Finance Market TTTC Multiple Choice
Finance Market TTTC Multiple Choice
Finance Market TTTC Multiple Choice
Thị trường Tài Chính (Trường Đại học Mở Thành phố Hồ Chí Minh)
10. Which of the following descriptions does 15. Which one of the following bonds is
not apply to money market securities? likely to have the highest required rate of
A) Short-term return, ceteris paribus?
B) Low-risk A) AAA-rated non-callable corporate
C) Highly liquid bond with a sinking fund
D) Long maturity B) AA-rated callable corporate bond
E) High denominations with a sinking fund
C) AAA-rated callable corporate bond
with a sinking fund
11. The most active and important D) High-quality municipal bond
participant in the U.S. money market E) AA-rated callable corporate bond
A) is the U.S. Treasury. without a sinking fund
B) are the large banks.
C) are the investment banks.
D) are the insurance companies. 16. An investor is trying to decide between a
E) is the Federal Reserve. muni paying 5.75 percent or an
equivalent taxable corporate paying 8.25
percent. What is the minimum marginal
12. The most significant borrower in the U.S. tax rate the investor must have to
money markets? consider buying the municipal bond?
A) Are commercial banks A) 80.00 percent
B) Are large corporations B) 20.00 percent
C) Is the U.S. Treasury C) 25.00 percent
D) Are the investment banks D) 66.67 percent
E) Are the insurance companies E) 30.00 percent
13. A noncompetitive bid for Treasury bill
auction provides
A) all noncompetitive bidders the same 17. Standard revenue bonds are
price. A) backed by the full ta xing authority
B) all competitive bidders the same of the municipality.
price. B) collateralized by the earnings from
C) all noncompetitive bidders the same a specific project.
quantity. C) bonds backed by mortgages.
D) all noncompetitive bidders lesser D) backed by the U.S. Treasury.
price than the competitive bidders. E) always offered with a best efforts
E) all competitive bidders the same offering.
quantity.
14. A Treasury security in which periodic
coupon interest payments can be 18. When an investment banker purchases
separated from each other and from the an offering from a bond issuer and then
principal payment is called a resells it to the public, this is known as a
A) STRIP. A) rights offering.
B) T-note. B) private placement.
C) T-bond. C) firm commitment.
D) GO bond. D) best efforts.
E) Revenue bond. E) standby offering.
33. A $2 million jumbo CD is paying a 37. Rank the following types of mortgages
quoted 3.55 percent interest rate on 180- by amount outstanding from largest to
day maturity CDs. How much money will smallest.
you have at maturity if you invest in the I. Home mortgages
CD? II. Multifamily mortgages
A. $2,000,000 III. Farm mortgages
B. $2,035,014 IV. Commercial mortgages
C. $2,035,500 A. I, II, III, IV
D. $2,071,000 B. I, II, IV, III
E. $2,088,400 C. II, I, IV, III
D. IV, II, III, I
34. From 1990 to 2013, which one of the E. I, IV, II, III
following money market securities
actually declined in terms of dollar
amount outstanding? 38. A ___________ placed against
A. commercial paper mortgaged property ensures that the
B. treasury bills property cannot be sold (except by the
C. federal funds and repos lender) until the mortgage is paid off.
D. negotiable CDs A. collateral
E. banker's acceptances B. lien
C. writ of habeas corpus
D. down payment
35. A 50-day maturity money market E. writ of certiorari
security has a bond equivalent yield of
3.60 percent. The security's EAR is
A. 3.69 percent. 39. You obtain a $265,000, 15-year fixed-rate
B. 3.61 percent. mortgage. The annual interest rate is
C. 3.55 percent 6.25 percent. In addition to the principal
D. 3.87 percent. and interest paid, you must pay $275 a
E. 3.66 percent. month into an escrow account for
insurance and taxes. What is the total
monthly payment (to the nearest dollar)?
36. If your firm enters into an overnight A. $2,272
reverse repurchase agreement, your firm B. $1,632
is C. $2,547
A. borrowing Fed funds D. $1,907
temporarily. E. $2,311
B. selling a security now while
agreeing to buy it back
tomorrow. 40. A borrower took out a 30-year fixed-rate
C. giving an unsecured loan to mortgage of $2,250,000 at a 7.2 percent
the counterparty. annual rate. After five years, he wishes
to pay off the remaining balance. Interest
rates have by then fallen to 7 percent. III. cash flows on a MBB are
How much must he pay to retire the not directly passed through
mortgage (to the nearest dollar)? from mortgages.
