Chapter 8 Money Market Quiz CA Foundation Chapter 8 Money Market Quiz 1 1 / 21 Commercial paper has maturity of around how many days? 1 days to 1 year 10 days to 1 year 15 days to 1 year none of these 2 / 21 _________ is a situation in the bonds market when the rate of interest falls to its lowest level and the speculativ demand for money becomes perfectly elastic. cash crunch liquidity trap economic surplus infinite supply 3 / 21 Which of the following are the features of the money market ? Maturity of period is more tha 1 year Highly risky Unsecured Instruments None of these 4 / 21 _______ is the money which is accepted as a medium of exchange because of the trust between the payer and the payee. Credit money Fiduciary money Fiat money None of these 5 / 21 What is the minimum limit of commercial paper, an instruement of money market? 5 lakhs 10 lakhs 20 lakhs 1 lakhs 6 / 21 Devaluation of money means Decrease in internal value of money Decrease in external value of money Both a and b None of these 7 / 21 ‘Treasury Bills’ or ‘T-Bills’ are short term debt instruments which are issue by Government of India an presently issued in______. 91 Days 182 Days 364 Days All of the above 8 / 21 The words “Bulls and Bears” are associated with Import and Export Banking Marketing Speculator 9 / 21 In the paralance of financial investments, the terms ‘bear’ denotes An investor who feels that the price of particular security is going to fall An investor who excepts the price of particular shares to rise A shareholder or a bondholder who has an interest in a company financial or otherwise none of these 10 / 21 Which of the following statements is true in the context of money supply in India? M3 is the most liquid money supply measure M2 is the most liquid money supply measure M1 is the most liquid money supply measure None of these 11 / 21 Which of the following money market instruments is also known as Zero Coupon Bonds? Call Money Treasury Bill Commercial Paper Commercial Bill 12 / 21 What is Issue Price? It is the same price as the market price It is a price lower than the market price It is a price fixed by the farmer It is a price higher than the market price 13 / 21 In which year BSE secured a trademark for its iconic building Phiroze JeeJeebhoy Towers at Dalal Street Street in Mumbai? 2011 2015 2009 2018 14 / 21 Taking profits from differences in prices or returns in different markets is called_________. two-sided sales take advantage of the situation futures fro protection against financial loss Arbitrage 15 / 21 Days intermediate T-bills were brought into effect from 1996-97 after abolition of which of the following? 91 days T-bills 182 days T-bills 273 days T-bills 364 days T-bills 16 / 21 When the general interest rate reaches a very low level, which of the following statements will be correct? Most people will except the interest rate to rise in the future Most people will prefer to hold bonds Most people will speculate further decline in the rate of interest Any increase in the money supply will cause the interest rate to fall further 17 / 21 Which of the following measures of money supply is known as ‘Broad Money’? M1 M2 M3 none of the above 18 / 21 Which one of the following statement is not true about Indian Money Market? Non-Banking Finance Companies(NBFCs) are financial institutions that constitute organised components of money market Money market mutual funds are allowed to sell units to corporates and individuals A well developed money market is essential for a modern economy None of these 19 / 21 In economics dictionary, what is the full form of NSDL? National Securities Depository Limited National Shares Depository Limited National Securities Developed Limited None of these 20 / 21 Which one is NOT true regarding the Marketing Stabilization Scheme (MSS)? It absorbs surplus liquidity of enduring nature arising out of capital flows It absorbs surplus liquidity through sale od short dated government securities and treasury bills Mobilised surplus liquidity is held in the MSS account with the Reserve Bank of India MSS account liquidity can be used for normal government expenditure of capital nature 21 / 21 Choose incorrect statement from the following: 28 Days T-bills were introduced in 1998 364 Days T-bills were introduced in 1992 182 Days T-bills were introduced in 1986 273 Days T-bills were introduced in 2006 Your score isThe average score is 53% 0% Restart quiz CA Foundation Chapter 8 Money Market Quiz 2 1 / 20 Money market Mutual Funds_________ Also known as finance companies Mutual funds that enable individuals and small businesses to invest indirectly in money market instruments Are involved in acquiring and placing mortgages are available only to high net worth individuals 2 / 20 Which of the following is not a tax? MAT VAT GST SAT 3 / 20 Velocity of money is mostly stable in which time period? Short run Long run Very Long run Very short run 4 / 20 What is not an example of commodity money? Salt Cigarettes Shells Paper 5 / 20 What is not a function of money? Standard of deferred payment. Unit of account. Means of consumption. Store of value. 