Too big to fail
Version A
Concordia University
Department of Economics
ECON 331 Section B
Winter 2013
MIDTERM EXAM
Name: ______________
Student ID: _____________________________
Mark: ___________________/70 marks
Instructor: Faisal Rabby
Feb. 28, 2013
Time Limit: 70 minutes
MULTIPLE CHOICE: Circle the one alternative that best completes the statement or answers the question.
(2x15 =30 points)
1) Which of the following can be described as involving indirect finance?
A) People buy shares of a mutual fund.
B) A corporation takes out loans from a bank.
C) Facebook issues IPO (Initial Public Offering) shares.
D) All of the above are true.
E) Only A and B are true. 2) If you know that the interest rates on all bonds will rise by one percent over the course of the year, which bond would you prefer to hold now?
A) A bond with ten years to maturity B) A bond with five years to maturity
C) A bond with one year to maturity
D) A bond with twenty years to maturity
3) In the figure above, a factor that could cause the supply of bonds to shift to the right is:
A) a business cycle expansion.
B) a decrease in government budget deficits.
C) a decrease in expected inflation.
D) all of the above are true.
E) only A and B are true.
Version A
4) In the figure above, the factor responsible for the decline in the interest rate is
A) an increase in the price level. B) a decline in income.
C) a decline in the expected inflation rate.
D) an increase in the money supply. 5) The efficient markets hypothesis suggests that if an unexploited profit opportunity arises in an efficient market,
A) it will be quickly eliminated.
B) it will tend to go unnoticed for some time.
C) it will not be eliminated quickly because not everyone is going to be aware of the opportunity.
D) You can always consistently take advantage of this unexploited profit opportunity. 6) Which of the
Concordia University
Department of Economics
ECON 331 Section B
Winter 2013
MIDTERM EXAM
Name: ______________
Student ID: _____________________________
Mark: ___________________/70 marks
Instructor: Faisal Rabby
Feb. 28, 2013
Time Limit: 70 minutes
MULTIPLE CHOICE: Circle the one alternative that best completes the statement or answers the question.
(2x15 =30 points)
1) Which of the following can be described as involving indirect finance?
A) People buy shares of a mutual fund.
B) A corporation takes out loans from a bank.
C) Facebook issues IPO (Initial Public Offering) shares.
D) All of the above are true.
E) Only A and B are true. 2) If you know that the interest rates on all bonds will rise by one percent over the course of the year, which bond would you prefer to hold now?
A) A bond with ten years to maturity B) A bond with five years to maturity
C) A bond with one year to maturity
D) A bond with twenty years to maturity
3) In the figure above, a factor that could cause the supply of bonds to shift to the right is:
A) a business cycle expansion.
B) a decrease in government budget deficits.
C) a decrease in expected inflation.
D) all of the above are true.
E) only A and B are true.
Version A
4) In the figure above, the factor responsible for the decline in the interest rate is
A) an increase in the price level. B) a decline in income.
C) a decline in the expected inflation rate.
D) an increase in the money supply. 5) The efficient markets hypothesis suggests that if an unexploited profit opportunity arises in an efficient market,
A) it will be quickly eliminated.
B) it will tend to go unnoticed for some time.
C) it will not be eliminated quickly because not everyone is going to be aware of the opportunity.
D) You can always consistently take advantage of this unexploited profit opportunity. 6) Which of the