A. $2,122,426 A. I, II, and III
B. $2,225,330 B. I and II only
C. $2,015,678 C. II and III only
D. $2,212,041 D. I and III only
E. $1,999,998 E. I only
41. A homebuyer bought a house for 44. Which one of the following types of
$245,000. The buyer paid 20 percent mortgages is likely to become more
down but decided to finance closing popular as the average age of the U.S.
costs of 3 percent of the mortgage population increases?
amount. If the borrower took out a 30- A. GEM
year fixed-rate mortgage at a 5 percent B. GPM
annual interest rate, how much interest C. SAM
will the borrower pay over the life of the D. PLA
mortgage? E. RAM
A. $224,655
B. $180,622
C. $228,477 45. Of the following, the most recent
D. $188,265 derivative security innovations are
E. $248,575 A. foreign currency futures.
B. interest rate futures.
C. stock index futures.
42. A homeowner can obtain a $250,000, 30- D. stock options.
year fixed-rate mortgage at a rate of 6.0 E. credit derivatives.
percent with zero points or at a rate of
5.5 percent with 2.25 points. How long
must the owner stay in the house to 46. You have agreed to deliver the
make it worthwhile to pay the points if underlying commodity on a futures
the payment saving is not invested? contract in 90 days. Today the
A. 7.15 years underlying commodity price rises and
B. 3.33 years you get a margin call. You must have
C. 6.04 years A. a long position in a futures
D. 5.90 years contract.
E. more than 30 years B. a short position in a futures
contract.
C. sold a forward contract.
43. An MBB differs from a CMO or a pass- D. purchased a forward contract.
through in that E. purchased a call option on a
I. the MBB does not result in futures contract.
the removal of mortgages
from the balance sheet.
II. a MBB holder has no 47. You have taken a stock option position
prepayment risk. and, if the stock's price increases, you
could lose a fixed small amount of
64. A negotiable Cd is
A) a time draft payable to a seller of
goods with payment guaranteed by 67. Of the following the most likely effect of
a bank an increase in income tax rates would be
B) a loan to an individual or business to
to purchase a home land or other A) decrease the savings rate
real property B) decrease the supply of lovable
C) short term funds transferred funds
between finical institutions usual for C) increase interest rates
on more than one day D) all of the above
D) a marketable bank issued time
deposit that specifies the interest
rate earned and a fixed maturity 68. Classify each of the following in terms of
date their effect on interest rates
I. convenience on borrowing
become more restrictive
65. You go to the Wall Street Journal and II. the federal reserve increases the
notice that yields on almost all corporate money supply
and treasury bonds have decreased. The III. total federal reserve increases the
yield decreases may be explained by money supply
which one of the following A) 1 increase, 11 increase, 111
A) a decrease in U.S inflationary increase
expectations B) 1 increase, 11 decrease, 111
B) newly expected decline in the value decrease
of the dollar C) 1 decrease, 11 increase, 111
C) an increase in current and expected decrease
future returns of real corporate D) 1 decrease, 11 decrease, 111
investments decrease
D) decrea sed japanese purchases of
U.S treasury Bills/Bonds
69. inflation causes the demand curve for
lovable funds to shift to the ____ and
66. According to the liquidity premium causes the supply curve to shift to the
theory of interest rates ____
A) Long term spot rates are higher A) right, right
than the average of current and B) right, left
expected future short term rates C) left, left
D) left, right
75. Ceteris paribus if the fed was targeting
the quantity of money supplied and
70. which of the following bond types pays
money demanded dropped the fed would
interest that is exempt from federal
likely _____. If the fed was instead
taxation
targeting interest rates and money
A) Municipal bonds
demand dropped the fed would
B) Corporate bonds
likely____ .
