a Most futures contracts are held to maturity. b) Future contract holders will either buy or sell an opposite contracton or before expiry date to close-out the contract c) The majority of commodity futures are held to maturity d) Financial futures contracts are delivered at maturity whereas all commodity futures are closed-out. Correct? 2) An orange grower who is concemed that the price of oranges will fall before harvest and sale can: a) buy an orange futures contract today. b) sell an orange futures contract today. c) carry out in the futures market the opposite of what he plans to do in the physical market when his crop is ready for sale. d) take a long position in orange futures. 3) When an oil company suffers severe damage to one of its oil drilling platiorms, this is an example of: a) technological risk. financial risk. c) business risk. d) operational risk. 4) The policy where a central bank influences the level of short-term interest rates in order to affect inflation is referred to as: a) fiscal policy. b) economic policy. c) monetary policy. inflation rate policy. 5) If a government's income from tax receipts exceeds its expenditure, the government is running a: a) deficit, and is a net borrower of funds. b) surplus, and is a net borrower of funds. c) deficit, and is a net saver of funds. d) surplus, and is a net saver of funds. 6) When the Australian government faces month-by-month mismatches between inflow of funds and cash outflows it may issue: a) Treasury bonds. b) Treasury bills c) Treasury notes. d) Treasury paper. Pa HA1022 Principles of Financial Management Trimester 2 2015 7) Calculate the duration of a five-year bond with face value of $1000, fixed coupon of 8% per annum, with current market vield of 9%, a) 4.13 years b) 4.30 years c) 4.72 years d 5.00 years Lin 8) If you are saving for an overseas trip and put $400 every month into an account paying 6.8% interest per annum, compounding monthly, how much will you have at the end of 3.25 years? a) $ 5,014.43 b) $16,907.41 c) $17,001.84 d) $17,043.22 9) A bank accepts a deposit of $450,000 for a term of one year and 90 days, with an interest rate of 7.25% per annum simple interest. Interest is paid six monthly at the maturity date. How much interest will be paid in total? ar $40,669.52 b) $40,696.52 c) $40,966.52 d) $40,699.52 10) JB Norman has received an invoice of $90,000 due in 60 days. The supplier offers 3% discount for immediate payment. If JB Norman pays immediately, what amount would be due? a) $85,955.34 b) $89,585.34 er $89,558.34 d) $86,585.34 11) Suppose you want to buy an apartment when you graduate in 4 years' time which costs around $400,000. If you feel confident that you can earn 9 % per year, how much do you need to invest today? a) $288,730 b) $283,730 c) $238,370 d) $283,370 12) What is the future value in five years of $20,000 invested today, compounding at 5.97 % interest per annum? a) $26,627.65 b) $26,726.65 c) $26,762.65 d) $26,267.65 Page 3 HA1022 Principles of Financial Management Trimester 2 2015