UNION CHRISTIAN COLLEGE
SAN FERNANDO CITY, LA UNION
SCHOOL OF BUSINESS SCIENCES
MIDTERM EXAMINATION in FIN 1 FINANCE MARKETS
Date of Examination: April 6, 2022
ESSAY. Answer the following questions briefly. Each correct answer is given 10 points. =70
points
1.
On bonds, when economies grow, target interest rates may be increased as
inflation rises, which puts positive pressure on yields. Is the statement correct? If
it is, explain with a scenario. If it is not, then reason out too.
2.
Government securities are considered to be risk-free as they have the backing of
the government that issued them. How true is this? Defend.
3.
Capitalizes and mobilizes fund in economy is an advantage of Bond/ Debt market.
Do explain. In some instances, can you not think for a little or minimal flaw of it,
especially at this time that the country is facing a big crisis? Just asking.
4.
The money market is less risky than the capital market while the capital market is
potentially more rewarding. Explain with illustration.
5.
Velocity of money is a measurement of the rate at which money is exchanged in
an economy. Explain with a little illustration.
6.
One disadvantage of forex states that: “Even though they are the most liquid
markets in the world, forex trades are much more volatile than regular markets.”
Cite a scenario and explain.
7.
Under Cost approach, it is based on logic that informed buyers will not pay more for
a property than it will cost them to build to a similar property from scratch and with
the same level of utility. Explain with illustration.
Prepared by:
Checked/Noted by:
Homer M. Madrid
Instructor
Nellie M. Galvan, CPA, MBA
Dean