In the course of 1923, German prices rose by approximately:
Detailed Answer
Correct answer: (B)
20bn times
2
In the course of a year a pension fund buys £15m of UK government bonds, £30m of UK company shares, £10m of ordinary company shares. It also sells £5m of overseas government bonds and £9m of UK preference shares. Its net acquisition of assets during the year was:
Detailed Answer
Correct answer: (D)
£41m
3
In the flow of funds analysis of money supply determination an increase in government borrowing not financed by the sale of bonds is likely to lead to:
Detailed Answer
Correct answer: (D)
An increase in bank deposits
4
In the flow of funds approach to money supply determination a rise in the central bank’s official dealing rate will most likely:
Detailed Answer
Correct answer: (D)
Reduce the demand for bank loans
5
In the loanable funds theory of interest determination, an increase in the productivity of capital equipment should lead to:
Detailed Answer
Correct answer: (D)
Higher interest rates
6
Interest is usually paid on money market instruments:
Detailed Answer
Correct answer: (D)
At maturity
7
Interest rates are 7.5 per cent. A 9% corporate bond, maturing in three years time for £100 and paying annual coupons will have a price of:
Detailed Answer
Correct answer: (C)
£103.90
8
Investment trusts often expose investors to higher capital risk than unit trusts because:
Detailed Answer
Correct answer: (D)
Investment trusts can be ’geared’
9
It is suggested in the text that the demand for money is not of great importance from the point of view of monetary policy because:
Detailed Answer
Correct answer: (B)
The supply of money is endogenous.
10
Long dated government bonds tend to have higher yields than short-dated bonds because:
Detailed Answer
Correct answer: (C)
They carry higher capital risk