MGT411 Current Paper 22/2/10....

[Hafiz Salman Majeed]

 

My paper of Money and Banking on 22 Feb 2010


(1) Components of Aggregate demand i.e. C + I + G+ NX 3

(2) Difference between monetary and Fiscal policy 5

(3) Central Bank is Stabilizer of economy. Explain. 5

(4) once more Question 5

(5 What is Monetary policy reaction curve? Explain its shifts. 10

(6 Currency in hand of public is shifted from 10 to 15 % , required reserves
10% and Excess reserve 3% . Calculate the impact of this change on multiplier.
(b) if Govt purchases $3 billion securities what will be effect on monetary base and also calculate this effect through above given information. 10 marks



MCQs that I got into memory total were 52 MCQs , 30 from Mid papers

Investing was an activity reserved for only __________ in the past.
► Business men
► Traders
► Wealthy people
► Stock brokers


Which of the following is the final mode of payment?
► Money
► ATM
► Cheque
► Yet to discover



Which of the following statements is correct?
► If you can buy the same goods this year as you bought last year with less money
the money supply decreased.
► To purchase the same goods today that were purchased one year ago requires
more money, there must have been inflation
► To purchase the same goods today as one year ago requires less money, the
money supply must have increased
► To purchase the same goods today that were purchased one year ago requires the
same amount of money, there must have been inflation


The risk premium of a bond will:
► Higher for investment-grade bonds than for high-yield bonds
► Positive but small if the risk of default is zero
► Decrease when the default risk rises
► Increase when the risk of default rises


The FOMC targets the federal funds rate, but if they are going to alter the course of
the economy they must influence which one of the following?
► The money growth rate as well
► The long-term nominal interest rate as well
► The real interest rate as well
► The nominal exchange rate as well





All of the following are the primary sources of funds for depository institutions
EXCEPT?
► Checkable deposits
► Savings and time deposits
► Short term loans
► Borrowings from other banks


Central banks today place most of their focus on which of the following?
► The unemployment rate
► The quantity of M2
► Interest rates
► Controlling the size of the money multiplier


If a central bank sets an explicit inflation target it would require which one of the
following?
► More emphasis on the interest rate target and less on a money target
► To shift their focus entirely to a nominal interest rate target
► Willingness to live with more volatility in the interest rate
► To give up control of targeting the monetary base


Which one of the following is included in the functions of both Finance company as
well as Government Sponsored Enterprise?
► Consumer loans
► Farm loans
► Business loans
► Mortgages

Which one of the following is the procedure of finding out the Present Value (PV)?
►Discounting
►Compounding
►Time value of money
►Bond pricing

A bank's Return on Equity is calculated by which of the following?
► Dividing the banks liabilities by the bank's capital
► Dividing the bank's net profit after taxes by the bank's capital
► Bank's assets plus the net profit after taxes and dividing this sum by the bank's
Capital
► Dividing the bank's net profit after taxes by the sum of the bank's assets and its
liabilities



Of all of the component parts of aggregate demand, the part least sensitive to changes in the real interest rate is:
► Investment
► Government purchases
► Consumption
► Net exports

If government purchases increase and push current output above potential output, then monetary policymakers are likely to:
► Raise the real interest rate
► Lower the real interest rate
► Keep the real interest rate constant focusing on changing nominal interest rate only
► Purchase Treasury securities


Required reserve-to-deposit ratio is a factor that affects the quantity of money. This
Factor is controlled by which of the following?
► Central bank
► Bank regulators
► Commercial banks
► Non bank public



Mr. Ghazanfar Pays through cheques for his purchases, so

►Cheque is not a form of money
►Cheque can not be used for payment
►He had not made final payment
► Payment is not made.


Example(s) of Government sponsored Enterprise(s) is/are

►Khushali Bank
►SME Bank
►ZTBL
►All of above given


What will be the future value of $1000, after 40 years if interest rate is 6.0%?

►$90,625
►$84,265
►$82,963 Wrong Question asked
►$96,215
If Price of Bond increases, then its coupon rate will

►Increase
►Decrease
►Not changed
►All information is not given

Treasury bonds and corporate bonds are

►Zero coupon bonds
►Fixed payments bonds
►Consol
►Coupon bonds


Premium on a bond increases if

► Default risk decreases
► Default risk is decreases but other risk increases
► Risk increases
► Default risk is zero

__________________create risk for financial institutions and so have come under
Increasing scrutiny in recent years

►OMO
►Off-balance-sheet activities
►Cash withdrawals
►Discount loans

Banks can operate in other countries by

► Opening a foreign branch
►Offer same services as in home country
►Purchasing a controlling interest in a foreign bank
►All of above given

What may be the true effect of Globalization and technology in Banking Industry?

►made banking a tougher job
►Profits are harder to come
►Overall the improved efficiency
►All of above given


Bank on-site examination is the evaluation of

► Past – due loans
► All assets
► Management
► Liquidity (vault cash)

__________ is extended on a very short-term basis, usually overnight, to sound institutions.

►Primary credit
►Secondary credit
►Seasonal credit
►All of above given

If Alternative means of payment increases then, money demand

► Arises
► Falls
► does not change
► All information is not provided

If liquidity of other assets rises then portfolio demand for money will

► Arises
► Falls
► does not change
► not all information provided



Banks can also borrow by using a _____or repo, which is a short-term collateralized loan

►Repurchase agreement
►OMO
►Discount loans
► Letter of Credit



--
Regards...
Do Remember Me In Your Prays...
Hafiz Salman Majeed....
MBA 1st Semester......
http://www.vuaskari.com
Hafiz.Sal...@gmail.com
Sent from Lahore, Pakistan