2/6/2020 Practice Quiz M3 (Ungraded)

My courses ▶ (20/01) MScFE 560 Financial Markets (C20-S1)

▶ Module 3: Interest and Money Markets ▶ Practice Quiz M3 (Ungraded)

Started on Thursday, 6 February 2020, 8:32 AM

State Finished
Completed on Thursday, 6 February 2020, 8:38 AM
Time taken 5 mins 56 secs

Question 1

Complete

Not graded

What is the Annual Effective Interest Rate (EAR) if the Annual Percentage Rate
(APR) is 5% and compounding is quarterly?

Select one:
Slightly below 5.09%
Over 5.25%

Slightly above 5.09%

Under 5.00%

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

Question 2

Complete

Not graded

Consider the following statements:

Statement A: Loans facilitated by the money-market tend to bring more

bene t to borrowers than to lenders.
Statement B: A money-market instrument’s par value can be viewed as a
promised loan repayment.

Which of the statements given above is correct?

Select one:
Neither statement A nor B
Only statement B
Both statement A and B
Only statement A

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

Question 3

Complete

Not graded

Let I denote the initial value of a loan or debt instrument, F the promised nal value
of the loan or instrument, and T the term of the loan or instrument.

Which one of the following statements is correct?

Select one:
 is the effective interest rate on the loan.
F −I

 is the annual effective interest rate on the loan.

F −I

 is the effective interest rate on the loan.

I −F

I −F
 is the annual effective interest rate on the loan.
I

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

Question 4

Complete

Not graded

Consider the following statements:

Statement A: Negotiable certi cates of deposit are more liquid than non-
negotiable certi cates of deposit.
Statement B: Money-market instruments that cannot be traded secondarily
are illiquid.

Which of the statements given above is correct?

Select one:
Only statement B
Only statement A

Both statement A and B

Neither statement A nor B

Your answer is correct.

Question 5

Complete
Not graded

Consider the following statements:

Statement A: The difference between the par value and the price is a
compensation for the possibility of default.
Statement B: Buying a certi cate of deposit is synonymous with lending
money.

Which of the statements given above is correct?

Select one:
Only statement B
Both statement A and B
Neither statement A nor B
Only statement A

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

◄ Notes 4 M3
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Live Session M3 ►

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