BFN104 TMA Solutions

BFN104 List of Questions

Q1 What do you understand by Countermand in relation to cheques?
It’s a written order, signed by the drawer (i.e. the customer) that is used by a drawer to notify the drawee (i.e. the bank) to pay the payee without delay.
It’s a written order, signed by the drawer (i.e. the customer) that is used by a drawer to notify the drawee (i.e. the bank) to stop the payment of a cheque, he had previously issued.
It’s an order issued by the drawer of the cheque to the payee to present the cheque after an occurrence of a future event.
It’sa written order, signed by the payee that is used by a drawer to notify the drawee (i.e. the bank) to pay after necessary deductions.

Q2 What is the main distinguishing feature of a Crossed Cheque?
Does not need endorsement.
It can be paid through the counter of the bank.
Has 30 days maturity period.
It is only payable through the bank and not payable over the counter.

Q3 What is the main distinguishing feature of an Open Cheque?
Is one that is payable over the counter.
Is not payable through the bank
Has no limit on the amount casheable.
It cannot be endorsed to another person.

Q4 Who is not a party to a cheque?
Drawer
Payee
Banker
Drawee

Q5 Which is not a characteristic of a cheque?
Amounts in words and figure must correspond.
The drawer’s account need not be correctly specified.
It must not be mutilated.
It must be properly signed by the drawer.

Q6 Which is not a way through which a bill can be discharged?
Where there is a payment in due course by drawee or acceptor.
Where the drawee or acceptor becomes the holder of the bill at or after maturity.
Where through merger the acceptor becomes the holder of the bill at or after maturity.
Where there is no express waiver or renunciation by the holder of the bill

Q7 When is a bill discharged?
When all the orders it contains have been carried out.
When nobody is interested in the bill.
When the bill is of no value again.
When limited liability is still attached.

Q8 Which are the types of Bill Endorsement?
Blank, Special, Unrestrictive and Unconditional.
Blank, Special, Restrictive and Conditional
Blank, Specialty, Unrestrictive and Conditional
Blank, Specialized, Restrictive and Unconditional

Q9 What is meant by Endorsement of a Bill of Exchange?
It is the process of transferring a bill of exchange from one person to another such that the benefits written on the bill becomes payable to the new holder
It is the process of signing a bill of exchange by one person at the full glare of a new holder
It is the process of transferring ownership of a bill of exchange from one person to many new beneficiaries at a time.
It is the process of writing a bill of exchange from one person to another such that the benefits written on the bill becomes payable to the new holder

Q10 On what basis are bills not classified?
Period/time
Documentary backing
Purpose
Location

Q11 Identify parties in a bill of exchange transaction
Drawer, Drawee, Acceptor, Payee, Payer, Endorser, Endorsee.
Drawer, Drawee, Acceptor, Payee, Andorser, Endorsee
Drawer, Drawee, Acceptor, Payee, Endorser, Endorsee.
Drawer, Drawee, Acceptee, Payee, Endorser, Endorsee

Q12 What do you understand by Negotiable Instrument?
They are instruments subject to negotiation.
They are near cash instruments that are acceptable means of payments in transactions, as well as for debt settlement.
They are alternative money used in payments in all transactions.
They include those instruments used in entertainment in the financial sector.

Q13 What then is the paradox of thrift?
That if people decide to save less, they may end up saving more, unless if the decrease in propensity to save is accompanied by a lower propensity to invest.
That if people decide to save more, they may end up saving less, unless if the increase in propensity to save is accompanied by a lower propensity to invest.
That if people decide to save more, they may end up saving less, unless if the increase in propensity to save is accompanied by a higher propensity to invest.
That if people decide to save more, they may end up saving less, unless if the increase in propensity to save is accompanied by a higher propensity to invest.

Q14 Why is thriftiness often seen as a virtue?
This is because an increase in thrift on the part of an individual leads to greater savings and wealth.
This is because an increase in thrift will increase an individual’s networth.
This is because an increase in thrift will increase the amount of money in the individual’s bank account.
This is because an inrease in thrift on the part of the individual leads to greater return on investment.

