Chapter - 5 Quiz(Part 3)

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Q201. Which one of the following is NOT a step in calculating Standard Deviation? *

1 point

A. Obtain the deviations from the mean.

B. Obtain the population variance.

C. Square root of each deviation.

D. Obtain the arithmetic mean.

Q202. Which of the following represents the UK monetary base? *

1 point

A. M1

B. M2

C. M4

D. M0

Q203. An increase in the price of a substitute product will result in: *

1 point

A. A parallel shift in the supply curve.

B. A parallel shift in the demand curve.

C. A movement along the demand curve.

D. A movement along the supply curve.

Q204. A standard deviation frequency distribution that does not follow a normal pattern is referred to as: *

1 point

A. Skewed

B. Abnormal

C. Off Tendency

D. Uncorrelated

Q205. An increase in Gross Domestic Product (GDP) generally indicates: *

1 point

A. Lower unemployment.

B. Higher inflation.

C. Increased productivity.

D. A healthier economy.

Q206. If interest is compounded quarterly, what is the future value of $1,000 invested at 6% per annum for 2 years? *

1 point

A. $1,061.36

B. $1,126.49

C. $1,593.85

D. $1,123.60

Q207. Based on the following data set, what is the Geometric Mean? *

1 point

A. 9.00

B. 6.03

C. 7.50

D. 7.00

Q208. Which one of the following statements is TRUE? *

1 point

A. Both Fundamental and Technical Analysis are long-term approaches.

B. Technical Analysis is long-term while Fundamental Analysis is short-term.

C. Fundamental Analysis is generally long-term, while Technical Analysis is generally short-term.

D. Both are short-term approaches.

Q209. If Technical Analysis consistently works, the Efficient Market Hypothesis suggests markets are: *

1 point

A. Strong Form Efficient

B. Weak Form Efficient

C. Inefficient

D. Semi-Strong Efficient

Q210. The scale used to measure Correlation is: *

1 point

A. 0 to +1

B. −∞ to +∞

C. 0 to +∞

D. −1 to +1

Q211. What is the Present Value of an investment paying $250 annually for 10 years, assuming an interest rate of 6%? *

1 point

A. $2,500

B. $1,840

C. $250

D. $447

Q212. A government engages in Protectionism to: *

1 point

A. Force domestic industries to compete globally.

B. Force global companies to compete domestically.

C. Protect inefficient domestic industries against global competition.

D. Protect consumers from inferior imported goods.

Q213. Which statement regarding Cross Elasticity of Demand is TRUE? *

1 point

A. Substitute goods are negative; complementary goods are positive.

B. Substitute goods are positive; complementary goods are negative.

C. Both substitute and complementary goods are positive.

D. Both substitute and complementary goods are negative.

Q214. Which of the following are TRUE regarding the Retail Price Index (RPI)?

I. It measures the prices of goods and services.

II. Mortgage interest payments are excluded.

III. It indicates inflation.

IV. It measures government spending.

1 point

A. I and IV

B. III and IV

C. I and III

D. I and II

Q215. A chart using vertical columns of Xs and Os to record significant price movements is called: *

1 point

A. Line Chart

B. Point and Figure Chart

C. Candlestick Chart

D. Bar Chart

Q216. The assumption that Supply creates its own Demand is known as: *

1 point

A. Say's Law

B. Equilibrium

C. Elasticity of Demand

D. Funke's Law

Q217. A product representing only a small proportion of a consumer's income is most likely to be: *

1 point

A. Price Elastic

B. Unit Elastic

C. Excess Elastic

D. Price Inelastic

Q218. The Trade Balance is: *

1 point

A. The Balance of Payments.

B. Transactions in financial assets.

C. The total of visible and invisible trade.

D. The sum of visible trade only.

Q219. Approximately what percentage of observations lie within three standard deviations of the mean in a normal distribution? *

1 point

A. Approximately 99.75%

B. Approximately 99.99%

C. Approximately 95.50%

D. Approximately 68.26%

Q220. A deposit of $8,000 earns 5% simple interest. What is the interest earned after 18 months? *

1 point

A. $1,261

B. $615

C. $600

D. $400

Q221. What is the effect of raising interest rates? *

1 point

A. Increase Saving

B. Increase Borrowing

C. Increase Profits

D. Decrease Saving

Q222. The price elasticity of demand for a normal good is likely to be which of the following? *

1 point

A. Greater than one

B. Positive

C. Zero

D. Negative

Q223. Which of the following are true regarding the behaviour of costs in the short run?

