Module 2: Economics Flashcards
Compute for the real interest rate if the economy grew at 6%, inflation rate is 3%, and the nominal interest rate is 10%.
A. 4%
B. 7%
C. 10%
D. 13%
B. 7%
Real return = Interest rate – inflation rate
Who is not required to provide customer identification?
A. Individual who buys and sells stocks
B. Broker firm who performs on behalf of individual
C. Beneficiary of trust
D. All of the above
C. Beneficiary of trust
An efficient market believer rejects which of the following notions:
A. The market reacts to new information
B. Investor’s reactions are random
C. It is useless to study past price movements
D. None of the above
B. Investor’s reactions are random
Which of the following statements are true regarding regional exchange?
A. A company can be listed on both national and regional exchange
B. Regional exchanges allow the trading of shares of a company which are not big enough to qualify on a national exchange
C. All of the above
D. None of the above
C. All of the above
For accounting purposes, shares of stock are recorded using:
A. Book Value
B. Market value
C. Par value
D. None of the above
C. Par value
Which of the following services provided by external auditors can impair independence?
A. Consultancy
B. Bookkeeping
C. Accounting
D. All of the above
D. All of the above
The following can be seen in the Balance Sheet except:
A. Cash
B. Inventory
C. Net Income
D. Liabilities
C. Net Income
Which of the following is incorrect about markets?
A. Markets are where buyers and sellers execute trades
B. Markets require no physical space
C. Money market is for short term instruments
D. Capital market is for long term instruments
B. Markets require no physical space
M2 includes ______
A. Savings
B. Time deposits
C. M1 + Savings and time deposits
D. Savings, time deposits, assets and liabilities of financial institutions
C. M1 + Savings and time deposits
Fixed income earners are most affected during:
A. Inflation
B. Recession
C. Depression
D. Deflation
A. Inflation
If a client wants to know the corporation’s business performance, he will refer to:
A. Cash flow Statement
B. Profit and loss statement
C. Investment statement
D. Corporation’s position in the industry
B. Profit and loss statement
Which of the following rate is fixed:
A. Nominal yield
B. Current yield
C. Yield to market
D. None of the above
A. Nominal yield
Who should be the most aggressive in their investment?
A. 22-year old fresh graduate
B. 31-year old single
C. 50-year old with no dependents
D. All of them should be aggressive in their investment
A. 22-year old fresh graduate
Which of the following do not earn interest?
I. Corporate bonds
II. US treasury bills
III. PH government bonds
IV. Zero coupon bonds
V. Bank tier 2 capital
A. II only
B. II and IV
C. IV only
D. All of the above
B. II and IV
Which of the following will have the highest gains or the biggest loss due to fluctuations of interest rate?
A. 81 days treasury notes
B. 3-year bonds
C. 7-year FXTNs
D. 1 –year commercial paper
C. 7-year FXTNs
The following statements describe an OTC market?
I. Centralized Market
II. Decentralized Market
III. Conducted on a double-auction basis
IV. Conducted on a negotiated basis
A. I and III
B. I and IV
C. II and III
D. II and IV
D. II and IV