Question 1: Complete MCQ:

I)

The interest rate where interest is charged at the same frequency as the quoted interest rate is the:

Select one:

a. compound interest rate.

b. real interest rate.

c. effective interest rate.

d. nominal interest rate. Incorrect

ii)

Which of the following best defines a Euromarket-type transaction?

Select one:

a. A financial transaction in USD, conducted solely within the European markets

b. A financial transaction denominated in a currency outside the currency of the country where the debt issue is made

c. A wholesale foreign exchange transaction of a government or institutional investor

iii)

Which of the following statements best describes the concept used to value shares?

Select one:

a. Market price can be expressed as the present value of an infinite stream of dividends assuming a company has an infinite life.

b. The present value of the dividend stream and expected capital gain must be calculated separately and then added together.

c. The value of an infinite stream of dividends discounted by the current short-term interest rate assuming a company has an infinite life.

d. Market price can be expressed as the present value of an infinite stream of dividends.

iv)

The major difference between investing institutions and financial intermediaries is that:

Select one:

a. investing institutions are not required to pay tax under the current Australian tax system.

b. the major role of financial intermediaries is to accept deposits and make loans while investing institutions are directed towards providing insurance and funds management.

c. investing institutions accept money from the public and invest the funds in assets, while financial intermediaries merely act as a third party and oversee the transfer of funds.

d. financial intermediaries generally have a much wider spread of assets than investing institutions.