Principles of Banking (FINA2204)
Faculty of Economics and Management Science (FEMS)
Semester: Second Semester
Level: 200
Year: 2016
Continuous assessment
Instruction: answer all questions
Duration: 2 hours
1.
Intermediation can be defined as?
a)
Facilitating asset transformation
b)
Brokerage
c)
Acting as an agent to bring buyers and sellers
d)
Settling disputes among financial institutions
2.
An institution which facilitates indirect lending is called
a) Financial intermediary
b) The financial system
c) A stock exchange
d) A financial market
3. Which of the following is incorrect about the financial system?
a) The financial system and the economic system are the same.
b) Financial institutions and financial markets are part of the financial system.
c) Savers and borrowers are part of the financial system.
d) Both domestic and foreign borrowers are part of the financial system.
4. The cost savings that arise from engaging in complementary activities by financial firms
are called?
a) Economic of scope
b) Economics of scale.
c) Securitization.
d) Externalities.
5. For an asset to act as money, the asset must?
a) Be commonly accepted by the public as a medium of exchange.
b) Be legally accepted as a medium of exchange.
c) Have a physical existence.
d) Be made out of or fully backed by a precious metal.
6. Which of the following is not a function of money?
a) Intermediation.
b) Unit of account.
c) Medium of exchange.
d) Store of value.
7. The exchange of commodities for commodities is called?
a) Barter.
b) Indirect exchange.
c) Asset transformation.
d) Monetary exchange.
8. A double coincidence of wants is?
a) A condition not easily satisfied in barter.
b) A condition easily satisfied in a direct exchange economy.
c) A desirable property of money.
d) A function of money.
9. The two broad monetary standards found in the history of money are?
a) Commodity standard and paper money standard
THE UNIVERSITY OF BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES
2nd Semester CA Course : Principles of Banking
Course Code: FINA204
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b) Gold standard and silver standard
c) Bimetallism and trimetallism.
d) Monometallic and bimetallism.
10. Legal tender is the circulating medium under?
a) Fiat-money standards.
b) The gold standard.
c) Bimetallism.
d) Commodity standards.
11. The fixed deposits are withdrawn by the customers from the banks by?
a) Cheque.
b) Surrendering fixed deposit
receipts
c) Withdrawable slips.
d) Using ATM.
12. The primary relationship between a banker and customer starts from the time?
a) When the customer visits the bank
b) When the customer opens a bank account.
c) When customer visits that bank to made queries.
d) All of the above.
13. In current account, the period of limitation stars?
a) After two years from the date of deposits.
b) When customer demand for repayment of deposits.
c) When customer deposits amount in the bank account.
d) None of the above
14. Services rendered by a banker not only to his customer, but also to the general public are
called?
a) Principal services.
b) General utility services
c) Agency services.
d) Social services.
15. The meaning of the word “garnishee” means?
a) To consult
b) To warn
c) To punish
d) To convince
16. Usually accidental charges are levied on………type of account holders?
a) Saving account
b) Current account
c) Fixed deposit account.
d) Recurring account
17. A company who accept demand deposit is called?
a) Joint stock company
b) Banking company.
c) Manufacturing company.
d) IT Company.
18. Current accounts are mainly opened by?
a) Professionals
b) Trading and industrial concern
c) Agriculturalist.
d) Salaried class people
19. Which type of deposits gives highest rate of interest?
a) Current account
b) Fixed deposits.
c) Recurring deposit.
d) None of these.
20. Which of the following is not a function of the commercial bank?
a) Acceptance of deposits
b) Advancing loans
c) Issue of paper notes
d) Credit control.
21. Which of the following is not near money?
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a) Treasury bills
b) Bond
c) Paper notes
d) Bill of exchange.
22. Which bank is called lender of last resort?
a) Commercial bank
b) Agricultural bank
c) Central bank
d) Industrial bank
23. Which bank enjoys monopoly power of note issue?
a) NABARD
b) Commercial bank
c) Central bank
d) None of these
24. For which function, money is accepted as unit of account?
a) medium of exchange
b) standard of deferred payment
c) measure of value
d) store of value
25. …….varies inversely with profitability.
a) Debt
b) Equity
c) Liquidity
d) Credit
26. Its emphasis is on converting short term assets or cash items into cash to manage
liquidity.
a) Shiftability theory
b) Anticipated income theory
c) Liquidity asset theory
d) Liability management theory.
27. It talks about the mix of short term self-liquidating loans and long term loans.
a) liquidity asset theory
b) anticipated income theory
c) shiftability theory
d) liability management theory
28. it lays emphasis on the ability of banks to create income
a) liquidity asset theory
b) shiftability theory
c) anticipated income theory
d) liability management theory
29. this theory cancels out unavailability of funds at any price and assumes a stable
confidence of the market creditworthiness of borrowers.
a) Liquidity asset theory
b) Shiftability theory
c) Liability management theory
d) Anticipated income theory
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