1) Flexible costs
2) Low Transaction costs
3) High Transaction costs
4) Constant Costs
5) Variable Costs
Answer-2
Q2. On which of the following instruments is the rate of return calculated on a 'discount basis'?
A. Certificates of deposit
B. Interbank deposits
C. Commercial paper
D. Repurchase agreements
E. Commercial bills
1) B and D
2) B, C and E
3) C and E
4) A and C
5) A, C and D
Answer-3
Q3. When a central bank wishes to reduce the rate of credit expansion, it would typically-
1) Buy treasury bills from the banking system at their current price.
2) Sell treasury bills to the general public.
3) Raise the price of repurchase agreements with the banking system.
4) Lower the price of repurchase agreements with the banking system.
5) Refuse reserves to the banking system.
Answer-3
Q4. The primary distinction between securities sold in the primary and secondary markets is the:
1) Riskiness of the securities.
2) Price of the securities.
3) Previous issuance of the securities.
4) Profitability of the issuing corporation.
5) Supervision
Answer-3
Q5. Owners of mutual funds own ______ and are called _______.
1) deposits; depositors
2) bonds; bondholders
3) shares; shareholders
4) IOU's of mutual funds; creditors
5) equity; lessee
Answer-3
Q6. The common stock of corporations that may be listed on stock exchanges or traded-
1) Over-the-counter
2) By brokers who own an inventory of shares from which they buy/sell
3) Between directors of the corporation
4) Between insiders of companies
5) On-the-counter
Answer-1
Q7. Financial markets evaluate the performance of publicly traded corporations -
1) Constantly
2) Quarterly when financial statements are filed with the OSC
3) Annually, when the annual report is issued
4) As requested by the managers of the corporations
5) Half yearly
Answer-1
Q8. Which of the following money market securities is backed by specified collateral?
1) Negotiable CDs
2) Banker's acceptances
3) Repurchase agreements
4) Commercial paper
5) Call Money
Answer-3
Q9. Which of the following may be a liability of a non-financial business corporation?
1) Commercial paper
2) Central bank funds
3) Treasury securities
4) Agency securities
5) Certificate of deposit
Answer-1
Q10. Banks invest in government securities for a variety of reasons except-
1) Income
2) Safety
3) Acceptable for collateral
4) High relative yield
5) Low relative yield
Answer-4
