25. The JSE Junior Exchange is intended to assist _

in raising capital

A newly-formed businesses

B. small and medium-sized enterprises (SMEs)

C. young people wishing to start businesses

D. venture capitalists

26. Securities market characterized by dealers who buy and sell securities for their own inventories is traditionally called alan:

A. primary market

B. secondary market

C. over - the - counter market

D. institutional market

27 Inflation is a term used to:

A. interest earned on an investment

B. rate at which the general price level of goods and services is rising

C. rate at which an investment increases

D. slippage in the Jamaica dollar versus the US dollar

VCI

28 A security:

A.is undervalued in the eyes of the investor if the intrinsic value is greater than the market value

B.is viewed as overvalued if the intrinsic value is greater than market value

C. will have the same intrinsic and market value regardless of whether the securities market is working efficiently

D. will provide an opportunity for investors to make extra profit if markets are efficient

29. Which of the following alternative investments, would you expect to have the highest return?

A. Government of Jamaica T-Bills

B. Common stock of small firms

C. Long-tem bonds issued by the Government of Jamaica

D. Long-term corporate bonds

30. Makeda employs a passive investment system. This means that she:

A. buys and holds a diversified portfolio

B. performs constant financial analysis

C. recommends selling whenever intrinsic value falls

D. recommends selling when bond yields are greater than dividend yields.

31. The Government of Jamaica has announced an issue of 90-day T-Bills Mr. B. Jacobin advises his broker to make a purchase. Mr. Jacobin is trading in the:

i. money market

ii. capital market

iii. primary market

iv. secondary market

A. i and ii

B. i and iii

C. ii and iii

D. ii and iv

32. The major factors in determining whether a mortgagor will grant a loan are:

i. PTL ratio

ii. LTV ratio

iii. ARM

iv. FRM

A. i only

B. i and ii only

C. ii and iii only

D. i and iv only

33. All of the following types of mortgage are designed to solve the tilt problem, EXCEPT:

A. graduated payment mortgages

B. dual rate mortgages

C. price-level adjusted mortgages

D. reverse mortgages

34. Mr. L. Luciano, who retired some years ago, would like to go on a world tour. He owns his home outright. His financial analyst advises him that a

mortgage would allow him to convert his equity into cash, while still living in his home.

A. reverse

B. second

C. graduated payment

D. graduated equity

35. Andrew Brown has a bad credit history. The Safeway Mortgage Bank has made a mortgage loan to finance his purchase of a home. Mr. Brown will pay a rate significantly higher than his friend. This is an example of:

A. redlined loans

B. sub-prime lending

C. rationed credit

D. default-risk loans

36. A mortgage loan in which only interest is paid initially, followed by a large payment of the principal at maturity is known as a/an

mortgage.

A. conventional

B. adjustable-rate

C. reverse annuity

D. balloon

37. In relation to conventional mortgages, which of the following statement is CORRECT?

A. Most of the early payments reflect interest, and do little to reduce the balance owed

B. Principal is reduced at a constant rate over the life of the mortgage

C. Most of the early payments reflect reductions in the balance owed rather than

interest

D. Interest is not charged on the loan until it is more than halfway to maturity.

38. __ keep(s) keeps foreign exchange quotes in two different countries in lie with each other.

A. Cross rates B. Forward rates C. Arbitrage D. Parity

39. Arbitrage refers to:

w

A. the purchase of a commodity including foreign exchange in one market at one price

while simultaneously selling it in another market at a more advantageous price

B. a foreign operation formed as either a branch or a subsidiary

C. a section of a Singaporean bank that deals in foreign currency deposits and loans

D. an unconditional promise of a bank to make payment on a draft when it matures

40. An American option can be exercised:

A. only on its expiration date

B. at any central security exchange

C. anytime during its life

D. only when the stock pays dividends

41 If all economies were completely integrated, then stock markets in different countries would move together, and

_ could be gained through international diversification.

A. great advantage

B. little advantage

C. greater returns

D. greater risk

42. Which of the following is an example of a long hedger?

A. An oil refinery buying crude oil at spot prices

B. A farmer who grow wheat and sells futures contracts short

C. A trader who buys and sells futures for the sole purpose of making a profit

D. A cereal producer who purchases wheat futures contracts

43. The basis for a 5 000 wheat future is $0.50, and the current spot price increases by $0.15. Miriam owns the asset and is short in the futures market. She will

A. neither gain nor lose B. gain $750 C. gain $3 250 D. lose $3 250

44. Futures contracts differ from forward contracts in that:

A. futures contracts are standardised and performance of each party is guaranteed by

the clearinghouse

B. futures contracts are standardised and require a daily settling of any gains and losses

C.futures contracts are standardised, performance of each party is guaranteed by the

clearinghouse and require a daily settling of any gains and losses

D. performance is guaranteed by a process known as marking to market

45. limit the loss and eliminate the possibility of profit, while loss but not the possibility of gain

A. Options; forward contracts B. Forward contracts; options C. Options; Futures contracts D. Futures contracts; options

46. A financial instrument that gives the buyer the right, but not the obligation to buy or sell the instrument at a strike price determined today, any time before the expiration date is known as a/an:

A. futures contract

B. option on futures

C. option

D. derivative

47. The default risk associated with a futures transaction is borne by the:

A. clearinghouse B. broker C. seller of the contract D. buyer of the contract

48. If one U.S. dollar equals 5.76 Egyptian pounds and one U.S. dollar equals 0.56 British pounds, how many Egyptian pounds equals one British pound?

A. 0.097 Egyptian pounds

B. 1.030 Egyptian pounds

C. 10.29 Egyptian pounds

D. 8.630 Egyptian pounds

49. When the exchange for the Jamaican dollar changes from USD $0.1333 to USD $0.125, then holding everything else constant the Jamaican dollar has:

A. appreciated, and Jamaican fruit sold in the US becomes more expensive

B. appreciated, and Jamaican fruit sold in the US becomes less expensive

C. depreciated, and American cars sold in Jamaica become more expensive

D. depreciated, and American cars sold in Jamaica become less expensive

50. The _ states that the exchange rate between any two currencies will adjust to reflect changes in the relative inflation rates of the two countries

A. theory of purchasing power parity

B. law of one price

C. theory of money neutrality

D. quantity theory of money