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"Financial Institutions" question number distribution across years
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JAMB questions for "Economics :: Financial Institutions"
Q1
By buying treasury bills, the Central Bank of Nigeria intends to
A
increase money supply in the economy
B
reduce money supply in the supply
C
reduce the cash reserve ratio for banks
D
increase the capital base of commercial banks
E
Q2
One of the functions of commercial banks is
A
maintaining stable price in the economy
B
granting loans to customers
C
regulating monetary policies
D
issuing bank notes and coins
E
Q3
The reform in the banking sector in Nigeria is principally motivated by the need to
A
increase the capital base of banks
B
provide more money to run the economy
C
minimize the rate of bank failures
D
enhance efficiency in bank operations
E
Q4
The ability of commercial banks to create money depends on the
A
reserve ratio
B
liquidity ratio
C
interest rate
D
capital base
E
Q5
A manufacturer who wants to build a new plant will source funds from the
A
commercial banks
B
money market
C
capital market
D
government
E
Q6
An advantage of electronic banking is that it
A
enables a customer to operate his accounts from different locations
B
enables a customer to operate many accounts from different locations
C
reduces the risk of bank fraud
D
enables many customers to operate joint accounts
E
Q7
Life insurance companies contribute to economic development by holding a part of their assets in
A
money-market instrument
B
Long-term financial instruments
C
cash and near money
D
equipment
E
Q8
The non-bank financial institutions that are entrusted with workers' contributions towards retirement are
A
pensions fund administrators
B
investment companies
C
mortgage institutions
D
pension fund custodians
E
Q9
A reduction in the bank rate encourages commercial banks to create money by
A
doubling the interest rate
B
maintaining the interest rate
C
decreasing the interest rate
D
raising the interest rate
E
Q10
The major role of NDIC is to
A
ensure adequate capitalization of insurance companies
B
accept customers' deposits
C
insure bank deposits
D
regulate the activities of insurance companies
E
Q11
If the Central Bank of Nigeria reduces the bank rate, this will cause
A
commercial banks to reduce lending
B
commercial banks to merge
C
money supply to increase
D
money supply to reduce
E
Q12
A discount house is a market where
A
various bills are exchanged
B
short-term and medium-term loans are obtained
C
shares are bought and sold
D
short-term loans are obtained
E
Q13
The regulatory authority of the capital market in Nigeria is the
A
Central Bank
B
Securities and Exchange Commission
C
Nigerian Deposit Insurance Corporation
D
Stock Exchange Market
E
Q14

