Question 1

Government securities are generally:

Accepted Answer

A)  illiquid. 
B)  issued when a government's budget is in surplus. 
C)  highly negotiable. 
D)  coupon-paying debt securities. 
A)  illiquid. 
B)  issued when a government's budget is in surplus. 
C)  highly negotiable. 
D)  coupon-paying debt securities.

Question 2

The main method the Australian Reserve Bank uses to manage the money market cash position is:

Accepted Answer

A)  conducting FX transactions. 
B)  issuing Treasury bonds. 
C)  managing the amount of Commonwealth securities in the market. 
D)  issuing Treasury notes. 
A)  conducting FX transactions. 
B)  issuing Treasury bonds. 
C)  managing the amount of Commonwealth securities in the market. 
D)  issuing Treasury notes.

Question 3

On Tuesday,the Reserve Bank announces details of a 26-week T-note tender,with competitive bids to close on Wednesday.A bank lodged a successful bid for $5 000 000 in T-notes at a yield of 6.57% per annum.Settlement is required on Thursday through RITS.What amount will the bank need to pay on settlement?

Accepted Answer

A)  $4 841 395.87 
B)  $4 843 084.08 
C)  $4 988 327.31 
D)  $4 998 362.54 
A)  $4 841 395.87 
B)  $4 843 084.08 
C)  $4 988 327.31 
D)  $4 998 362.54

Question 4

When the Australian Reserve Bank wants to ease the monetary policy,it will:

Accepted Answer

A)  sell Commonwealth government securities. 
B)  increase the overnight cash rate. 
C)  buy Commonwealth government securities. 
D)  sell repurchase agreements. 
A)  sell Commonwealth government securities. 
B)  increase the overnight cash rate. 
C)  buy Commonwealth government securities. 
D)  sell repurchase agreements.

Question 5

Repurchase agreements are:

Accepted Answer

A)  usually collaterised with Commonwealth Government securities. 
B)  usually low-interest rate loans. 
C)  usually loans that have real assets as collateral. 
D)  none of the given answers. 
A)  usually collaterised with Commonwealth Government securities. 
B)  usually low-interest rate loans. 
C)  usually loans that have real assets as collateral. 
D)  none of the given answers.

Question 6

The selling of Government bonds is currently handled by:

Accepted Answer

A)  APRA. 
B)  ARB. 
C)  AOFM. 
D)  Austraclear. 
A)  APRA. 
B)  ARB. 
C)  AOFM. 
D)  Austraclear.

Question 7

If a bond investor wishes to guarantee the coupon interest they receive and be compensated for the effects of inflation,they may look to buy:

Accepted Answer

A)  a Treasury note. 
B)  a corporate bond. 
C)  a capital-indexed bond. 
D)  a Treasury bond. 
A)  a Treasury note. 
B)  a corporate bond. 
C)  a capital-indexed bond. 
D)  a Treasury bond.

Question 8

For a credit payment system,the processing of the payment begins at the:

Accepted Answer

A)  payer's financial institution. 
B)  payee's financial institution. 
C)  Australian Reserve Bank. 
D)  exchange settlement account of the payee. 
A)  payer's financial institution. 
B)  payee's financial institution. 
C)  Australian Reserve Bank. 
D)  exchange settlement account of the payee.

Question 9

When the Australian government faces month-by-month mismatches between inflow of funds and cash outflows it may issue:

Accepted Answer

A)  Treasury bonds. 
B)  Treasury bills. 
C)  Treasury notes. 
D)  Treasury paper. 
A)  Treasury bonds. 
B)  Treasury bills. 
C)  Treasury notes. 
D)  Treasury paper.

Question 10

Until _______,purchasers of new-issue Treasury bonds could hold them either as bearer bonds or inscribed stock.

Accepted Answer

A)  1979 
B)  1984 
C)  1987 
D)  1992 
A)  1979 
B)  1984 
C)  1987 
D)  1992

Question 11

The management of the revenues and expenditure of a government is called:

Accepted Answer

A)  monetary policy. 
B)  fiscal policy. 
C)  debt management. 
D)  economic policy. 
A)  monetary policy. 
B)  fiscal policy. 
C)  debt management. 
D)  economic policy.

Question 12

A funds manager is revaluing his/her investment portfolio,which includes a $2 000 000 holding of Treasury bonds.The bonds pay a coupon of 10% per annum,payable half-yearly.A coupon payment has just been made,and the bonds have exactly five years to maturity.Similar bonds are currently yielding 12% per annum in the market.What is the value of the fund manager's Treasury bond portfolio?

Accepted Answer

A)  $1 495 331.33 
B)  $1 620 921.33 
C)  $1 852 798.26 
D)  $2 000 000.00 
A)  $1 495 331.33 
B)  $1 620 921.33 
C)  $1 852 798.26 
D)  $2 000 000.00

Question 13

The transmission channel related to changing the money supply to change the pattern of bank lending and the availability of funds,to influence economic activity,is known as a:

Accepted Answer

A)  credit channel. 
B)  monetary policy channel. 
C)  foreign exchange channel. 
D)  wealth channel. 
A)  credit channel. 
B)  monetary policy channel. 
C)  foreign exchange channel. 
D)  wealth channel.

Question 14

A bank is considering purchasing a Treasury note with a face value of $500 000 that is currently selling for $487 324,with 180 days to maturity.What is the note currently yielding?

Accepted Answer

A)  4.90% 
B)  5.14% 
C)  5.27% 
D)  5.41% 
A)  4.90% 
B)  5.14% 
C)  5.27% 
D)  5.41%

Question 15

The AOFM on behalf of the federal treasurer has the power to decide on the timing,maturities and quantities of Treasury bonds but their price is decided by tender.

