1- A lender is promiseda $100 payment (including interest) one year from today.

Question

1- A lender is promiseda $100 payment (including interest) one year from today. If the
lender has an 8% opportunity cost of money, he should be willing toaccept what amount
today?
A. $100.00
B. $108.20
C. $92.59
D. $96.40

2- The higher the Future Value (FV) of the payment, the higher willbe the:
A. Discount rate
B. Present value
C. Liquidity
D. Cost of borrowing

3- The procedure of finding out the Present Value (PV) is knownas:
A. Discounting
B. Compounding
C. Time value of money
D. Bond pricing

4 ---------------- tells us after how much time period the amountof money will become
double.
A. Real interest rate
B. Nominal interest rate
C. Rule of 72
D. Time value of money

5- The interest rate used in the present value calculation is oftenreferred to as:
A. Discount rate
B. Inflation rate
C. Nominal rate
D. None of the given option

6- The procedure of finding out the Future Value (FV) is knownas:
A. Discounting
B. Compounding
C. Time value of money
D. Bond pricing

7- The price of a bond is the ---------------- of its payments.
A. Present Value
B. Future Value
C. Coupon rate
D. Principal amount

8- The ---------------is defined as the probability weightedaverage of the squared
deviations of the possible outcomes from their expected value.
A. Standard deviation
B. Variance
C. Mean
D. Median

9- The difference between real and nominal interest rate is
A. The cost of borrowing
B. The effect of inflation
C. The price of bonds
D. None of the given option

10- The Future Value (FV) of $1000 in 5 years at 5% interest ratewill be:
A. $1000.00
B. $1276.28
C. $999.99
D. $1500.52

11- Stock exchange is an example of:
A. Financial instrument
B. Financial institution
C. Financial market
D. Bank

12- Which of the following is NOT an example of financialinstitutions?
A. Banks
B. Securities firms
C. Stock exchanges
D. Insurance companies

13. Which of the following are used to monitor and stabilize theeconomy?
A. Governments
B. Commercial Banks
C. Central Banks
D. Financial institutions

14. Financial instruments are evolved just as much as_____________.
A. Currency
B. Stocks
C. Bonds
D. Commodity

15. Previously financial markets are located in which of thefollowing?
A. Coffee houses or Taverns
B. Stock exchanges
C. Bazaar
D. Coffee houses and Stock exchanges

16. We need __________ to carry out day to day transactions
A. Money
B. Bonds
C. Stocks
D. Loans

17- Among the following which one is less liquid asset?
A. Checking account
B. Car
C. Share
D. Debit card

18- Which of the following is the final mode of payment?
A. Money
B. ATM
C. Cheque
D. Yet to discover

19- Debit card works in the same way as which one of thefollowing?
A. Cheque
B. Credit card
C. Store value card
D. Pay order

20- Banks use to handle transactions among themselves, throughwhich one of the
following?
A. Debit card
B. Electronic transfers
C. Credit card
D. Store value card

Explanation / Answer

1)      C. $92.59

2)      A. Discountrate

3)      A.Discounting

4)      C. Rule of72

7)      C. Couponrate

8)      B.Variance

9)      B. The effectof Inflation

10)    B. $1,276.28

11)    C. Financial Market

12)   C. Stock Exchanges

13)    C. Central Banks

14)    C. Bonds

15)   D. Coffee houses andStock exchanges

16)    A. Money

17)   D. Debit Card

18)    C. Cheque

19)    C. Store value card

20)    B. Electronictransfers

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