The savings deposit in a commercial bank is called

A

capital

B

fund

C

near money

D

call money

E
Q15
The capital market provides business firms with the avenue to
A
purchase capital equipment
B
lease capital equipment
C
obtain short-term funds
D
obtain long-term funds
E
Q16
The role of the Central Bank in the economic development of Nigeria is to
A
use cheques and bank draft to facilitate business transactions
B
maintain a stable price system
C
give short and medium term loans to the public
D
give financial and technical advice to customers
E
Q17
Which financial institution is charged with the formulation of monetary policies in Nigeria?
A
The Nigerian Deposit Insurance Corporation
B
The Central Bank of Nigeria
C
The Lagos Stock Exchange
D
The Abuja Commodity Exchange
E
Q18
The primary function of non-bank financial institutions is to
A
grant loans to banks
B
manage investment portfolios for government
C
mobilize savings for investment
D
receive deposits from banks
E
Q19
Insurance companies, pension and provident funds and unit trust are all examples of
A
rural-based revenue mobilizers
B
non-governmental organisations
C
government financial agencies
D
non-bank financial institutions
E
Q20
Securities are described as listed when they are
A
mobilized as long-term debt instruments
B
traded on a recognised stock market
C
bought and sold purely for development purposes
D
mobilized as short-term debt instruments
E
Q21
The commercial banks differ from non-bank financial institution because they
A
contribute to economic development
B
accept deposits withdrawable by cheque
C
mobilize savings
D
invest surplus funds
E
Q22
The distinguishing characteristic between the money market and the capital market lies in whether the
A
securities are primary or secondary
B
debt instruments provided are long-term or short-term
C
funds mobilized are private or public
D
securities are in debentures or ordinary shares
E
Q23
Insurance companies invest mainly in instruments traded on the
A
commodity market
B
open market
C
capital market
D
money market
E
Q24
The stock exchange is a market for the buying and selling of
A
existing shares
B
monetary instruments
C
new shares
D
treasury bills
E
Q25
The primary objective of the NDIC is to
A
provide regulations guiding the finance houses
B
give protection to banks against fraud
C
give protection to bank depositors
D
give protection to the CBN against fraud
E
Q26
Liquidity preference refers to the
A
wish to hold more funds for precautionary purposes
B
need to increase the money supply in order to lower the interest rate
C
demand to hold money as assets rather than as stocks
D
need to borrow money for short periods to meet some temporary crises
E
Q27
In Nigeria , the bank that can correctly be describes as a unit bank is
A
the Central Bank
B
community bank
C
people's bank
D
mortgage bank
E
Q28
The capital market is a market for trading of financial assets such as
A
bankers' acceptances
B
treasury bills
C
long-term securities
D
commercial papers
E
Q29
An increase in the discount rate is an indication of a central bank's intention to pursue
A
an expansionary monetary policy
B
a disciplined monetary policy
C
a dynamic monetary policy
D
a contractionary monetary policy
E
Q30
A capital market differs from the money market in that in the former
A
loan sought is long term
B
loan repayment is guaranteed
C
loan sought is short term
D
the percentage of interest charged is more
E
Q31
Two principal ways by which banks can lend money to their customers are through
A
loans and discounting bills
B
loans and overdrafts
C
overdrafts and cheques
D
overdrafts and treasury bills
E
Q32
Bills of exchange originate from a
A
central bank
B
commercial bank
C
community bank
D
development bank
E
Q33
Non-bank financial intermediaries do not
A
provide credit facilities
B
accept deposits
C
accept demand deposits
D
sell shares
E
Q34
Which of the following is a transfer payment?
A
Dividend to a shareholder
B
Gift to a Motherless Babies' Home
C
Salary to a worker
D
Rent to a landlord
E
Q35
If the reserve requirement for commercial banking in Nigeria were 30%, a commercial bank which receives an initial cash deposit of N3 000 is in a position to lend out
A
N9 000
B
N3 330
C
N2 770
D
N2 100
E
Q36
An issue of bank notes backed by gold but by government securities securities is known as
A
fiduciary issue
B
guaranteed money
C
seigniorlage
D
egal tender
E
Q37
A rise in the market price of fixed interest securities is an indication that the
A
supply of money has decreased
B
liquidity preference has increased has risen
C
market rate of interest has riven
D
market rate of interest has fallen
E
Q38
One of the techniques of monetary control used by the Central Bank of Nigeria is
A
selective credit control
B
budget deficit
C
foreign exchange control
D
monitoring the general price level
E
Q39
Banks can create more money by
A
increasing its cash ratio with Central Bank
B
issuing more bank cheques
C
accepting more deposits from customers
D
lending out of money from customers' deposits
E
Q40
Stocks and shares as well as bonds are examples of instruments used in the
A
commodity markets
B
money markets
C
capital markets
D
security markets
E
Q41
In commercial banking, an account from which the customer cannot withdraw money instantly is a
A
demand deposit account
B
time deposit account
C
special deposit account
D
savings deposit account
E
Q42
The Central Bank's expansionary monetary policy is justified at a period
A
when the inflation rate is high and the economy is experiencing a boom
B
of economic depression accompanied by low capacity utilization
C
when trade unions are clamouring for higher wages
D
when the price of crude petroleum is rising
E
Q43
A bank is said to be distressed when it
A
is unable to deal with the Central Bank
B
has a low capital base
C
has low level of deposits
D
experiences serious liquidity crisis
E
Q44
One method through which the Central Bank can restrict the commercial banks' power of credit expansion is to
A
demand for increased special deposit
B
decrease the cash ratio
C
buy securities in the open market
D
reduce the rate of interests at which banks borrow from it
E
Q45
Foreign exchange rate in a free market economy is determined by
A
the government
B
the Central Bank
C
demand and supply
D
commercial banks
E
Q46
The money market is a financial market that specialised in the provision of
A
short-term loans and advances
B
medium-term loans
C
long-term loans
D
venture capital for development projects
E
Q47
Which of the following progrmmes in the monetary sector is aimed at enhancing the banking habit of rural areas?
A
The deregulation of the banking system
B
The increase in the number of merchant banks
C
The community banking scheme
D
The deregulation of interest rate
E
Q48
The sum of N80,000 is deposited in a bank and the cash ratio of the banking system is 10%. Calculate the total sum of money the bank can create from the deposit.
A
N100,000
B
N800,000
C
N100,000
D
N8,000,000
E
Q49
Which of the following is NOT directly concerned with dealings in treasury bills?
A
The Stock Exchange
B
The Central Bank
C
Commercial Banks
D
Discount House
E
Q50
The best way to reduce the supply of money in the economy is to
A
increase the liquidity ratio
B
increase the number of bank notes and cheques produced
C
decrease treasury bills
D
liberalize access to credit
E
Q51
The total amount of money in circulation includes cash
A
and current account balances owned by the non-bank public
B
owned by banks and the non-bank public
C
and current account balances owned by banks and the non-bank public
D
owned by banks, the government and the non-bank public
E
Q52
One of the functions of Development Bank is to
A
mint money for the development of the economy
B
provide short-term loans to commercial banks
C
provide medium of long-term finance for development of the banking system
D
provide medium and long-term finance for the development of the economy
E
Q53
Banks aid economic expansion and development by
A
discourages trade by barter
B
favours debtors at the expense of creditors
C
increases the real income of salary earners
D
increases the value of a country's exports
E
Q54
Banks aid economic expansion and development by
A
being very strict in lending policies
B
mobilizing savings for investment lending
C
pay interest on deposit accounts
D
charging high interest on loans
E
Q55
The basic purpose of imposing legal reserve requirements on commercial bank is to
A
assure the profitability of commercial banks
B
provide a device through which credit creation by banks can be controlled
C
provide a proper ratio between earning and non-earning bank assets
D
provide the Central Bank with working capital
E
Q56
Find the total credit that the banking system can create if primary deposits is just N100.00 while the cash ratio is 20%
A
N700.00
B
N600.00
C
N500.00
D
N400.00
E
Q57
Which of the following is a liability of a commercial bank?
A
Deposits in the bank
B
Loans made by the bank to individuals
C
Loans made by the bank to other banks
D
Bonds purchased by the bank
E
Q58
The stock exchange market is where
A
businessmen borrow some capital
B
the federal government trades on treasury bills
C
existing bonds and stocks are traded
D
new stocks and shares are bought or sold
E
Q59
Commercial bank reserves at the Central Bank have the effect of
A
controlling credit and money supply
B
discouraging banking operations
C
advancing trade prospects
D
reducing bank frauds
E
Q60
The group of people engaged in banking or insurance services by occupational distributions are classified as
A
primary producers
B
secondary producers
C
tertiary producers
D
technical producers
E