6 / 20 The principal source of a central bank’s control over the money supply is… he linkage between the reserves held by banks and sight deposits held at commercial banks. ..the opportunity cost of holding money, the interest rate. …the power to issue bank notes that circulate. ..the monopoly of legal gold and silver reserves. 7 / 20 The monetary base is: The sum of currency in circulation and commercial bank reserves. The sum of currency in circulation and the currency held by commercial banks. The sum of gold and foreign exchange held by the central bank The sum of real assets of the banking sector plus its net worth. 8 / 20 Considering the money market in isolation, if real GDP increases in the short-run, then the equilibrium nominal interest rate will (A) _____ should the money stock be (B)_________ by the central bank. (A) remain constant; (B) decreased (A) fall ; (B) held constant (A) rise; (B) held constant (A) fall; (B) decreased 9 / 20 According to table 9.1, M1 in the Euro Area is at 6630.8 bn €, M2 at 10234.5 bn € and M3 at 10836.8 bn € in 2015. How much money is invested in time deposits with unrestricted access in the Euro Area? 1110.8 bn € Can’t be calculated. 4206 bn € 3603.7 bn € 10 / 20 M3 – M1 = ? M2 Time deposits with unrestricted access + larger, fixed term deposits + accounts at non-bank institutions Time deposits with unrestricted access + sight deposit accounts M2 + accounts at non-bank institutions 11 / 20 What is not a characteristic of sight deposits? Convertibility into cash on demand Low or zero interest payments Transferability of claims against them. Relatively low liquidity 12 / 20 Monetary aggregates (M1, M2, etc.) describe… ..accumulating definitions of money with increasingly lower convertibility to reserves. …accumulating definitions of money with increasingly higher convertibility to reserves ..accumulating definitions of money with increasingly lower liquidity. ..accumulating definitions of money with increasingly higher liquidity. 13 / 20 Fiat Money is Money… without or very little intrinsic value …with intrinsic value. ..that can be also consumed …this is not declared by the government as legal tender. 14 / 20 The demand for heavy loans can cause excess funds for banks deficiencies for banks organized reservation competitive reservations 15 / 20 In borrowing and lending of federal funds, the federal funds rate is result of function between assets and liability cost and marketing supply and demand income and expense 16 / 20 The maximum maturity days of holding commercial paper are 170 days 270 days 5 days 120 days 17 / 20 The commercial paper issued with low interest rate thus the commercial paper are categorized as payables rating commercial rating poor credit rating better credit rating 18 / 20 The liquidity status of certificate of deposit which is more negotiable is considered as certified liquidity term liquidity more liquid less liquid 19 / 20 The agreement which incurs the transaction between two parties and promise held that second party will sell security at specific maturity is classified as repurchasing commercial notes repurchase bills purchase agreement reverse repurchase agreement 20 / 20 The repurchase agreements having maturity of one week or lesser have denominations of $10 million or more $20 million or more $25 million or more $15 million or more Your score isThe average score is 41% 0% Restart quiz CA Foundation Chapter 8 Money Market Quiz 3 1 / 20 The instrument used by Federal Reserve to smooth the money supply and interest rates include treasury notes repurchase agreements commercial payable notes commercial receivable notes 2 / 20 For a particular security transaction, the agreement is ‘repo’ with the point of view of security seller security buyer security function none of these 3 / 20 The accounting entry of the institutions who lend federal funds to other institutions is posted as liability on balance sheet assets on balance sheet income in income statement expense on income statement 4 / 20 The bids of bidder which tells that how much treasury bills bidder wants to buy is classified as federal acceptance bid bankers’ acceptance bid non-competitive bids competitive bids 5 / 20 The funds transferred usually for a day between financial institutions are classified as federal funds banker’s funds debt funds secured funds 6 / 20 The investors held commercial papers generally from issuance to maturity within 1 to 2 days within 3 to 4 days within 4 to 5 days 7 / 20 The certificate of deposits which are usually negotiable are issued by banks financial market stock exchange business corporations 8 / 20 The rate which is used in major banks in United States as a rate for industrial and commercial loans is London intra bank offered rate London interbank offered rate euro interbank offered rate demand intra bank rate 9 / 20 The type of market in which Eurodollar are traded is classified as brokerage market contraction market expansion market Eurodollar market 10 / 20 The submitted bids in the treasury bills auction consist of types which are competitive bids non-competitive bids treasury bids both A and B 11 / 20 For a particular security transaction, the agreement is classified as ‘reverse repo’ with the point of view of security liability security buyer