C) Treasury bonds
A) increase the money supply, do
D) Convertible bonds
nothing
B) do nothing, decrease the money
supply
71. The relationship between maturity and C) decrease the money supply, do
yield to maturity is called the ____ nothing
A) Loan covernant D) do nothings, increase the money
B) term structure supply
C) bond indenture
D) fisher effects
76. Which of the following is the major
monetary policy making body of the U.S
72. According to the UET: unbiased federal reserve system
expectation theory A) FOMC
A) Markets are segmented and buyers B) Households
stay in their own segment C) FRB bank presidents
B) liquidity premiums are negative and D) U.S congress
time varying
C) the term structure will most often be
upward sloping
77. The major liability of the federal reserve
D) the long ten spot tate is an average
is
of the current and expected future
A) U.S treasury securities
short term interest rates
B) Depository institutions reserves
C) Currency out side banks
D) Vault cash of commercial banks
73. The primary policy tool used by the fed
to meet its monetary policy goals is
A) changing the discount rate
78. The major asset of the federal reserve is
B) changing reserve requirements
A) U.S treasury securities
C) devaluating currency
B) Depository institutions reserves
D) open market operations
C) Currency out side banks
D) Vault cash of commercial banks
B) Banks charge to lend foreign inflation does not get out of hand the fed
exchange to customers could:
C) Banks charge each other on loans A) reduce reserve requirements at
of excess reserves banks
D) The federal reserve charges on B) Decrease the discount rate
loans to commercial banks C) lower the target fed funds rate
D) lower the target money supply
growth rate.
80. Before 2003 the discount window loan
rate was set
A) Below the target fed funds rate 85. If the fed is targeting interest rates and
B) Above the target fed funds rate money demand increases an appropriate
C) Equal to the target fed funds rate policy response would be to
D) Equal to the repurchase rate A) Increase reserve requirement
B) increase the discount rate
C) Buy U.S treasury securities from
81. A decrease in reserve requirements government bond dealers
could lead to a(n) D) Increase government spending
A) Increase in bank lending
B) Increase in the money supply
C) an increase in the discount rate 86. The Major monetary policy making arm
D) Both A and B of the federal reserve is the
A) The federal open market committee
B) Council of federal reserve bank
82. if the fed wishes to stimulate the presidents
economy it could C) Office of the comptroller of the
I. Buy the U.sS government currency
securities through OMO D) Federal reserve bank of new york
II. Raise the discount rate
III. Lower reserve requirements
A) 1 and 111 only 87. in the area of bank supervision, which of
B) 11 and 111 only the following are functions of the federal
C) 1 and 11 only banks
D) 11 only I. Examinations of state member
banks
II. approval of member bank and
83. Currently the fed sets monetary policy bank holding company
by targeting acquisitions
A) the fed funds rate III. deposit insurance
B) the prime rate A) 1 only
C) the level of non-borrowed reserves B) 1 and 11 only
D) the level of borrowed reserves C) 11 and 111 only
D) 1 and 111 only
91. Money market securities exhibit which of 96. Which one of the following statements
the following about commercial paper is NOT true?
I. large denomination Commercial paper issued in the U.S
II. maturity greater than one year A) Is an unsecured short term
III. low default risk promissory note
IV. contractually determined cash B) Has a maximum maturity of 270
flows days
A) 1, 11, and 111 C) Is virtually always rated by at least
B) 1, 11, and 1v one ratings agency
C) 11, 111, and 1v D) Carries an interest rate above the
D) 11 and 1v prime rate
100. LIBOR is generally _____ the fed 104. When an investment banker
funds rate because foreign bank purchases an offering from a bond
deposits are generally ____ than issuer and then re sells it to the public
domestic bank deposits. this is know as a
A) Greater than; less risky A) Rights offering
B) Less than; more risky B) Private placement
C) The same as; equally risky C) Firm commitment
D) Greater than; more risky D) Best efforts
119. .The discount yield on a T-bill differs determined at the time of the
from the T-bill's bond equivalent yield repo.
(BEY) because
I. the discount yield is the
return per dollar of face 122. Which one of the following
value and the BEY is a statements about commercial paper is
return per dollar originally NOT true?
invested. A. is an unsecured short-term
II. a 360-day year is used on promissory note.
the discount yield and the B. has a maximum maturity of
BEY uses 365 days. 270 days.
