1. The regulatory discipline involving the banking industry means that
2. a.the government screens and controls the risks of banking
3. b.there are licensing and procedures in place
4. c.there are standards of capital requirements
5. d.a, b, and c
6. e.b and c

0.8 points

QUESTION 2

1. Which of the following is not true about the role of stock analysts?
2. a.They are tenacious in their pursuit of managers in bringing out details of complex risks
3. b.They study the financial statements at a great depth that private individuals cannot accomplish without adequate training
4. c.They compete with the reporters in financial press for covering scandals and frauds
5. d.Their business is communication and recommendation

0.8 points

QUESTION 3

1. The iproblems arising out of asymmetric Information may be overcome by
2. a.principles of corporate governance
3. b.appropriate contracts that may be enforced through courts
4. c.financial intermediaries acting as corporate monitors
5. d.a, b, and c
6. e.a and b

0.8 points

QUESTION 4

1. The primary model(s) of corporate governance is (are):
2. a.state ownership and control
3. b.family ownership and control
4. c.bank-centered control systems
5. d.control by dispersed shareholders
6. e.
7. a, b, and c
8. f.a, b, c, and d

0.8 points

QUESTION 5

1. Which of the following is not a reson for the importance of institutional investors in increasing private equity?
2. a.They maintain close contact with the investment banks to resolve all successive issues
3. b.They buy large quantity of equity thus bringing benefits of economy of scale
4. c.They provide autonomy to corporate managers
5. d.Their large holdings permit them to play a role in corporate governnace

0.8 points

QUESTION 6

1. Firms are not likely to disclose accurate information voluntarily unless required by law. Which of the following does not support this statement?
2. a.Unilateral disclosure attracts more capital
3. b.Legal protections are a need to protect unsophisticated investors
4. c.Short-term costs of revealing outweigh long-run benefits of being forthright
5. d.No company wants its competitors to become aware of its weakness resulting in a competitive disadvantage

0.8 points

QUESTION 7

1. Which of the following does not result in transfer of resources to insiders of a corporation?
2. a.transparency and disclosure
3. b.preemption of corporate opportunities by insiders
4. c.selling or leasing corporate assets to insiders at bargain prices
5. d.outright theft
6. e.making loans to insiders

0.8 points

QUESTION 8

1. Which of the following is not true in the use of collateral (pledging specific assets) in securing a loan?
2. a.Collateral helps firms receive credit that otherwise they may not receive
3. b.Collateralhelps inovercoming situations where there is poor information about the firm
4. c.Collateralis useful in the recovery of a higher percentage of outstanding balance
5. d.Collateralincreases the probability of bankruptcy

0.8 points

QUESTION 9

1. The Rule of Law ensuresthat
2. a.all people are subjected to the same set of rules
3. b.the judicial system is independent in its enforcement
4. c.the government officials may arbitrarily exercise their power
5. d.a and b
6. e.a, b, and c

0.8 points

QUESTION 10

1. Shareholder protection includes
2. a.right to information
3. b.right to receive equal amount of dividends per share
4. c.right to vote on important corporate matters
5. d.right to sue the company for damages
6. e.a, b, c, and d
7. f.a, b, and c

0.8 points

QUESTION 11

1. Imposition of interest rate ceilings
2. a.provides banks with rents
3. b.increases the competition for mobilization of deposits
4. c.protects the savers in inflationary economies
5. d.
6. suppresses the flow of capital abroad

0.8 points

QUESTION 12

1. Which of the following is not a factor of communism?
2. The government preempts all of society's wealth
3. The business system owns the government.
4. The cental government owns the business system
5. The government manages all assets from a central command center

0.8 points

QUESTION 13

1. Financial repression includes
2. a.restricting domestic entrepreneurs to enter financial business
3. b.restricting foreign banks to enter the merket
4. c.permitting the International Monetary Fund (IMF) to regulate banks
5. d.a and b
6. e.a, b, and c

0.8 points

QUESTION 14

1. Which of the following is not a method of financial repression by a government?
2. a.Permitting foreign banks to compete with domestic banks
3. b.Imposition of interest rate ceiling on deposits
4. c.Imposition of high reserve requirements on banks
5. d.Directing bank credit

0.8 points

QUESTION 15

1. Which of the following is not a factor in governments' extraction of wealth through rents?
2. competitive market
3. outright corruption
4. protectionism
5. monopoly

0.8 points

QUESTION 16

1. The growth of government ownership and state-owned enterprises (SOEs) were caused by an economic policy of
2. a.socialism
3. b.market failures
4. c.protectionism
5. d.a and b
6. e.a, b, and c

0.8 points

QUESTION 17

1. The award of stock options for managers motivates them to
2. a.work very hard
3. b.consume corporate value through perquisites
4. c.maximize the worth (value) of the corporation
5. d.a and c
6. e.a, b, and c

0.8 points

QUESTION 18

1. In the absence of large savings, spontaneous privatization was the quick path to ensuring efficiency. Such spontaneous privatization involved
2. a.managers (and employees) operating a segment of the business away from the management of the state-owned enterprise (SOE)
3. b.joint ventires between the managers and the SOE
4. c.managers using the productive assets on a lease after sale
5. d.a and c
6. e.a, b, and c

0.8 points

QUESTION 19

1. Which of the following is not true about governments' role in an era of state-owned enterprises?
2. a.increased control over prices and wages
3. b.provide subsidies and credits for favored producers
4. c.increased authority in the regulatory process
5. d.fair allocation process of resourcesto maximize value for the investment

0.8 points

QUESTION 20

1. The inefficiency of the state-owned enterprises (SOEs)is caused by
2. a.multiple goals
3. b.monolpoly in the market structure
4. c.absence of incentives
5. d.lack of access to capital
6. e.a and b
7. f.a, b, and c
8. g.a, b, c, and d

0.8 points

QUESTION 21

1. X and Y are two countries engaged in international trade. If the currency of Y collapses (meaning a rapid decline in its value),
2. a.its exports to country X will increase
3. b.its exports to country X will decrease
4. c.its imports from country X will increase
5. d.its imports from country X will decrease
6. e.a and d
7. f.b and c

0.8 points

QUESTION 22

1. Aa a result of the resolution of the debtcrisis, countries in Latin America resorted to
2. a.trade liberalization
3. b.exchange rate reform
4. c.pension reform
5. d.
6. financial market deregulation
7. e.all of the above

0.8 points

QUESTION 23

1. The peso problem has been invoked to explain
2. a.large forward discounts in the currencies subject to high inflation
3. b.large risk premiums in the rates of returns from equity market
4. c.apparent distortions in the term structure of interest rates
5. d.a and b
6. e.a, b, and c

0.8 points

QUESTION 24

1. The assessment of sovereign risks includes:
2. a.GDP, GDP per capita, and its growth
3. b.historical record of default
4. c.exixsting level of debt outstanding
5. d.a and b
6. e.a, b, and c

0.8 points

QUESTION 25

1. Which of the following condition is not true in the case of International Bonds?
2. International Bonds are designed to attract international portfolio investors
3. International Bondsare denominated in the domestic currency
4. International Bondspay interest free of withholding tax
5. International Bondsare not registered under the national rules of any country