Q15 Pre-Keynesian economists argue that saving and investment are not equal for certain reasons except
savings and investment depend upon different factors and are made for different purposes and motives
they also pointed out that the excess of investment over saving has led banks to create new credit
saving and investment are made by two different classes of people
savings naturally preceed investment

Q16 Mathematically, Net Present Value of an investment is the
difference between total present value of cash outflows and total present value of cash inflows occurring in periods over the entire life of the project
difference between income and expenditure on an investment
total value of all projects the company is involved in
the different between total cash outflows and total cash inflows occurring in periods over the entire life of the project

Q17 What is the Present Value Criterion of Investment used for?
It is used to evaluate the value of an investment project.
It is used to measure the cost of an investment project.
It is used to raise funds for an investment project.
It is used to evaluate the profitability of an investment project.

Q18 What is Marginal Efficiency of Investment?
It is the rate of return expected from a given investment on a fixed asset after covering all its costs
It is the rate of return expected from a given investment on a capital asset including all its costs, except the rate of interest
It is the rate of return expected from a given investment on a capital asset after covering all its costs, except the rate of interest
It is the rate of return expected from a given investment on a money asset after covering all its costs, except the rate of interest

Q19 What do you understand by Marginal Efficiency of Capital?
This refers to the highest rate of return expected from an additional unit of a capital asset over its cost
This refers to the lowest rate of return expected from an additional unit of a capital asset over its cost
This refers to the average rate of return expected from an additional unit of a capital asset over its cost
This refers to the minimum rate of return expected from an additional unit of a capital asset over its cost

Q20 For an investment to be made there are various factors that must considered; which is not one of them?
Expected rate of return
Foreign direct investment
Cost of capital asset
Market rate of interest

Q21 What is Marginal Propensity to Save?
The additional disposable income that is received
The fractional total income that is consumed
The additional disposable income that is saved i.e. not consumed
The additional disposable income that is consumed

Q22 What do you understand by Average Propensity to Save?
It is the proportion of total income that is saved
It is the proportion of disposable income that is consumed
It is the proportion of disposable income that is invested
It is the proportion of disposable income that is saved

Q23 How do you define Saving?
The difference between the productive and monetary secors
The amount of money in one’s bank account
The difference between disposable income and consumption
The total amount of money in circulation at a point in time

Q24 Bureau de Change
Deals on local currency deposits
Deals on foreign exchange
Deals on commercial paper
Deals on funds remmittance

Q25 What’s Negotiable Certificate of Deposit?
This is short term instrument sold by banks to depositors
It’s a document banks issue to large-sum depositors
It’s a certicate issued by the CBN to Commercial Banks to collect deposits from customers
This is long term instrument sold by banks to depositors

Q26 What is Interbank Market?
It is an arrangement that enables banks to balance their liquidity position
It’s a market where commercial banks trade on deposits
It’s an arrangement for monitoring Commercial Bank activities by CBN
None of A-C

Q27 Who are the marketers of commercial papers?
Merchant Banks
Marketing Companies
Individuals
Commercial Banks

Q28 Which organisation is responsible for issuing Commercial Papers?
Central Bank of Nigeria
Commercial Banks
Large and reputable companies of unquestionable credit strength
Merchant Banks

Q29 What is Commercial Paper?
Short term unsecured prommissory note
Document issued by Commercial Banks
It’s a security document issued by the Central Bank
None of A-C

Q30 What’s the maturity range of Treasury Certificates?
90 to 180 days
1 to 2 years
30 to 60 days
3 to 5 years

Q31 Which is not a type of investment?
Fixed Investment
Moveable Investment
Inventory Investment
Replacement Investment

Q32 What do you understand by Investment?
It’s the total amount of money one has in the bank
It is the sacrifice of certain economic resources for future uncertain benefits in terms of resources
It is the total deposits received by an Investment Bank
It is the difference between Income and saving

Q33 Although Treasury Certificates are generally similar to Treasury Bills, how do they differ from each other?
Maturity period
Issuing organisation
End users
Beneficaries

Q34 What’s the maturity range of Treasury Bills?
7 days to 30 days
1 week to 6 weeks
30 days to 90 days
90 days to 180 days

Q35 Which organisation is responsible for issuing treasury bills and certificates?
The Central Bank of Nigeria
Commercial Banks
Government Treasuries
Merchant Banks

Q36 Money market instruments deal on
loans banks provide for business
the provision of venture capital
long term financing
short term financing

