MBF Mid Exam

PARADISE VALLEY UNIVERSITY COLLEGE FACULTY OF BUSINESS & ECONOMICS
DEPARTMENT OF ACCOUTING
MONEY, BANKING & FINANCE MID EXAM
Name_______________________________________ ID No_________________ Sec: A
Year: 1st Time Allowed. 30' Max. Point: 30%
Instruction I:- Write “True “ if the statement is correct and write “False” if the statement is incorrect
on the space provided only. (1 % each)
_____1. The markets for long-term debt and equity are called capital markets.
_____2.
_____3. In recent years, financial markets have become more stable and less risky.
_____4.The introduction of money as a medium of exchange was one of the greatest
inventions of mankind
____5.
Instruction II. Match the items given under column “A” with the correct combination given under
column “B”
‘A’ ‘B’
_____6. Money market instruments A. Bonds
_____7. Instruments traded in capital market B. Treasury Bills
_____8. Venue where good or service is exchanged C. Secondary Market
_____9. Market facilitates trade of existing securities D. Capital Market
from investor to investor E. Primary Market
_____10. Initial public offering F. Market
Instruction III: Choose the best answer from the given alternatives and write the letter of your
choice on the space provided.
_____11. Depository institutions include
A. mutual funds C. savings banks

B. commercial banks and thrifts D. credit unions
_____12. A primary market is one in which

A. Financial assets are traded for the first time.
B. Investors buy and sell securities they already own.
C. Securities are sold by and transferred from one investor or to another
D. The financial market in which previously issued financial instruments such as bonds
_____12. The two commodities meant for exchange could be of unequal values
rendering one of the parties to the exchange at a disadvantage. This implies:
A. Difficulty to Store Wealth C. Lack of Common Measure of Value
B. Lack of Divisibility of Certain Articles D. Lack Double Coincidence of Wants
_____13. Major liabilities of commercial banks are
A. Remittances C. Loans
B. Deposits D. Standing Instructions
_____14. Institutions deal in financial functions and protect corporations and individuals against
accidents, theft and death are considered as
A. Penalty companies C. Credit Unions
B. Insurance companies D. Banks
_____15. Which of the following is not a financial instrument?
A. Treasury bill C. Mortgage loan.
B. Real estate D. Federal funds loan.
_____16. The capital markets consist of the primary market and secondary market. Which of the
following statements is TRUE regarding the differences between the two markets?
A. New issues are distributed to investors in the primary market while existing securities are
traded in the secondary market.
B. Existing securities are traded in the primary market while new issues are distributed
to investors in the secondary market.
C. New issues are traded in the primary market while existing securities are distributed in the
secondary market.
D. Existing securities are distributed to investors in the primary market while new issues are
traded in the secondary market.
_____17._____________is a public financial market in which financial instruments or commodities are
traded for immediate delivery.
A. Future Market B. Forward Market C. Spot Market D. Stock Market
_____18. Which one of the following differs from the other?
A. Stock Market B. Bond Market C. Share Market D. Cash Market
_____19. Type of financial security which have linked payoff to another issued security is classified as
A. Derivative Security B. Debt Security C. Commodity Market D. All
_____20. Exchange rate of foreign currency fluctuate day to day because of
A. demand and supply C. decreased maturity

B. increased maturity D. instrument availability
Instruction IV: Give Short Answer for the following questions.

21. Write at least two capital market instruments. (3%)
A. __________________________________ B. _____________________________________ C.
____________________________________
22. Write the major types of Financial Intermediaries. 4%
A. ______________________________ C. ______________________________
B. ______________________________ D. ______________________________
23. Financial system consists (3%)
A. ___________________________________________
B. __________________________________________ &
C. ___________________________________________
11. Money market where securities are issued by governments to obtain

funds for short term is classified as
A. money market instruments
B. capital market instruments
C. counter instruments
D. long term instruments
1. The functions of money are

medium of exchange and unit of account.
b. medium of exchange, unit of account, and store of value.
c. medium of account and store of value.
d. store of value and unit of account.
2.

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PARADISE VALLEY UNIVERSITY COLLEGE FACULTY OF BUSINESS & ECONOMICS

_____11. Depository institutions include

A. mutual funds C. savings banks

_____12. A primary market is one in which

_____20. Exchange rate of foreign currency fluctuate day to day because of

A. demand and supply C. decreased maturity

Instruction IV: Give Short Answer for the following questions.

11. Money market where securities are issued by governments to obtain

1. The functions of money are

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