A bank’s risk: asset ratio compares its capital with its:
Detailed Answer
Correct answer: (A)
Risk-adjusted assets
2
A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:
Detailed Answer
Correct answer: (B)
Past experience
3
A bond issued in July 1997 will mature in July 2013 for £100. In July 2003, its original maturity and residual maturity would be (respectively):
Detailed Answer
Correct answer: (A)
16 and 10
4
A central bank which sets the short-term rate of interest must:
Detailed Answer
Correct answer: (A)
Meet the resulting demand for reserves
5
A central bank wishes to indicate that its official interest rate will be 4.5% from tomorrow. What repurchase price should it set for 28 day repo deals in government bonds valued at £1m?
Detailed Answer
Correct answer: (B)
£1,003,452
6
A company has just declared a dividend of 8p per share on shares current valued at £1.50. Dividends have been growing steadily at 5 per cent p.a. The dividend yield on these shares is is:
Detailed Answer
Correct answer: (B)
5.3%
7
A corporate bond paying an annual coupon of £9 matures for £100 on 30 September 2011. What is its price on 1 October 2008 if interest rates are 8.5 per cent?
Detailed Answer
Correct answer: (C)
£101.28
8
A downward sloping yield curve most likely indicates:
Detailed Answer
Correct answer: (B)
Low prices for long-dated bonds
9
A firm announces that its next dividend payment will be 12p per share. The shares are currently priced at £1. The firm’s earnings have recently grown at a rate of 9 per cent per year and this is expected to continue. The total annual return on these shares is:
Detailed Answer
Correct answer: (A)
21%
10
A government sale of treasury bills to the central bank is the nearest thing in a modern economy to:
Detailed Answer
Correct answer: (A)
Financing a government deficit