I. Marginal costs and average costs are the same
II. Average costs are dish shaped
III. Marginal costs cut average costs at their minimum
IV. Marginal costs cut average costs at their maximum *

1 point

A. II and III only

B. I only

C. II and IV only

D. I and II only

Q224. In the short run, a firm will continue to operate provided that it covers, at a minimum, which one of the following? *

1 point

A. Fixed costs

B. Labour costs

C. Total costs

D. Variable costs

Q225. If there is no predictable common movement between two securities' returns, which of the following is correct? *

1 point

A. Negatively correlated

B. Perfectly negatively correlated

C. Positively correlated

D. Zero correlation

Q226. In a perfectly competitive market, which of the following are true?

I. No barriers to entry or exit

II. Single homogeneous product

III. Product and price information freely available

IV. Small number of firms dominate the industry

1 point

A. I and III only

B. IV only

C. I, II and IV only

D. I, II and III only

Q227. What is removed from current assets to convert the Current Ratio into the Acid Test Ratio? *

1 point

A. Cash

B. Accounts Receivable

C. Stock (Inventory)

D. Short-term Investments

Q228. In the long run, which statement is true? *

1 point

A. Covers fixed and variable costs

B. Covers fixed costs

C. MC = MR

D. Covers variable costs

Q229. What stage of the economic cycle follows a recession? *

1 point

A. Deceleration

B. Recovery

C. Acceleration

D. Boom

Q230. US Core CPI excludes which items? *

1 point

A. Children's clothing

B. Mortgage rates

C. Alcoholic beverages

D. Food and Energy

Q231. If a country runs a Current Account Deficit, how is it normally funded? *

1 point

A. Net inflow of capital

B. Visible trade surplus

C. Invisible trade surplus

D. Net outflow of capital

Q232. Which are stages of the Economic Cycle?

I. Boom
II. Deceleration
III. Recession
IV. Recovery

1 point

A. I and IV only

B. III only

C. All of the above

D. I, III and IV only

Q233. Company Earnings = £325m, Shares = 26m, Dividend = £1/share. Dividend Cover = ? *

1 point

A. 12.50

B. 11.25

C. 25.00

D. 22.50

Q234. Within ±2 Standard Deviations, approximately what percentage of observations lie? *

1 point

A. 95.5%

B. 99.75%

C. 92.34%

D. 68.26%

Q235. Present Value of $1,000 received after 3 years at 6%? *

1 point

A. $847.46

B. $839.62

C. $943.40

D. $1,191.02

Q236. GDP for an Open Economy equals: *

1 point

A. GDP = C + I + G + (X − M)

B. GDP = a + c(1−t)Y

C. GDP = C + I + G + (M − X)

D. GDP = C + I + G

Q237. Which statements about Price Elasticity of Demand (PED) are correct?

I. PED >1 = Elastic
II. PED >1 = Inelastic
III. PED <1 = Elastic
IV. PED <1 = Inelastic

1 point

A. I and IV only

B. II and III only

C. I only

D. IV only

Q238. Amount required today to accumulate £1,000,000 in 50 years at 5.4%? *

1 point

A. £77,541

B. £75,876

C. £72,105

D. £63,657

Q239. Difference between GDP and GNP? *

1 point

A. Government expenditure

B. Exports less imports

C. Investment expenditure

D. Net Property Income

Q240. ECB's M1 (Narrow Money) consists of Notes & Coins plus: *

1 point

A. Money Market Instruments

B. Bank Deposits

C. Interbank Lending

D. Overnight Deposits

Q241. Which will NOT shift the Demand Curve? *

1 point

A. Growth in consumer income

B. Decrease in the price of the product

C. Price of substitute changes

D. Consumer tastes change

Q242. Which cause a parallel shift in Demand?

I. Price of substitute changes
II. Price of product changes
III. Consumer tastes
IV. Income changes

1 point

A. I and III only

B. II and IV only

C. I, III and IV only

D. III only

Q243. Which are Short-run phenomena?

