2/6/2020 Practice Quiz M3 (Ungraded)

My courses ▶ (20/01) MScFE 560 Financial Markets (C20-S1)

▶ Module 3: Interest and Money Markets ▶ Practice Quiz M3 (Ungraded)

Started on Thursday, 6 February 2020, 5:11 PM

State Finished
Completed on Thursday, 6 February 2020, 5:17 PM
Time taken 6 mins 39 secs

Question 1

Complete

Not graded

Let I denote the initial value of a loan or debt instrument, F the promised nal

value of the loan or instrument, and T the term of the loan or instrument.

Which one of the following statements is correct?

Select one:
 is the effective interest rate on the loan.
F −I

 is the effective interest rate on the loan.

I −F

 is the annual effective interest rate on the loan.

F −I

I −F
 is the annual effective interest rate on the loan.
I

Your answer is correct.

https://masters.wqu.org/mod/quiz/review.php?attempt=172151&cmid=33516 1/4
2/6/2020 Practice Quiz M3 (Ungraded)

Question 2

Complete

Not graded

Consider the following statements:

Statement A: The par value can be viewed as the original value of the debt
instrument plus an interest payment.
Statement B: Money-market instruments are low in credit risk because they
are issued by large, stable entities.

Which of the statements given above is correct?

Select one:
Only statement B
Both statement A and B

Only statement A
Neither statement A nor B

Your answer is correct.

Question 3

Complete
Not graded

What is the central function of money markets?

Select one:
To connect potential lenders to potential borrowers.
To ensure that businesses have easy access to money.
To ensure that the central bank and banks have good control over the
liquidity in the economy.

To provide pro table low-risk investments, so that risk in the economy can
be minimized.

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

Question 4

Complete

Not graded

Consider the following statements:

Statement A: One must take par value into account when comparing the
prices of money-market instruments.
Statement B: Liquidity risk is minor in the money markets.

Which of the statements given above is correct?

Select one:
Both statement A and B
Neither statement A nor B

Only statement A
Only statement B

Your answer is correct.

Question 5

Complete
Not graded

Consider the following statements:

Statement A: A treasury bill pays out its par value plus interest at maturity.
Statement B: Commercial paper involves more risk than treasury bills.

Which of the statements given above is correct?

Select one:
Only statement B
Neither statement A nor B
Both statement A and B
Only statement A

Your answer is correct.

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2/6/2020 Practice Quiz M3 (Ungraded)

◄ Notes 4 M3
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Live Session M3 ►

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