III. the discount yield is C. is virtually always rated by at
calculated without least one ratings agency.
compounding, and the BEY D. has no secondary market.
is calculated with E. carries an interest rate above
compounding. the prime rate.
A. I only
B. II only
C. I and II only 123. A negotiable CD
D. II and III only A. is a bank-issued transactions
E. I, II, and III deposit.
B. is a registered instrument.
120. The following formula is used to C. is a bank-issued time deposit.
calculate the _____________ of a money D. has denominations ranging
market investment. from $50,000 to $10 million.
A. EAR E. pays discount interest.
B. APR
C. single-payment yield
D. discount yield 124. A 180-day $3 million CD has a 4.25
E. BEY percent annual rate quote. If you buy the
CD, how much will you collect in 180
days?
121. The rate of return on a repo is A. $3,047,439
A. determined by the rate of B. $3,045.678
return on the underlying C. $3,062,877
collateral. D. $3,063,750
B. strongly affected by the E. $3,127,500
current Fed funds rate at the
time of the repo. 125. A banker's acceptance is
C. determined at the time of the A. a time draft drawn on the
repo. exporter's bank.
D. determined by the rate of B. a method to help importers
return on the underlying evaluate the creditworthiness
collateral and determined at of exporters.
the time of the repo. C. a liability of the importer and
E. strongly affected by the the importer's bank.
current Fed funds rate at the D. an add-on instrument.
time of the repo and
E. for greater than one year the 120-day note at a 5.25 percent
maturity. discount. What is the exporter's true
effective annual financing cost?
A. 5.52 percent
126. The most liquid of the money market B. 5.42 percent
securities are C. 5.34 percent
A. commercial paper. D. 5.29 percent
B. banker's acceptances. E. 5.25 percent
C. T-bills.
D. Fed funds.
E. repurchase agreements.
131. A Chinese exporter sells $200,000 of
toys to a French importer. The Chinese
127. In dollars outstanding in 2013, the
exporter requires the French importer to
largest money market security was
obtain a letter of credit. When the bank
A. commercial paper.
accepts the draft, the exporter discounts
B. banker's acceptances.
the 90-day note at a 4 percent discount.
C. T-bills.
What is the exporter's true effective
D. Fed funds and repos.
annual financing cost?
A. 4.00 percent
B. 4.04 percent
128. You buy a $10,000 par Treasury bill at C. 4.10 percent
$9,575 and sell it 60 days later for $9,675. D. 4.16 percent
What was your EAR? E. 4.22 percent
A. 4.44 percent
B. 6.29 percent
C. 6.35 percent
132. If a $10,000 par T-bill has a 3.75
D. 6.52 percent
percent discount quote and a 90-day
E. 6.67 percent
maturity, what is the price of the T-bill to
the nearest dollar?
A. $9,625
129. LIBOR is generally _______________ B. $9,906
the Fed funds rate because foreign bank C. $9,908
deposits are generally D. $9,627
________________ domestic bank E. none of the options
deposits.
A. greater than; less risky than
B. less than; riskier than
133. A 90-day T-bill is selling for $9,900.
C. the same as; of equal risk to
The par is $10,000. The effective annual
D. greater than; riskier than
return on the T-bill is (watch your
E. less than; less risky than
rounding)
A. 4.00 percent.
B. 4.16 percent.
130. A U.S. exporter sells $150,000 of C. 4.10 percent.
furniture to a Latin American importer. D. 4.04 percent.
The exporter requires the importer to E. 4.21 percent.
obtain a letter of credit. When the bank
accepts the draft, the exporter discounts
138. In a Treasury auction, preferential 142. You buy a $10,000 par Treasury bill at
bidding status is granted to $9,575 and sell it 60 days later for $9,675.