I. Increasing returns to labour
II. Diminishing returns to labour
III. Economies of scale
IV. Diseconomies of scale

1 point

A. III and IV

B. I and II

C. I and III

D. II and IV

Q244. Bank sells bonds from its own trading book outside an exchange. This is: *

1 point

A. Exchange trade – Agent

B. OTC – Principal

C. OTC – Agent

D. Exchange trade – Principal

Q245. Perfect Negative Correlation equals: *

1 point

A. −1

B. 0

C. −0.5

D. +1

Q246. Which country uses only M0 and M4 as money supply measures? *

1 point

A. USA

B. Eurozone

C. UK

D. China

Q247. Which combination of investments would NOT provide any diversification benefits? *

1 point

A. Partly positively correlated

B. Partly negatively correlated

C. Perfectly negatively correlated

D. Perfectly positively correlated

Q248. A period of falling rates of inflation is known as: *

1 point

A. Inflation

B. Disinflation

C. Deflation

D. Stagflation

Q249. A Head & Shoulders reversal pattern is completed when: *

1 point

A. Left shoulder rises above neckline

B. Right shoulder breaches neckline downward

C. Right shoulder rises above neckline

D. Left shoulder breaches neckline downward

Q250. Cross Elasticity of Demand (XED): *

1 point

A. Both substitutes & complements positive

B. Substitutes positive; complements negative

C. Complements positive; substitutes negative

D. Both negative

Q251. Which statements about economic costs are TRUE?

I. Opportunity costs
II. Only actual expenditure
III. Include normal profits
IV. Include all profits

1 point

A. I & IV

B. I & III

C. II only

D. II & III

Q252. Economic policy using government spending, taxation and borrowing to boost demand is: *

1 point

A. Expansionary Monetary Policy

B. Tight Fiscal Policy

C. Tight Monetary Policy

D. Expansionary Fiscal Policy

Q253. Price rises from 10¢ to 15¢ while demand falls from 1,000,000 to 800,000. PED equals: *

1 point

A. -0.4

B. +0.4

C. +2.5

D. -2.5

Q254. XYZ Plc shares trade at 120p with a P/E ratio of 10. EPS equals: *

1 point

A. 10p

B. 2p

C. 12p

D. 20p

Q255. To reduce unemployment using Fiscal Policy, the Government should: *

1 point

A. Run a balanced budget

B. Reduce interest rates

C. Take an expansionary stance

D. Adopt contractionary policy

Q256. The Foreign Exchange Market is: *

1 point

A. Exchange-traded globally

B. OTC in New York

C. OTC across global financial centres

D. Exchange-traded in New York

Q257. Which inflation measure is still published in the UK and used for Index-Linked Gilts? *

1 point

A. HICP

B. CPI

C. RPI

D. Core CPI

Q258. Risk-free return from combining two assets requires correlation of: *

1 point

A. 0

B. -1

C. +0.5

D. +1

Q259. Current Account Deficit is funded by: *

1 point

A. Government borrowing

B. Central Bank intervention

C. Interest rate adjustment

D. Net inflow of capital

Q260. Which is NOT Fiscal Policy? *

1 point

A. Budget deficit

B. Built-in stabilisers

C. Restricting money supply

D. Budget surplus

Q261. Profit is maximised where: *

1 point

A. AR = MC

B. MR = MC

C. Short-run cost = Long-run cost

D. TC = TR

Q262. Portfolio manager makes investment decisions within client guidelines. This is: *

1 point

A. Execution-only

B. Non-discretionary

C. Advisory

D. Discretionary

Q263. Technical Analysis is: *

1 point

A. Using historical price and volume data

B. Analysing company financial statements

C. Combining analysts' forecasts

D. Using accounting techniques

Q264. In the Short Run: *

1 point

A. All costs fixed

B. Both fixed & variable costs

C. All costs variable

D. No costs incurred

Q265. Cross Elasticity of Demand (XED):