Q37 Isolate the alternative that is not a Money Market Institution
Bureau De Change
International Monetary Fund
Central Bank of Nigeria
Merchant Banks

Q38 Which of the following is not a Money Market Instrument?
Treasury certificates
Negotiable Certificate of Deposit
Long term repurchase agreement
Bankers Unit Fund

Q39 What do you understand by Money Aggregates?
Total money in the banking system
Total amount of money in the vault of Central Bank of Nigeria
Refers to the several of a countryâ??s money supply
Summation of money with the populace

Q40 What main advantage has Electronic money over paper money?
Instantaneous and borderless transactions
More acceptable in Nigeria
It increases the networth of the holder
Confers more authority to spend on the holder

Q41 Which artisan was the advent of paper money associated with?
Merchant
Blacksmith
Goldsmith
Bricklayer

Q42 Which type of “money” immediately succeeded the barter exchage?
Commodity money
Paper money
Electronic money
Coin money

Q43 Which is one of the limitations of the barter system of exchange?
It didn’t encourage face-to-face contacts during transaction
It discouraged movement of bulky goods
There was accurate measure of value
Indivisibility of certain good

Q44 According to John Keynes which one is not a motive for demanding money?
Transaction motive
Valuation motive
Speculative motive
Precaution motive

Q45 Which pair is not characteristic of money?
Scarcity and Stability
Divisibility and Cognisability
Probability and Heterogeneity
General acceptability and Durability

Q46 Which one is not a function of money?
Store of high value
Medium of exchange
Unit of account
Standard of deferred payment

Q47 What do you understand by this statement, “for money to be generally acceptable, it must be backed up by the institutional force of law”.
It must have economic and social value
It must have the backing of the government and the legal system
It must be accepted by all and sundry
It must be backed up by the Police Force

Q48 In economic term, what is Money?
In Nigeria, money is just Naira and Kobo we use to purchase goods and services
Physical cash with which he carries out his daily transactions
A number of financial instruments which is acceptable as a medium of exchange and settlement of debts
Any form of cash that can be used for buying and selling

Q49 Which one is not a specialized bank?
Mortgage bank
Peoples Bank
Micro-finance bank
Merchant bank

Q50 Which one is not a function of Development Banks?
Preparation of feasibility studies on a consultancy basis
Discounting of bills and deposit acceptance
Provision of technical assistance
Provide long term and medium term financing for industry and projects

Q51 The ownership structure of the community banks is shared in the following manner
Community Development Association or town Union; Trade Associations and Indigenes of the community
Community Development Association or town Union; Local Government and Indigenes of the community
State Government; Trade Associations and Indigenes of the community
Community Development Association or town Union; Trade Associations and Indigenes of the community and Non-Indigenes

Q52 Identify which alternative that is not an objective of Community Banks
To promote the emergence of an effective and integrated national financial system that responds to need of the whole economy especially at the grass root community levels
To promote rural development by providing financial and banking services and other ancillary facilities to communities inadequately supplied with such facilities
To inculcate disciplined banking habits among the low income workers in the country, especially those in the rural areas and
To promote rural development by providing financial and banking services and other ancillary facilities to urban communities inadequately supplied with such facilities

Q53 Which one is not a function of Mortgage Banks
Train builders on house contruction and land acquisition
Provide long term loans to individual and estate developers for the purpose of building houses
Engage in building of houses, which they offer for sale to customers
Accept deposits from customers in order to encourage savings towards owning a house.

Q54 Which of the following is not a specialized bank?
Micro-finance bank
Development bank
Merchant bank
Mortgage bank

Q55 Which of these is not a function of merchant bank?
Loan syndication
Grant of short-term loans and advances
Discounting of Bills of Exchange
Corporate Restructuring

Q56 In what way did the Indigenization Decree of 1972 affect banks?
Personnel structure
Branh network
Volume of business done
Ownership structure

Q57 Which of the following is a primary function of commercial banks?
Accepting deposits
Money transfer services.
Providing customers with facilities of foreign exchange dealings
Issuing letters of credit and travellers cheque

Q58 Which of these reasons negates the assertion that Commercial and Merchant Banks have grown to become an indispensible part of our everyday business activities?
They facilitate business activities
They contribute to economic growth
They provide interest-free loans
Assist in better living standard s of the populace

