---------- is considered private information?

• A) In-depth knowledge about the investment of company
• B) Liquidity position reveal by cash flow statement
• C) The dividend history reveal by the financial statement of company
• D) Knowledge about the dividend percentage before the announcement of dividend declaration

In long run investment__________?

• A) Both have the same risk
• B) None of the given options
• C) Bonds are less risky then stocks
• D) Stocks are less risky then bonds

Why banks do not prefer to manage the deposit withdrawals by adjusting the asset side of the balance sheet?

• A) It reduces bank size, as smaller the balance sheet, lower will be the profit.
• B) Asset adjustment is more costly and time consuming.
• C) It increases the size of the bank but reduces the profits in long run.
• D) To refuse to renew a customer loan is not possible for banks.

Which one of the following is NOT true for gap analysis?

• A) It is a formal study of what a business is doing currently and where it wants to go in the future
• B) It is the difference between the yield on interest sensitive assets and liabilities
• C) Banks manages credit risk by using gap analysis
• D) It is the difference in the maturity of assets and liabilities

Profitability of one bank may vary from the profitability of other banks due to following factor/s:

• A) Level of professional activities
• B) Efficient cost management
• C) All of the given options
• D) Size of the bank

The Dividend-Discount Model of stock valuation:

• A) Takes the net present value of the expected future price of the stock and add the annual dividend
• B) Takes the net present value of expected dividends and add it to the future sale price of the stock
• C) Takes the annual dividend, adds it to the expected future selling price and divides by the number of years to get the current price
• D) Is an application of the net present value formula

All of the following functions are performed by financial intermediaries Except:

• A) Financial intermediaries provide access to payment system
• B) Financial intermediaries pool the resources of only big saver
• C) Financial intermediaries reduce transaction cost
• D) Financial intermediaries diversify the risk

Which of the following practice is NOT used to manage foreign exchange risk?

• A) Use foreign exchange swaps
• B) Attract deposits and make loans in the same currency
• C) Do business only in a particular country
• D) Use foreign exchange futures

Banks can also borrow by using a repurchase agreement or repo, which is a short-term _____________.

• A) Discount loan
• B) Collateralized loan
• C) Personal loan
• D) Corporate loan

When one party takes benefit due to poor knowledge of other party it is called?

• A) Asymmetry information
• B) Adverse selection
• C) Symmetry information
• D) Moral hazard

Which of the following is considered like a bond issued by commercial bank, with certain maturity and specific interest rate?

• A) Perpetual bond
• B) Treasury bill
• C) Certificate of deposit
• D) Checkable deposits

Which of the asymmetry information problem compel to the good companies out of market and focus will be shift to the average qualities?

• A) Adverse selection
• B) Moral hazard
• C) Standardized information
• D) None of above

Which of the following is included in the government-sponsored enterprise?

• A) Khushhali Bank
• B) House Building Finance Corporation (HBFC)
• C) Small and Medium Enterprise (SME)
• D) All of the given options

If risk premium on equity increases, what will be effect on stock price?

• A) It will increase
• B) It will decrease
• C) It will constant
• D) Price may increase or decrease

The theory of efficient market states that prices of financial instruments reflect:

• A) Some of the information
• B) Imperfect information
• C) No information
• D) All available information

Without the ability of financial intermediaries to pool the resources of small savers:

• A) People would likely save more
• B) The economy would likely grow faster
• C) The risk associated with lending would increase
• D) Borrowers needing large amounts of money would find it less costly to obtain the funds

Which one the following is NOT the way to manage liquidity risk?

• A) By adjusting assets
• B) By holding sufficient excess reserves
• C) By adjusting liabilities
• D) Through diversification

Which of the following stock valuation method focus the company’s financial report and different ratios to estimate stock price?

• A) Chartist
• B) Value at risk (VAR)
• C) Behaviorist
• D) Fundamentalist

Bubbles in Stock market occur owing to investor------

• A) Psychology
• B) Risk-averse behavior
• C) Lquidity level
• D) Willingness

Often a bank will require a loan officer to make personal visits on customers with loans outstanding. This is encouraged because:

• A) The bank wants to make sure the business is still there
• B) The bank likely has excess funds available and hopes to make another loan to the business
• C) This is an effective monitoring technique and should reduce moral hazard
• D) The bank worries about competitors trying to steal their customers