I. Positive for complements
II. Positive for substitutes
III. Negative for complements
IV. Negative for substitutes

1 point

A. I & II

B. III & IV

C. I & IV

D. II & III

Q266. Higher resource prices cause: *

1 point

A. Supply shifts right + Price falls

B. Supply shifts right + Price rises

C. Supply shifts left + Price falls

D. Supply shifts left + Price rises

Q267. In which market are firms 'Price Takers'? *

1 point

A. Perfect Competition

B. Barriers to Entry

C. Monopoly

D. Oligopoly

Q268. Present Value of $2,000 received every year forever at 4% equals: *

1 point

A. $8,000

B. $2,080

C. $50,000

D. $1,849

Q269. Difference between Nominal GDP and Real GDP is measured by: *

1 point

A. Exports & Imports

B. Indirect Taxes

C. GDP Deflator

D. Subsidies

Q270. For USD/JPY Spot FX: *

1 point

A. JPY Base, T+3

B. USD Base, T+2

C. USD Base, T+3

D. JPY Base, T+2

Q271. Which industry consists of 'Price Takers'? *

1 point

A. Monopoly

B. Oligopoly

C. Perfect Competition

D. All of the above

Q272. How many firms operate in a perfectly competitive market? *

1 point

A. An infinite number of firms

B. One firm

C. Between 30 and 50 firms

D. A limited number of highly interdependent firms

Q273. Nominal returns are: *

1 point

A. Return after removing inflation

B. Future expected return

C. Return incorporating inflation

D. Return expressed as a percentage

Q274. Which statement is TRUE regarding the UK Current Account? *

1 point

A. Another name for Balance of Payments

B. Net flow of interest, profits and dividends only

C. Equal to the capital account plus/minus balancing item and changes in foreign reserves

D. The invisibles trade balance

Q275. Which is a visible import/export? *

1 point

A. Financial Services

B. Banking

C. Tourism

D. Manufactured goods

Q276. Which product is generally price inelastic? *

1 point

A. Normal goods

B. Necessities

C. Luxuries

D. Inferior goods

Q277. EUR/USD Spot = 1.2750 means: *

1 point

A. $1 = €1.2750 (T+2)

B. €1 = $1.2750 (Today)

C. €1 = $1.2750 (T+2)

D. $1 = €1.2750 (Today)

Q278. Why compare EBITDA instead of EPS? *

1 point

A. EBITDA is after tax

B. EBITDA includes all expenses

C. EBITDA removes depreciation and amortisation effects

D. EBITDA is after depreciation

Q279. Central Bank of the USA is: *

1 point

A. Federal Reserve

B. Bank of New York

C. US Treasury

D. Bank of America

Q280. Which measure of central tendency is affected by extreme values?

I. Mean
II. Median
III. Mode

1 point

A. I, II & III

B. I only

C. II & III

D. I & II

Q281. Demand Curve normally slopes: *

1 point

A. Horizontal

B. Vertical

C. Downward to the right

D. Downward to the left

Q282. Market Equilibrium occurs where: *

1 point

A. Supply > Demand

B. Price = Cost

C. Supply = Demand

D. Demand > Supply

Q283. Profit is maximised where: *

1 point

A. Total Revenue covers Short-run costs

B. Marginal Revenue = Marginal Cost

C. Average Revenue is maximum

D. Total Revenue covers Long-run costs

Q284. Four funds have equal returns but different risk. Which suits a cautious investor? *

1 point

A. Fund C

B. Fund B

C. Fund A

D. Fund D

Q285. Deflation means: *

1 point

A. Prices increasing

B. Prices decreasing

C. Inflation + Unemployment

D. Mixed price movement

Q286. Supply Curve normally slopes: *

1 point

A. Horizontal

B. Vertical

C. Upward to the right

D. Upward to the left

Q287. Which country uses the FOMC to set interest rates? *

1 point

A. USA

B. Eurozone

C. Japan

D. UK

Q288. Gordon Growth Model does NOT require: *

1 point

A. Net Income

B. Dividend Growth Rate

C. Current Dividend

D. Required Return

Q289. Which Central Bank has the FOMC? *

1 point

A. Bank of Japan

B. Bank of England

C. ECB

D. Federal Reserve

Q290. Income Elasticity > 1 indicates: *

1 point

A. Luxury Goods

B. Necessities

C. Normal Goods

D. Inferior Goods

Q291. Variance differs from Standard Deviation because: *

1 point

A. Applies only to sample

B. Variance is √SD

C. SD only applies to sample

D. Variance = (Standard Deviation)²

Q292. Unemployment caused by wages being too high is: *

1 point

A. Seasonal

B. Structural

C. Classical

D. Frictional

Q293. Capital Account includes: *

1 point

A. Visible Trade

B. Foreign Direct Investment

C. Invisible Trade

D. Dividends

Q294. Dividend Yield = ? (EPS = 15p, Dividend = 6p, Price = 120p) *

1 point

A. 6%

B. 8%

C. 12.5%

D. 5%

Q295. Which is NOT Monetary Policy? *

1 point

A. Budget Surplus

B. Restrict Bank Credit

C. Set Interest Rates

D. Restrict Money Supply

Q296. Long Run is associated with: *

1 point

A. Economies/Diseconomies of Scale

B. Fixed Costs are sunk

C. Fixed Costs minimum

D. Diminishing returns to fixed capital

Q297. Present Value of £400 received annually for 14 years at 3.5% = *

1 point

A. £4,223.76

B. £4,453.29

C. £4,121.10

D. £4,368.21

Q298. If income rises and demand falls, the product is: *

1 point

A. Normal Good

B. Substitute

C. Inferior Good

D. Complement

Q299. GDP measures: *

1 point

A. Price changes

B. Output of firms

C. Exports

D. Tax rates

Q300. GDP (Expenditure Method) excludes: *

1 point

A. Taxation

B. Government Spending

C. Exports

D. Investment

Q301. Market Segmentation Pricing Strategy:

