Midterm Examination - Part I

Due Nov 24 at 2pm Points 50 Questions 50

Available until Nov 24 at 2pm Time Limit 60 Minutes

Instructions
INSTRUCTIONS:

1-50 Multiple Choice. Select the best answer from the choices given.

This quiz was locked Nov 24 at 2pm.

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LATEST Attempt 1 59 minutes 44 out of 50

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Score for this quiz: 44 out of 50

Submitted Nov 24 at 1:59pm
This attempt took 59 minutes.

Question 1 1 / 1 pts

Intermediaries in the secondary market who are agents of investors and

match buyers with sellers of securities are called

  brokers

  traders

  dealers
   investment banks

Question 2 1 / 1 pts

The orders that are transacted at best available price are classified as

  available order

  post order

  limit order

  market order

Question 3 1 / 1 pts

Which one of the following is a type of equity security that has a fixed
dividend and a priority status over other equity securities?

  preferred stock

  common stock

  senior bond

  debenture
Question 4 1 / 1 pts

The BSP's sector which is responsible for the regulation of banks and
other BSP-supervised financial institutions.

  Financial Supervision Sector

  Corporate Services Sector

  Monetary and Economics Sector

  Currency Management Sector

Question 5 1 / 1 pts

A financial market in which only short-term debt instruments are traded is

called the ________ market.

  capital

  money

  bond

  stock

Question 6 1 / 1 pts
A bond that is bought at a price below its face value and the face value is
repaid at a maturity date is called a

  fixed- payment loan.

  discount bond.

  simple loan.

  coupon bond.

Question 7 1 / 1 pts

The exchange markets and over the counter markets are considered as
two types of

  risky market

  floating market

  secondary market

  primary market

Question 8 1 / 1 pts

Which of the following is a long-term financial instrument?

   A treasury bond

  A negotiable certificate of deposit

  A treasury bill

  A repurchase agreement

Incorrect
Question 9 0 / 1 pts

Every financial market has the following characteristic:

  It determines the level of interest rates.

  It allows loans to be made.

  It allows common stock to be traded.

  It channels funds from lenders-savers to borrowers-spenders.

Question 10 1 / 1 pts

In a typical loan amortization schedule, the amount of interest paid each

period          .

  decreases with each payment.

  remains constant with each payment.

  increases with each payment.

   equals zero.

Question 11 1 / 1 pts

A characteristic of common stock in which it the common stockholders

have the lowest priority claim on a corporation’s assets in the event of
bankruptcy.

  Residual claim

  Limited liability

  Dividend

  Voting rights

Question 12 1 / 1 pts

Well-functioning financial markets promote

  deflation

  growth

  inflation

  unemployment
Question 13 1 / 1 pts

Convertible bonds tend to offer a(n) ________ return than nonconvertible

bonds.

  equal

  higher

  lower

  similar

Question 14 1 / 1 pts

These are loans secured by a piece of real estate already used to secure a
first mortgage.

  Jumbo mortgages

  Reverse-annuity mortgages

  Second mortgages

  Subprime mortgages

Question 15 1 / 1 pts
Which of the following instruments is not traded in a money market?

  Corporate bonds

  Banker’s acceptances

  Treasury bills

  Commercial paper

Question 16 1 / 1 pts

A corporate bond with a rating below ________ is considered to be a junk

bond?

  AAA

  BBB

 C

 B

Question 17 1 / 1 pts

If an investment banker has agreed to sell a new issue of securities on

a best-efforts basis, the issue
   most likely involves a well-established, large company.

  most likely involves an unusually large stock offering.

 
results in no assumption of underwriting risk by the investment banker.

  most likely involves bonds instead of common stock.

Question 18 1 / 1 pts

There is "asymmetric information" in the issuing of common stock or debt

if

  management has more accurate information than investors have.

  investors have nearly perfect information.

  investors have more accurate information than management has.

  the markets have nearly perfect information.

Question 19 1 / 1 pts

An important financial institution that assists in the initial sale of

securities in the primary market is the

  stock exchange.

  investment bank.
   commercial bank.

  brokerage house.

Question 20 1 / 1 pts

Inflation is a

  decline in interest rates.

  continuous fall in prices.

  continually rising price level.

  continuous increase in the money supply.

Question 21 1 / 1 pts

It allows a financial intermediary to offer safe liquid liabilities such as

deposits while investing the depositors' money in riskier illiquid assets.

  Diversification

  Economies of scale

  Price risk

  Primary markets
Question 22 1 / 1 pts

The present value of an expected future payment ________ as the interest

rate increases.

  is constant

  rises

  falls

  is unaffected

Question 23 1 / 1 pts

Federal funds are

  loans made by banks to each other.

  loans made by banks to the Federal Reserve System.

  loans made by the Federal Reserve System to banks.

  funds raised by the federal government in the bond market.

Question 24 1 / 1 pts
Financial intermediaries can substantially reduce transaction costs per
dollar of transactions because their large size allows them to take
advantage of

  their market power.

  poorly informed consumers.

  economies of scale.

  standardization.

Question 25 1 / 1 pts

A "fallen angel" is a bond that has moved from: 

  investment grade to speculative grade.

  being a long-term obligation to being a short-term obligation.

  being publicly traded to being privately traded.

  senior status to junior status for liquidation purposes.