A. competitive bidders. What was your EAR?
B. noncompetitive bidders. a. 6.35 percent
C. short sale committed bidders. b. 6.52 percent
D. commercial bank bidders. c. 4.44 percent
145. Money market securities exhibit 148. The following formula is used to
which of the following? calculate the _____________ of a money
I. Large denomination market investment. (pf-p0)/p0 * (360/n)
II. Maturity greater than one a. single-payment yield
year b. EAR
III. Low default risk c. APR
IV. Contractually determined d. BEY
cash flows e. discount yield
a. I, II, and III
b. II and IV
c. II, III, and IV 149. The most significant borrower in the
d. I, III, and IV U.S. money markets?
e. I, II, III, and IV a. Are the investment banks
b. Are large corporations
c. Are commercial banks
d. Are the insurance companies
e. Is the U.S. Treasury
C. 5.79%
D. 5.87%
174. Bearer bonds are bonds
E. 4.95%
A. with coupons attached that
179. An investor buys a $10,000 par, 4.25%
are redeemable by whoever
annual coupon TIPS security with 3
has the bond.
years to maturity. If inflation every six
B. where the registered owner
months over the investor's holding
automatically receives bond
period is 2.50%, what is the final
payments when scheduled.
payment the TIPS investor will receive?
C. in which the issue matures on
A. $10,213.00
a series of dates.
B. $10,869.28
D. issued in another currency
C. $11,822.25
other than the bond issuer's
D. $11,843.37
home currency.
E. $12,201.11
E. issued in a different country
180. A bond investor has a 99% chance of
other than the bond issuer's
receiving all of her promised payments
home country.
on a particular bond issue in the first
175. .
year of holding the bond, but only a 98%
176. A T-Bond with a $1000 par is quoted
chance in the second year, and a 97%
at a bid of 105:7 and an ask of 105:9. If
chance in the third year and beyond.
you sell the bond you will receive
What is the cumulative default
A. $1,052.81.
probability over the first three years she
B. $1,052.19.
holds the bond?
C. $1,057.22.
A. 3.75%
D. $1,059.22.
B. 4.24%
E. none of the above.
C. 5.89%
D. 6.85%
E. 7.33%
177. A T-Bond with a $10,000 par is quoted 181. You purchase a $1000 face value
at a bid of 92:11 and an ask of 92:17. If convertible bond for $975. The bond can
you bought the bond and then be converted into 150 shares of stock.
immediately sold it at the same quotes, The stock is currently priced at $5.25. At
how much money would you gain or what minimum stock price would you be
lose (ignore commissions)? willing to convert?
A. $12.50 A. $4.50
B. -$12.50 B. $5.26
C. -$18.75 C. $6.50
D. $18.75 D. $7.10
E. $0.00 E. $7.25
178. The quoted ask yield on a 30-year 182. You purchased a five-year annual
$1000 par T-Bond with a 6.25% coupon payment 6% coupon bond for $1,000 and
and a price quote of 106:16 is you planned on holding it to maturity.
___________ (use semiannual However right after you bought the bond
compounding). it was called at $1,043.29 when all
A. 2.94% interest rates fell to 5% and remained
B. 2.90% there for the full five years. You
reinvested the money for the full five D. One side has the obligation to
years. What was your annual compound buy an asset for the market
rate of return off your original price in one year's time.
investment?