I. Increase price where demand is inelastic
II. Increase price where demand is elastic
III. Reduce price where demand is inelastic
IV. Reduce price where demand is elastic

1 point

A. I & II only

B. I & IV only

C. II & III only

D. III & IV only

Q302. Electronic settlement with simultaneous cash transfer is called: *

1 point

A. Quote Driven

B. OTC

C. Best Execution

D. Delivery versus Payment (DVP)

Q303. Measures of Dispersion include:

I. Range
II. Standard Deviation
III. Variance
IV. Interquartile Range

1 point

A. I only

B. I & II only

C. I, II & III only

D. All of the above

Q304. Functions of a Central Bank:

I. Banker to banks
II. Issue currency
III. Set interest rates
IV. Hold foreign reserves

1 point

A. I & II only

B. All of the above

C. II & III only

D. III & IV only

Q305. Single-period value creation model comparing Profit vs WACC × Capital is: *

1 point

A. MVA

B. PER

C. NAV

D. EVA

Q306. Imperfect Positive Correlation means: *

1 point

A. Best diversification

B. Prices move exactly together

C. One rises while other falls

D. Prices generally move in the same direction

Q307. Credit creation increases the money supply through the: *

1 point

A. Injecting liquidity

B. Velocity of money

C. Multiplier effect

D. Reserve ratio

Q308. Present Value of a perpetuity paying £300 annually at 4% is: *

1 point

A. £750

B. £7,700

C. £6,500

D. £7,500

Q309. A portfolio manager making decisions within client-set parameters is managing on a: *

1 point

A. Discretionary basis

B. Non-discretionary basis

C. Execution only

D. Advisory basis

Q310. A government borrowing money to stimulate demand is using: *

1 point

A. Restrictive fiscal policy

B. Expansionary fiscal policy

C. Restrictive monetary policy

D. Expansionary monetary policy

Q311. If Country A's currency appreciates against Country B's currency, Country A's trade surplus will most likely: *

1 point

A. Remain unchanged

B. Depend only on inflation

C. Decrease

D. Increase

Q312. Which would normally shift the demand curve to the right? *

1 point

A. Decrease in price of a complementary good

B. Decrease in consumers' income

C. Decrease in own price

D. Increase in own price

Q313. The ECB Governing Council consists of: *

1 point

A. Governors of Eurozone central banks

B. Eurozone Finance Ministers

C. EU central bank governors

D. EU Finance Ministers

Q314. Revenue = $10m, PBIT = $3m, Share Capital = $2m, Reserves = $10m, Long-term Loans = $3m. ROCE = ? *

1 point

A. 67%

B. 20%

C. 83%

D. 25%

Q315. P/E Ratio = 16, EPS = 21p. Current Share Price = ? *

1 point

A. 473p

B. 258p

C. 239p

D. 336p

Q316. Middle value of an ordered distribution (odd observations) is called: *

1 point

A. Geometric Mean

B. Arithmetic Mean

C. Mode

D. Median

Q317. Returns: 3%, 6%, 8%, 10%, 14%. Median and Mean respectively are: *

1 point

A. 8% and 8.2%

B. 8.136% and 8.2%

C. 8.2% and 8.136%

D. 8% and 8.136%

Q318. All investments return 5%. Which is best for a cautious investor? *

1 point

A. SD = 7%

B. SD = 9%

C. SD = 11%

D. SD = 4%

Q319. Profit maximisation occurs when: *

1 point

A. Above shutdown point

B. Marginal Cost = Marginal Revenue

C. Total Revenue maximised

D. Resources fully employed

Q320. To inject liquidity, a Central Bank should: *

1 point

A. Require special deposits

B. Sell Treasury Bills

C. Buy Treasury Bills

D. Increase reserve requirements

Q321. Fiscal Policy includes Government Borrowing, Spending and: *

1 point

A. Open Market Operations

B. Tax Policy

C. Money Supply

D. Foreign Exchange Reserves

Q322. $300 invested at 5% p.a., compounded half-yearly for 2 years = *

1 point

A. $330

B. $315

C. $331

D. $320

Q323. £2,500 invested for 3 years. Year 1 = 5%, Year 2 = 4.5%, Year 3 = 3.8%. Final Value = ? *

1 point

A. £2,832.50

B. £347.36

C. £2,847.36

D. £332.50

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