Question 26 1 / 1 pts

A share of common stock is a claim on a corporation's
   liabilities.

  expenses.

  debt.

  earnings and assets.

Question 27 1 / 1 pts

The ________ is the final amount that will be paid to the holder of a coupon
bond.

  present value

  discount value

  face value

  coupon value

Question 28 1 / 1 pts

Which is an example of expansionary monetary policy?

  BSP increases the reserve requirement ratio

  BSP raises the discount rate

  BSP purchases securities in the open market

   Reverse repurchase operation of the BSP

Incorrect
Question 29 0 / 1 pts

It is the risk that an FI may not have enough capital reserves to offset a
sudden loss incurred.

  default risk

  liquidity risk

  interest rate risk

  insolvency risk

Incorrect
Question 30 0 / 1 pts

Which is not a monetary policy tool?

  Discount Rate

  Reserve Requirements

  Open Market Operation

  Taxation
 Question 31 1 / 1 pts

In borrowing and lending of federal funds, the federal funds rate is result
of function between

  supply and demand

  income and expense

  cost and marketing

  assets and liability

Question 32 1 / 1 pts

Compared to money market securities, capital market securities have

  longer maturities.

  lower yields.

  less risk.

  more liquidity.

Incorrect
Question 33 0 / 1 pts
These are other fees in a mortgage contract that covers the remaining
costs to the mortgage issuer for processing the mortgage application and
completing the loan.

  Loan origination fee

  Application fee

  Appraisal fee

  Title search

Question 34 1 / 1 pts

Compared to money market securities, capital market securities have

  more liquidity.

  longer maturities.

  lower yields.

  less risk.

Question 35 1 / 1 pts

The primary difference between Treasury notes and bonds is _________.

   maturity at issue

  default risk

  coupon rate

  tax status

Question 36 1 / 1 pts

Markets in which funds are transferred from those who have excess
funds available to those who have a shortage of available funds are called

  commodity markets

  financial markets

  central markets

  derivative exchange markets

Question 37 1 / 1 pts

A corporation acquires new funds only when its securities are sold

  in the secondary market by a commercial bank.

  in the secondary market by an investment bank.

  in the secondary market by a stock exchange broker.

   in the primary market by an investment bank.

Question 38 1 / 1 pts

The ________ is the stated interest rate of the bond at the time it was
issued.

  yield

  internal rate of return

  coupon rate

  effective rate

Question 39 1 / 1 pts

Which of the following are short-term financial instruments?

  A share of Ayala Corporation

  A residential mortgage

  A commercial paper

  A treasury note with a maturity of four years

 Question 40 1 / 1 pts

The Fisher effect is defined as the relationship between which of the

following variables?

 
real interest rates, interest rate risk premium, and nominal interest rates

  interest rate risk premium, real interest rates, and default risk premium

  default risk premium, inflation risk premium, and real interest rates

  real interest rates, inflation rates, and nominal interest rates

Question 41 1 / 1 pts

Which of the following money market instrument is not sold on a discount

basis?

  Commercial paper

  Banker's acceptance

  Negotiable certificate of deposit

  Treasury bill

Incorrect
Question 42 0 / 1 pts
The duration of a coupon bond increases

  when interest rates increase.

  the higher the bond price.

  the higher the coupon rate on the bond.

  the longer is the bond's term to maturity.

Question 43 1 / 1 pts

The services performed by financial institutions that benefit the supplier

of funds includes the following, except

  Transaction cost services

  Maturity intermediation

  Denomination intermediation

  Money supply transmission

Question 44 1 / 1 pts

An agent who maintains an inventory from which he or she buys and sells

securities is called a:

  investment bank
   broker

  dealer

  syndicate

Question 45 1 / 1 pts

A ________ feature on a bond allows the issuer to buy back the bond from
the investor before maturity.

  dividend

  convertible

  call

  recall

Question 46 1 / 1 pts

During a period of high inflation, the Bangko Sentral ng Pilipinas is likely to

  lower the discount rate.

  lower the reserve requirements

  decrease the money supply.

   buy treasury bonds on the open market.

Question 47 1 / 1 pts

It is a public record attached to the title of the property that gives the
financial institution the right to sell the property if the mortgage borrower
defaults on his or her payments.

  down payment

  lien

  call provision

  indenture

Incorrect
Question 48 0 / 1 pts

Which is not a characteristic of money market instruments?

  They have an original maturity of one year or less.

  They have low default risk.

  They have high rate of return.

  They are generally sold in large denomination.

Question 49 1 / 1 pts

A preferred stock where the dividend is fixed regardless of any increase or

decrease in the issuing firm’s profits.

  Cumulative preferred stock

  Noncumulative preferred stock

  Nonparticipating preferred stock

  Participating preferred stock

Question 50 1 / 1 pts

The Securities Exchange Commission (SEC) does not

  advise the investor whether his investment choices are good or bad

 
ensure that investor have full and accurate information available for
investment decisions

  monitor the major securities exchanges

  require exchanges to monitor trading to prevent insider trading

Quiz Score: 44 out of 50