much risk, and this is what drives financial institutions to take steps to limit moral haza |
| Answer» C. borrowers will commit moral hazard by taking on too much risk, and this is what drives financial institutions to take steps to limit moral haza | |
| 423. |
A widening of the difference between the return on corporate bonds and on government bonds might suggest which of the following? |
| A. | The economy is on the brink of recession. |
| B. | Interest rates are going to rise in future. |
| C. | Government bonds are becoming more risky compared to corporate bonds. |
| D. | Investors should avoid government bonds. |
| Answer» B. Interest rates are going to rise in future. | |
| 424. |
Most automobile financing is provided by |
| A. | commercial banks. |
| B. | thrifts. |
| C. | finance companies owned by automobile companies. |
| D. | finance companies owned by real estate brokers. |
| Answer» D. finance companies owned by real estate brokers. | |
| 425. |
In a situation where share prices are generally depressed because long-term interest rates are expected to rise in future, a large firm looking for long-term finance would normally consider: |
| A. | issuing long-dated bonds. |
| B. | making a new share issue. |
| C. | borrowing from its bank on overdraft. |
| D. | borrowing in the interbank market. |
| Answer» B. making a new share issue. | |
| 426. |
The IDBI was started in |
| A. | 1949 |
| B. | 1964 |
| C. | 1982 |
| D. | 1962 |
| Answer» C. 1982 | |
| 427. |
The minimum net worth requirement for PCM on the NCDEX is-----------. |
| A. | 50 Lakh |
| B. | 500 Lakh |
| C. | 5000 Lakh |
| D. | 5 Lakh |
| Answer» D. 5 Lakh | |
| 428. |
When money lent for more than a day but up to a fortnight is called |
| A. | Call money |
| B. | Term money |
| C. | Money at short notice |
| D. | None of the above |
| Answer» D. None of the above | |
| 429. |
Successful financial intermediaries have higher earnings on their investments because they are better equipped than individuals to screen out good from bad risks, thereby reducing losses due to |
| A. | moral hazard. |
| B. | adverse selection. |
| C. | bad luck. |
| D. | financial panics. |
| Answer» C. bad luck. | |
| 430. |
The maximum maturity days of holding commercial paper are |
| A. | 170 days |
| B. | 270 days |
| C. | 120 days |
| D. | 5 days |
| Answer» C. 120 days | |
| 431. |
In borrowing and lending of federal funds, the federal funds rate is result of function between |
| A. | assets and liability |
| B. | cost and marketing |
| C. | supply and demand |
| D. | income and expense |
| Answer» D. income and expense | |
| 432. |
The small investors’ gateway to enter into big companies is ————— |
| A. | Equity shares |
| B. | Preference shares |
| C. | Bonds |
| D. | Mutual fund |
| Answer» E. | |
| 433. |
Which of the following is not a characteristic feature of venture capital firms? |
| A. | Funding just one or a small number of firms. |
| B. | Holding equity in the firms that are funded. |
| C. | Having a long-term investment horizon. |
| D. | Providing advice and assistance to the firms that are funded. |
| Answer» B. Holding equity in the firms that are funded. | |
| 434. |
Asymmetric information can lead to widespread collapse of financial intermediaries, referred to as a |
| A. | bank holiday. |
| B. | financial panic. |
| C. | financial disintermediation. |
| D. | financial collapse. |
| Answer» C. financial disintermediation. | |
| 435. |
Discount and Finance House of India was set up in pursuance of the recommendations of .....................Committee |
| A. | Malegam |
| B. | Malhotra |
| C. | Vaghul |
| D. | Narasimham |
| Answer» D. Narasimham | |
| 436. |
Which of the following can be described as involving direct finance? |
| A. | A corporation’s stock is traded in an over-the-counter market. |
| B. | People buy shares in a mutual fund. |
| C. | A pension fund manager buys commercial paper in the secondary market. |
| D. | None of the above. |
| Answer» E. | |
| 437. |
-----------is the world’s largest exchange in silver and gold |
| A. | NMCE |
| B. | MCX |
| C. | ICEX |
| D. | NCDEX |
| Answer» C. ICEX | |
| 438. |
The device adopted to make profit out of the differences in prices of a security in to differentmarkets is called..................... |
| A. | Cornering |
| B. | prise rigging |
| C. | arbitrage |
| D. | margin trading |
| Answer» D. margin trading | |
| 439. |
In primary markets, first time issued shares to be publicly traded in stock markets is considered as |
| A. | traded offering |
| B. | public markets |
| C. | issuance offering |
| D. | initial public offering |
| Answer» E. | |
| 440. |
Which of the following are short-term financial instruments? |
| A. | A banker’s acceptance |
| B. | A share of Walt Disney Corporation stock |
| C. | A Treasury note with a maturity of 4 years |
| D. | All of the above |
| Answer» B. A share of Walt Disney Corporation stock | |
| 441. |
Major players of Indian money market is |
| A. | Central bank |
| B. | Co-operative banks |
| C. | Commercial banks |
| D. | Indigenous banks |
| Answer» D. Indigenous banks | |
| 442. |
The first Indian equity index is |
| A. | Nifty |
| B. | Sensex |
| C. | Dollex |
| D. | Defty |
| Answer» C. Dollex | |
| 443. |
----------- Exchanges provide real time, online, transparent and vibrant spot platform forcommodities. |
| A. | Electronic Spot |
| B. | Regional |
| C. | Futures |
| D. | Stock |
| Answer» B. Regional | |
| 444. |
The certificate which evidences an unsecured corporate debt of short-term maturity |
| A. | Certificate of Deposit |
| B. | Commercial paper |
| C. | Secured Premium Notes |
| D. | Interbank participation Certificate |
| Answer» C. Secured Premium Notes | |
| 445. |
When the least desirable credit risks are the ones most likely to seek loans, lenders are subject to the |
| A. | moral hazard problem. |
| B. | adverse selection problem. |
| C. | shirking problem. |
| D. | free-rider problem. |
| Answer» C. shirking problem. | |
| 446. |
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. |
| Answer» D. government bond-holders hold extrapolative expectations. | |
| 447. |
Which of the following sequences lists financial assets from least risky to most risky? |
| A. | Stocks, bonds, derivatives. |
| B. | Bonds, derivatives, stocks. |
| C. | Derivatives, bonds, stocks. |
| D. | Bonds, stocks, derivatives. |
| Answer» E. | |
| 448. |
Two important characteristics of financial instruments are: |
| A. | information communication and risk neutrality. |
| B. | risk neutrality and liquidity. |
| C. | standardization and information communication. |
| D. | liquidity and standardization. |
| Answer» D. liquidity and standardization. | |
| 449. |
If interest rates rise, the present value of any future earnings is bound to: |
| A. | Fall |
| B. | Rise |
| C. | Suffer from inflation |
| D. | Increase in risk |
| Answer» B. Rise | |
| 450. |
The financial futures market has evolved over recent time because of |
| A. | volatility and risk in the foreign exchange markets |
| B. | volatility of interest rates |
| C. | appeal to speculators due to low margin requirements |
| D. | all of the above |
| Answer» E. | |