1

point

1.
What is the concept of equity premium?

a) Returns on stocks have been higher historically than alternatives such as government bonds

b) Returns of stocks have been lower historically than alternatives such as government bonds

c) Returns on stocks have been equal to returns on government bonds

d) None of the above

1
point

2.
Who invented CAPM?

a) Markowitz

b) Shiller

c) Sharpe and Lintner

d) None of the above

1
point

3.
Which firm has the biggest bailout in the entire sub-prime financial crisis in the United States?
a) Goldman Sachs

b) AIG

c) Lehman Brothers

d) None of the above

1
point

4.
What are efficient markets?

a) Markets that don't take any information into account

b) Markets that don't price in all publicly available information

c) Markets that are regulated by governments

d) None of the above

1
point

5.
If a bond pays $100 at maturity in 5 years, what is the price of the discount bond today (assume r to
be the annual interested rate)?

a) 100/(1+r)
b) 100(1+r)^2

c) 100 / (1+r)^5

d) None of the above

1
point

6.
What is the term structure of interest rates?

a) Interest rates by different maturities

b) Interest rates by different asset classes

c) Interest rates by private banks

d) None of the above

1
point

7.
Which of the following is true of how corporations are treated?

a) It is a natural person

b) It is an artificial person

c) It is a Government
d) None of the above

1
point

8.
Why has mortgage finance not developed in several developing countries?

a) Because of lack of property rights

b) Because of lack of private sector activity

c) Because of low levels of education

d) None of the above

1
point

9.
In the world of securitization, what does CDO stand for?

a) Collateralized Driver Obligation

b) Central Desk Operation

c) None of the above

d) Collateralized Debt Obligation

1
point

10.
The consumer Financial Protection Bureau is an example of what kind of regulation?

a) Macro-prudential

b) Micro-prudential

c) Not a regulation

d) None of the above

1
point

11.
Why are futures price calculations for oil more complicated than those of stocks?

a) Because oil requires storage unlike stocks

b) Because stocks require storage unlike oil

c) Because oil is a more risky asset than stocks

d) None of the above

1
point

12.
What is the strike price of an option?

a) Price at which the underlying asset may be bought or sold

b) Dividend of the underlying asset

c) Volatility of the underlying asset

d) None of the above

1
point

13.
In which country did deposit insurance start?

a) Japan

b) United States

c) Italy

d) United Kingdom

1
point

14.
What is the percentage of common equity requirements under Basel III?

a) 5.5%

b) 6.5%

c) 7.5%
d) 4.5%

1
point

15.
What did the Lincoln Rule/Amendment propose?

a) Swap dealers are barred across to the Fed discount window

b) Sets Basel III capital adequacy requirements

c) Provides a framework for private equity investments

d) None of the above

1
point

16.
What is the prudent person rule?

a) Applies to Fed regulators to behave prudently

b) Applies to investment managers to behave prudently

c) Applies to Local Governments to behave prudently

None of the above

1
point

17.
What are Archipelago and Island examples of?

a) Electronic communications network

b) SEC directives

c) Basel III regulations

d) None of the above

1
point

18.
Who was the founder of Ashoka?

a) Bill Gates

b) Peter Tufano

c) Bill Drayton

d) None of the above

1
point

19.
What is social insurance?

a) Insurance that is offered by goverments

b) Insurance that is offered by a private company

c) Insurance that is offered by an investment manager

d) None of the above

1
point

20.
What is the purpose of imposing reserve requirements on banks?

a) To increase flow of capital

b) To prevent bank runs

c) To limit the amount of money printing

d) None of the above

1
point

21.
What is the Moody's agency an example of?

a) News agency

b) Social enterprise

c) Rating agency
d) None of the above

1
point

22.
What are Shadow Banks?

a) Banks that are not regulated as commercial banks

b) Banks that are regulated as commercial banks

c) Banks that take money deposits

None of the above

1
point

23.
How many Central Banks are members of Bureau of International Settlements?

a) 62

b) 57

c) 35

d) 47

1
point

24.
According to David Swensen, what does the term equity orientation mean?

a) A disposition towards buying equities

b) A disposition towards not buying equities

c) A disposition towards buying bonds

d) None of the above

1
point

25.
In which of the following industries does moral hazard most commonly tend to prevail?

a) Apartment rentals

b) Insurance

c) Education loans

d) None of the above