Financial Markets – New Academic Year Quiz
1. Mortgage lending in the UK reached its highest level in July since?
a. July 2006
b. July 2008
c. July 2010
d. July 2012
2. Which social media company saw their share price tumble to below its $26 IPO
(Initial Public Offering) price on August 20th?
a. Facebook
b. LinkedIn
c. WhatsApp
d. Twitter
3. Which country’s government unexpectedly engineered a devaluation of its currency
on August 11th, causing alarm in the USA?
a. China
b. Japan
c. Brazil
d. Mexico
4. Which country’s government successfully negotiated a bail-out in July in order to
prevent it from defaulting on its debt?
a. Greece
b. Russia
c. Brazil
d. China
5. What is the name of Google’s new holding company?
a. Number
b. Alphabet
c. Letter
d. Zero
6. What has happened to the price of copper over the last 6 months?
a. Risen by 46%
b. Has barely changed
c. Fallen by 18%
d. Fallen by 46%
7. Which Middle-Eastern government issued bonds worth $5.3bn on August 10th in
order to compensate for slowing oil revenue?
a. Dubai
b. Iran
c. Oman
d. Saudi Arabia
8. What was July’s Consumer Price Index (CPI) inflation rate?
a. 0%
b. -0.1%
c. 0.1%
d. 1%
9. On July 21st, the FTSE 100 closed at a value of 6750. What value did it close at on
August 21st?
a. 6274
b. 6750
c. 6843
d. 6992
10.Which country’s Central Bank issued commemorative banknotes, only to discover
that they had misspelled the name of their first president?
a. USA
b. France
c. Nigeria
d. Singapore
Financial Markets – Back to School News Quiz – Answers
1. B – July 2008. A total of £22bn was borrowed in July 2015. The Council of Mortgage
Lenders (CML) expects total mortgage borrowing in 2015 to reach £209bn.
•
Follow-up question: what is the likely impact on Aggregate Demand of an increase in the
level of mortgage lending?
2. D- Twitter. Investors started to sell Twitter shares as they feared that it would not be
able to compete with the likes of Facebook. In one day, Twitter’s market valuation
fell from $41.5bn to just $17.6bn. Some of the biggest investors selling shares were
top US universities including Harvard, Stanford and Yale.
•
Follow-up question: explain what is meant by “short-termism”
3. A- China. China is starting to struggle with falling economic growth rates so in an
attempt to boost exports by making them more price competitive, the government
has intervened in the foreign exchange market to cause the value of the Yuan to fall
• Follow-up question: explain how a government can cause a devaluation of their currency by
manipulating a) interest rates and b) foreign exchange reserves
4. A- Greece. A summit of Eurozone leaders on July 13th ended with a plan to provide
Greece with a 3rd bailout of $86bn over 3 years in return for more austerity; the plan
was approved by the Greek government on August 11th. The Greek PM Alexis Tsipras
resigned unexpectedly on August 20th.
• Follow-up question: Explain why structural reforms will be essential to boosting growth in
the Greek economy
5. B – Alphabet. Google’s move in August is regarded as an attempt to copy the
structure of Warren Buffett’s Berkshire Hathaway, ostensibly to make the company’s
operations more transparent to meet shareholder demands. More detail here:
http://www.theguardian.com/technology/2015/aug/10/google-alphabet-parentcompany.
• Follow-up question: explain what is meant by the principal-agent problem.
6. C – fallen by 18%. This is mostly due to the slowdown in China’s economic growth
rate. Most metal commodity prices have fallen, leading to a significant fall in the
share price of mining companies.
• Follow-up question: What is the likely impact on global inflation rates of the decrease in the
price of metal commodities?
7. D – Saudi Arabia. The 10 year bonds issued were really attractive, offering half a
percent more than the equivalent US Treasury bond – but they were only available
for sale to local banks. The last time that the Saudi Arabian government issued bonds
was in 2007.
• Follow-up question: explain the relationship between the price of bonds and the yield on
bonds
8. C – CPI inflation of 0.1%. The RPI for the same period was 1%.
• Follow-up question: what is the difference between the CPI and the RPI?
9. A – 6724. The FTSE 100, along with other stock market indices around the world, has
been tumbling for most of the summer, as the slowdown in China starts to affect the
rest of the world and investor confidence.
• Follow-up question: find out the names of 5 more major stock market indices from around
the world
10. D – Singapore. The banknotes were sold to commemorate the 50th anniversary of
the founding of the city-state. Notes were being sold on at a profit within minutes of
their official release.
• Follow-up question: explain what is meant by the term ‘fiat money’