A. 6.00%
B. 5.89% 186. Which of the following is NOT true
C. 5.75% A. When a CBOE call option on
D. 5.23% IBM is exercised, IBM issues
E. 5.00% more stock
B. An American option can be
exercised at any time during
183. If the net proceeds are greater than its life
the gross proceeds in an underwritten C. An call option will always be
offering, then exercised at maturity if the
A. the investment banker made a underlying asset price is
profit on the spread. greater than the strike price
B. the issuing company D. A put option will always be
underpriced its securities. exercised at maturity if the
C. the issue fails to occur. strike price is greater than the
D. the SEC rescinds the issue. underlying asset price.
184. NYSE listing has traditionally 187. A one-year call option on a stock with
benefited a firm by a strike price of $30 costs $3; a one-year
A. improving the stock's price. put option on the stock with a strike
B. generating increased publicity price of $30 costs $4. Suppose that a
for the firm. trader buys two call options and one put
C. providing easier access to option. The breakeven stock price above
primary market capital. which the trader makes a profit is
D. A, B, and C A. $35
B. $40
C. $30
D. $36
exercised when the stock price is $65. of $45 for $4 per option. For second
The trader's net profit is alternative to give a better outcome at
A. $700 the option maturity, the stock price must
B. $500 be above
C. $300 A. $45
D. $600 B. $46
C. $55
D. $50
196. The price of a stock on February 1 is
$124. A trader sells 200 put options on
the stock with a strike price of $120 200. A company knows it will have to pay
when the option price is $5. The options a certain amount of a foreign currency to
are exercised when the stock price is one of its suppliers in the future. Which
$110. The trader's net profit or loss is of the following is true
A. Gain of $1,000 A. A forward contract can be
B. Loss of $2,000 used to lock in the exchange
C. Loss of $2,800 rate
D. Loss of $1,000 B. A forward contract will always
give a better outcome than an
option
197. The price of a stock on February 1 is C. An option will always give a
$84. A trader buys 200 put options on better outcome than a forward
the stock with a strike price of $90 when contract
the option price is $10. The options are D. An option can be used to lock
exercised when the stock price is $85. in the exchange rate
The trader's net profit or loss is
A. Loss of $1,000
B. Loss of $2,000 201. A short forward contract on an asset
C. Gain of $200 plus a long position in a European call
D. Gain of $1000 option on the asset with a strike price
equal to the forward price is equivalent
to
198. The price of a stock on February 1 is A. A short position in a call option
$48. A trader sells 200 put options on the B. A short position in a put option
stock with a strike price of $40 when the C. A long position in a put option
option price is $2. The options are D. None of the above
exercised when the stock price is $39.
The trader's net profit or loss is
A. L oss of $800 202. A trader has a portfolio worth $5
B. Loss of $200 million that mirrors the performance of a
C. Gain of $200 stock index. The stock index is currently
D. Loss of $900 1,250. Futures contract trade on the
index with one contract being on 250
times the index. To remove market risk
199. A speculator can choose between from the portfolio the trader should
buying 100 shares of a stock for $40 per A. Buy 16 contracts
share and buying 1000 European call B. Sell 16 contracts
options on the stock with a strike price C. Buy 20 contracts
239. With bilateral clearing, the number of 243. The basis is defined as spot minus
agreements between four dealers, who futures. A trader is hedging the sale of
trade with each other, is an asset with a short futures position.
A. 12 The basis increases unexpectedly.
B. 1 Which of the following is true?
C. 6 A. The hedger's position
D. 2 improves.
B. The hedger's position
worsens.
240. Which of the following best describes C. The hedger's position
central clearing parties sometimes worsens and
A. Help market participants to sometimes improves.
value derivative transactions D. The hedger's position stays
B. Must be used for all OTC the same.
derivative transactions
C. Are used for futures
transactions
253. Which of the following best describes 256. Which of the following is a reason for
the capital asset pricing model? hedging a portfolio with an index
futures?
262. A company will buy 1000 units of a 266. Important buyers of loans include all
certain commodity in one year. It but which one of the following?
decides to hedge 80% of its exposure a) Foreign banks
using futures contracts. The spot price b) Insurance companies
and the futures price are currently $100 c) Closed-end bank loan mutual funds
and $90, respectively. The spot price and d) Vulture funds
the futures price in one year turn out to e) Credit unions
be $112 and $110, respectively. What is
the average price paid for the
commodity?
A. $92
267. Which one of the following types of
B. $96
transactions leaves the assets on the
C. $102
balance sheet?
D. $106
a) Loan sale without recourse
b) GNMA pass-throughs backed by
mortgages placed in trust
263. The schedule showing how monthly c) CMOs issued using mortgage pool
mortgage payments are split into as collateral
principal and interest is called a(n): d) Mortgage-backed bonds issued
a) securitization schedule. e) None of the options are correct.
b) balloon payment schedule.
c) graduated payment schedule.
d) amortization schedule.
e) growing equity schedule.
268. A three-class CMO has Class A, Class
B, and Class C securities outstanding.
264. Mortgage payments are Which class has the longest duration?
____________ on a 15-year fixed-rate a) Class A
mortgage than on a 30-year fixed-rate b) Class B
mortgage, and ____________ is paid on c) Class C
a 15-year mortgage than on a 30-year d) Class B and Class C have the
mortgage; ceteris paribus. same duration.
a) lower; less interest e) All of these choices are correct.
b) liquidity risk.
c) interest rate risk.
d) sovereign risk.
e) technology risk.