Accepted Answer

A) True 
 B)False

Question 16

For government securities listed on the ASX,there is a higher volume of off-exchange trades compared with on-exchange transactions because:

Accepted Answer

A)  of difficulties in payment. 
B)  greater profits may be made. 
C)  of brokers that can act as an agent between two parties. 
D)  of the high fees involved. 
A)  of difficulties in payment. 
B)  greater profits may be made. 
C)  of brokers that can act as an agent between two parties. 
D)  of the high fees involved.

Question 17

Which of the following is NOT an advantage for a state's central borrowing authority?

Accepted Answer

A)  By grouping issues as a single one, lower economies of scale can be obtained. 
B)  Potential conflict between different debt issuers may be overcome. 
C)  The timing of debt issues can be controlled so they are brought to the market at the most opportune time. 
D)  The central borrowing authority can do a public issue more effectively than a private placement. 
A)  By grouping issues as a single one, lower economies of scale can be obtained. 
B)  Potential conflict between different debt issuers may be overcome. 
C)  The timing of debt issues can be controlled so they are brought to the market at the most opportune time. 
D)  The central borrowing authority can do a public issue more effectively than a private placement.

Question 18

Since each state government is responsible for providing a wide range of services,every state has its own borrowing authority to issue debt securities.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT an advantage associated with the issue of inscribed stock?

Accepted Answer

A)  It is expensive to print and distribute the physical instrument. 
B)  Without a register, there is a potential for non-disclosure of income. 
C)  It protects the holder from the risk of capital loss. 
D)  It protects the holder from the risks of theft or misplacement. 
A)  It is expensive to print and distribute the physical instrument. 
B)  Without a register, there is a potential for non-disclosure of income. 
C)  It protects the holder from the risk of capital loss. 
D)  It protects the holder from the risks of theft or misplacement.

Question 20

Which of the following statements regarding the Treasury bond tender system is correct?

Accepted Answer

A)  The timing of Treasury bond tenders is set each year in the government's budget papers. 
B)  Buyers of bonds effectively nominate the price at which they purchase the bond. 
C)  The tender system removes the need for a secondary market in Treasury bonds. 
D)  The maturities and quantities of bond tenders are determined by the Loan Council. 
A)  The timing of Treasury bond tenders is set each year in the government's budget papers. 
B)  Buyers of bonds effectively nominate the price at which they purchase the bond. 
C)  The tender system removes the need for a secondary market in Treasury bonds. 
D)  The maturities and quantities of bond tenders are determined by the Loan Council.

Government securities are generally:

The main method the Australian Reserve Bank uses to manage the money market cash position is:

When the Australian Reserve Bank wants to ease the monetary policy,it will:

Repurchase agreements are:

The selling of Government bonds is currently handled by:

If a bond investor wishes to guarantee the coupon interest they receive and be compensated for the effects of inflation,they may look to buy:

For a credit payment system,the processing of the payment begins at the:

When the Australian government faces month-by-month mismatches between inflow of funds and cash outflows it may issue:

Until _______,purchasers of new-issue Treasury bonds could hold them either as bearer bonds or inscribed stock.

The management of the revenues and expenditure of a government is called:

The transmission channel related to changing the money supply to change the pattern of bank lending and the availability of funds,to influence economic activity,is known as a:

A bank is considering purchasing a Treasury note with a face value of $500 000 that is currently selling for $487 324,with 180 days to maturity.What is the note currently yielding?

The AOFM on behalf of the federal treasurer has the power to decide on the timing,maturities and quantities of Treasury bonds but their price is decided by tender.

For government securities listed on the ASX,there is a higher volume of off-exchange trades compared with on-exchange transactions because:

Which of the following is NOT an advantage for a state's central borrowing authority?

Since each state government is responsible for providing a wide range of services,every state has its own borrowing authority to issue debt securities.

Which of the following is NOT an advantage associated with the issue of inscribed stock?

Which of the following statements regarding the Treasury bond tender system is correct?

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Exam 12: Government Debt, monetary Policy and the Payments System

Government securities are generally:

The main method the Australian Reserve Bank uses to manage the money market cash position is:

When the Australian Reserve Bank wants to ease the monetary policy,it will:

Repurchase agreements are:

The selling of Government bonds is currently handled by:

If a bond investor wishes to guarantee the coupon interest they receive and be compensated for the effects of inflation,they may look to buy:

For a credit payment system,the processing of the payment begins at the:

When the Australian government faces month-by-month mismatches between inflow of funds and cash outflows it may issue:

Until _______,purchasers of new-issue Treasury bonds could hold them either as bearer bonds or inscribed stock.

The management of the revenues and expenditure of a government is called:

The transmission channel related to changing the money supply to change the pattern of bank lending and the availability of funds,to influence economic activity,is known as a:

A bank is considering purchasing a Treasury note with a face value of $500 000 that is currently selling for $487 324,with 180 days to maturity.What is the note currently yielding?

The AOFM on behalf of the federal treasurer has the power to decide on the timing,maturities and quantities of Treasury bonds but their price is decided by tender.

For government securities listed on the ASX,there is a higher volume of off-exchange trades compared with on-exchange transactions because:

Which of the following is NOT an advantage for a state's central borrowing authority?

Since each state government is responsible for providing a wide range of services,every state has its own borrowing authority to issue debt securities.

Which of the following is NOT an advantage associated with the issue of inscribed stock?

Which of the following statements regarding the Treasury bond tender system is correct?

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

An Introduction to Interest Rate Determination and Forecasting

Interest Rate Risk

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters