Download Financial Markets and Institutions Exam and more Exams Financial Management in PDF only on Docsity! Student: _________________________________________________ Id. number: _____________________ 1 With the term 'pay-as-you-go (PAYG)' referred to retirement plans, it is usually meant: [ a ] unfunded schemes, where today's pensions are paid with current contributions from active workers [ b ] funded schemes, offered by private entities but mandatory for the purpose of retirement [ c ] schemes where contributions are defined but benefits can be calculated at the age of retirement 2 A typical liability of most central banks is: [ a ] currency in circulation [ b ] discount loans [ c ] government bonds 3 In money markets, treasuries are typically originally placed through: [ a ] dealers and brokers [ b ] non-competitive biddings [ c ] competitive biddings 4 With the term 'conflict of interest' it is usually meant: [ a ] a position where one entity's profitability does not depend on how good its strategy is [ b ] a position where one has multiple interests that may conflict with their contractual obligation towards other parties [ c ] a position where one financial institution is remunerated only if a third party is in financial trouble 5 If you borrowed at a fixed interest rate and you expect rates to fall, you could: [ a ] buy a derivative called 'swap', in order to transform the loan in a variable interest rate position [ b ] buy a derivative called 'option', in order to get more funds if interests rates effectively fall [ c ] buy a derivative called 'future', in order to sell at convenient prices your loan if interests fall 6 In financial intermediation real interest rates are relevant because: [ a ] they represent the effective cost for borrowers disclosed in financial contracts [ b ] they adjust yields by expected future price levels [ c ] they express the return earned from a financial institution in each operation 7 With the so-called 'French' amortisation plan, each instalment of a mortgage loan: [ a ] is typically composed by an increasing share of interests and a decreaseing share of principal [ b ] is typicalli composed by a fixed share of principal and a decreasing share of interests [ c ] is typically composed by a decreasing share of interests and an increasing share of principal 8 With the term 'callable bond' it is usually meant: [ a ] a bond where the issuer can, under specified conditions, provide its reimbursement before maturity [ b ] a bond where the lender can, under specified conditions, buy more bonds of the same kind [ c ] a bond where the lender can, under specified conditions, sell some or all of his/her bonds to the issuer 9 As a safety-net system of financial markets, deposit insurance has the following feature: [ a ] protects markets from excessive risk-taking with a small premium price for its intervention [ b ] reduces efficiency by charging costs to market participants and may promote excessive risk-taking [ c ] decreases the likelihood and severity of financial crises in developed and developing countries 10 The term 'venture capital' usually refers to: [ a ] free surplus that banks can invest freely in financial markets [ b ] a partnership seeking delisting of a public company from a stock exchange [ c ] funding of start-ups with high growth potential and high risk 11 A fund called 'exchange traded fund (ETF)', unlike other investment funds: [ a ] does invest only in stocks traded in stock exchanges EXAM: Financial markets and institutions University of Trieste - 24th January 2014 EX.: 2 Choose clearly and unambiguously the only right answer to each of the following questions. Remember that a right answer is worth 1 point, a blank one is worth 0, whereas a wrong choice leads to a -0.5 penalty. This exam is failed if the final score is equal or lower than 10 points.