Q59 As a Banker and Lender of Last Resort to Banks the Central Bank of Nigeria performs the following functions except
Maintains current account for deposit money banks
Pay bank depositors of failed banks
It provides short term loans to banks
Discounts eligible bill held by banks, where they have exhausted all possible means of acquiring supplementary funds

Q60 As a Banker and Financial Adviser to the Government the Central Bank of Nigeria performs the following functions except
Finance the government in events of temporary budget shortfall
Advise the government on the nature, size and timing of issuing debt instruments
Acts on behalf of government as issuing house for its treasury bills, treasury certificate and other debt instruments
Establishes banks and other financial institutions in the various states of the federation

Q61 Which one was not a function of the West African Currency Board (WACB)?
To issue a West African currency
To ensure a speedy convertibility of the currency with the old silver currency.
To provide means whereby the colonial government will share from the proceeds of currency issue
Acceptance of deposits from the banking public

Q62 What is meant by the Central Bankof Nigeria’s function of Foreign Exchange Management?
Management of the Naira in foreign countries
Mangement of currencies other than the Naira
Exhanging the Naira with United States Dollar
Minting of foreign currencies by the CBN

Q63 When was the 20 Naira note introduced?
1974
1973
1976
1977

Q64 When did the Central Bank of Nigeria change to Metric System?
1973
1974
1975
1976

Q65 How many Departments and Directorates are there in the Central Bank of Nigeria?
17 and 4
28 and 5
27 and 6
18 and 5

Q66 Between 1960 and 1965, the Central Bank shared its functions with
Federal Ministry of Trade and Investment
Ministry of Foreign Affairs
Federal Ministry of Finance
Federal Ministry of Commerce and Industry

Q67 Who headed the first commission for the setting up of the Central Bank of Nigeria?
Mr. J. B. Loynes
F. B. Grish
J. K. Flush
Mr J. L. Fisher

Q68 What organisation preceded the Central Bank of Nigeria in the performance of its functions?
The West African Central Bank
African Development Bank
The West African Currency Board
Bank of the Northern and Southern Nigeria

Q69 Which is not supposed to be a function of the Central Bank?
The regulation of the currency
Acceptance of deposits from the banking populace
The performance of general banking and agency for the state
The settlement of clearing balances between the banks

Q70 What document is not supposed to accompany an application for banking licence as provided by Bank and Other Financial Institutions Decree (BOFID) No. 25 of 1991?
A feasibility report of the proposed bank
International passports of the directors
A list of shareholders, directors and principal officers of the proposed bank and their particulars
A draft copy of the memo and articles of association of the proposed bank

Q71 The promulgation of the Banking (Amendment) Act of 1962 (Cap 19) led to
Increased number of registered banks
Improved government control over the activities of banks.
Reduced the number of registered banks
Led to the merger of banks in Nigeria

Q72 What major reason led to initial bank failure in Nigeria?
Due to lack of proper regulation and control
Poor expertise by the operators
There were just too many banks
Due to poor patronage

Q73 “1952 was seen as the era of free banking” means
Anybody could float a bank
No condition was required to operate a bank
1952 marked the beginning of banking in Nigeria
The only requirement for banking operations was the registration in line with the Companies (Banking) Ordinance

Q74 What is meant by the saying that “banking is fiducial”?
Banking is supposed to be done secretly
Banking transaction should be done in a secure environment
Banking is done in trust
Banking transaction should be done fairly

Q75 What is modern-day alternative to payment by cash?
Payment through cheque
Cashless policy
Credit purchase
Trade by barter

Q76 The Payment System deals with
How wealth moves about
Moving money from one bank branch to another
Payment for transactions through the bank
Payment across the counter

Q77 Commercial Banking as a process involves all but
Deposit taking
Safekeeping of financial assets
Creation of wealth
Printing of currencies

Q78 Which is not a Stakeholder with the bank?
Bondholders
Investors
Directors
Bank Liquidators

Q79 What is the other name for Bank?
Investment House
Acceptance House
Discount House
Broker House

Q80 A successful completion of this course may enable you do the following except
Pass your examination
Use and apply the knowledge gained
Become an expert in Banking and Finance
Be able to contribute to the development of scholarly thoughts

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