security seller security function 12 / 20 The process of issuing treasury bills is classified as treasury trading auction treasury fund auction treasury bills auction treasury bills transfer 13 / 20 The financial instrument such as commercial paper can be sold issued by commercial banks directly with brokers or dealers functional buyers 14 / 20 The federal funds are loans borrowed and lent on single payment basis monthly payment basis semiannual payment basis annual payment basis 15 / 20 The type of instrument whoever holds it, gets the interest and principal amount is classified as term instrument interim instrument primary instrument bearer instrument 16 / 20 The non-competitive bidders get the allocation of treasury bills on federal basis last basis firstly basis preferential basis 17 / 20 The interest rate of certificate of deposits is quoted using a time span of 250 days a year 150 days a year 365 day a year 360 day a year 18 / 20 The interest rate paid on the traded Eurodollars is called as London intra bank offered rate London interbank offered rate Euro interbank offered rate Demand intra bank rate 19 / 20 The markets which reallocate liquid funds in relatively fixed amounts are classified as capital markets debt markets secondary markets primary markets 20 / 20 The banks that deals with reciprocal agreements and accounts are considered as correspondent banks non-correspondent banks reciprocal transactions functional banks Your score isThe average score is 42% 0% Restart quiz CA Foundation Chapter 8 Money Market Quiz 4 1 / 23 The treasury bills are issued to raise significant amount of funds by US treasury Australian treasury Swiss treasury functional treasury 2 / 23 The treasury bills have high liquidity because of extensive secondary markets extensive primary markets premium money markets discounted money markets 3 / 23 The rates of certificate of deposits are mostly negotiated between bank and COD buyer bank and stock market stock market and COD buyer indirect negotiations of buyers 4 / 23 The negotiable deposit certificate are traded in secondary markets primary markets direct markets indirect markets 5 / 23 In the Eurodollar market, the decrease in demand of Euro dollars results in increase in KIBOR decrease in KIBOR decrease in federal funds rate increase in federal funds rate 6 / 23 The international banker’s acceptance usually arises from underlying letter of confirmation letter of transfer letter of credits letter of buying 7 / 23 The price which is paid by the bidders and is accepted by all other bidders is classified as highest price lowest price zero price peak price 8 / 23 The government regulates financial markets for two reasons which are increase information available to investor ensure the soundness of financial system create a sound atmosphere Both A and B 9 / 23 The Federal reserve, money market brokers and dealers, mutual funds and US treasury are all participants of liquid markets money markets transaction markets functional markets 10 / 23 The obligations that are issued by US governments and are obligated for short term, are classified as bankers treasury treasury bills treasury funds secured treasury 11 / 23 The negotiable certificate of deposit with one year maturity pays the interest annually semiannually monthly every two weeks 12 / 23 The Federal Reserve increases the money supply by selling treasury bills buying treasury bills selling Swiss bills buying Swiss bills 13 / 23 The type of bidding in which the bids are met before the allocation of competitive bidders is considered as firstly basis preferential basis federal basis last basis 14 / 23 The short term promissory notes are unsecured and not collateralized against securities, hence it is classified as notes payable notes receivable commercial paper commercial notes 15 / 23 If the 180 days T-bill have the maturity of one year with the value of $9250 and face value is $10000 then reported discount yield is 0.2 0.13 0.14 0.15 16 / 23 The type of bids which states complete description about quantity of bids and prices of bids is classified as markets bid bankers bid competitive bids non-competitive bids 17 / 23 In the Eurodollar market, the increase in demand of Euro dollars result in increase in LIBOR decrease in LIBOR increase in KIBOR decrease in KIBOR 18 / 23 The repurchase agreements usually called repos, can be traded directly with brokers or dealers functional buyers both A and B 19 / 23 The retail certificate of deposits which are not traded have face value of 250000 100000 150000 200000 20 / 23 The bankers acceptance which is usually time draft is fully backed by commercial banks Swiss banks agriculture banks functional banks 21 / 23 The financial instrument which is used to raise funds for working capital is considered as commercial paper commercial notes notes payable notes receivable 22 / 23 The Federal Reserve decreases the money supply by selling Swiss bills buying Swiss bills selling treasury bills buying treasury bills 23 / 23 The principal investors of US treasury bills which are issued by US treasury do not include mutual funds extensive funds corporations brokers and dealers Your score isThe average score is 38% 0% Restart quiz
