. Which of the following is not a function of money? ______.
" w. _! K6 l$ O9 d; O2 H8 V( J9 dA. To act as a medium of exchange
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; `; r8 k" ], X" |# K2 J1 p% iB. To act as a unit of account
, U0 `4 l" U3 N5 }7 o. NC. To act as a store of value - ]+ ]$ t( b2 ~( L
D. To provide a double coincidence of wants
+ O3 W; K' N3 Y( ]8 I5 c$ {$ ^E. To act as a means of payment 0 R3 m# o. r3 m+ N
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2. The price in the foreign exchange market is called ______.
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A. the trade surplus
' D" Q3 f4 ]7 ^B. the exchange rate 7 r% ]" t$ Y0 u9 |2 ]: a$ r
C. the money price - L& i7 ^0 X$ P7 c; ^
D. the currency rate * F1 H$ f0 X, b
3. Market risk refers to the risk of______.
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% g% p- E/ m3 _# w" n$ H5 H: DA. financial prices fluctuations
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B. default ) A$ Q# @% a$ q, s) x
C. fraud 0 B- r3 M8 E2 ~3 I
D. deferred payments ) A, F( R4 j. U
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4. Which of the following is not among the generally accepted accounting principles? ______. # b/ j+ J6 f, |! z
2 }! S, u a& E" N: D w4 uA. Cash basis . D1 H e4 E2 Y- W p
B. Prudence
" A* C3 Z& W& K! ?7 V; s0 cC. Consistency
# t1 H# l& |2 S, c( E1 _2 t. nD. Going concern
. f& y0 b3 p+ Q1 \8 {! S! ~E. Money measurement.
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; t+ g) u! o# }" [* G: m5. What is a documentary letter of credit? ______.
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A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
( t5 e/ `" R) [* e4 J7 h5 K( pB. A method of lending against documentary security 2 b; d% B- [) E$ k; Q( a
1 F3 {4 j- M0 {0 G3 XC. An international trade settlement system biased in favour of importers 8 t0 ~/ s8 W3 n0 a$ R% `/ o" n
F- M' R5 P# V7 c* K4 T( G
D. All of the above 8 T; j8 Z3 [7 I& C, _% t* O
6. Holding a group of assets reduces risk as long as the assets ______. ( R; e' H/ S _( w
A. are perfectly correlated 9 o) N1 c0 n* m, p- `0 \
B. are completely independent ' R4 h% N* r7 O& ?& Q* g
C. do not have precisely the same pattern of returns
- C% n0 j& J/ }. f2 `D. have a correlation coefficient greater than one 5 [) Z3 e# I! v2 e b5 B& H
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an . 1 B0 a! G4 X2 u! C
A. liability
7 u2 |/ C$ R; \B. debt
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C. equity
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D. asset
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8. What function is money serving when you buy a ticket to a movie? ______. ' W- H* V0 _7 |8 T; f6 g
A. store of value 6 w8 ~: r6 c. S# Y" y$ V) \
! H" P$ L! l- E( e8 @B. a medium of exchange
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C. transaction demand
3 j# [* L/ O/ \D. a unit of account
, [; |7 Y0 N6 C+ g) w1 o2 X9. If foreigners expect that the future price of sterling will be lower, the ______.
4 P" c5 b, v- `. NA. supply of sterling will increase, demand for sterling will fall, and the 2 \" d9 D3 {* ^. ~ j3 @
exchange rate will fall
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B. supply of sterling will increase, demand for sterling will rise, and the
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! B# y# r7 E" \. n8 ?3 c ]( Jexchange rate may or may not increase ) O3 r0 ~3 ?4 w8 U, |
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
* x( \, ]+ v! Y% _, @D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
, {. k i1 U8 C10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.
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) X' F$ H) o; b- SA. open account & I0 f' p; e; O( s1 A- k
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B. bank‘s letter of guarantee
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C. banker‘s draft
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5 y; K8 z- f, s' l3 m- v$ GD. documentary credit 2 F! L5 @, Z" R: x1 X
11. Which of the following statements is not true of central banks? ______. & ~" A. i. h2 d3 h& G: Q$ F1 K" E
A. They pay the government‘s salaries & Z. S+ Y, O) L
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B. They always undertake the regulation of the banking system ; d, \. Z' J1 V& v6 d5 F
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3 s8 ^ B/ F6 o. pC. They are always the lender of last resort 0 A0 e9 m9 N c" j) b# M+ J
% g; V+ M0 k9 b8 V* nD. None of the above 9 x9 e: B8 h+ ?# O" `& r4 X# z
12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______. 4 d8 ]6 h# p9 G( ~- s9 W i
A. appreciates by 12.70%
% r3 y$ E# Z: h! Q+ fB. depreciates by 14.55%
# e/ f3 r" e9 j6 [C. depreciates by 12.70%
5 i+ \# j: k6 c+ D- `) r+ t) cD. appreciates by 14.55% % I) W+ j. Q- _1 B
13. According to diversification principle in investment, suppose you invest Stock X and Stock Y with equal funds, which of the following is not true? ______
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3 [# Q+ M+ @9 ~+ W' ^4 TA. If X and Y are totally independent with each other, the risk of the portfolio is reduced 0 K% ]6 @) K# r" I& l
B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset
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( e0 z8 D8 q0 r5 w" J* |0 OC. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased - y8 c; }1 x+ D M2 \
+ X& A# Q1 r" C, H$ N4 `* G0 d, mD. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased " h$ S! `; Q& ]' \+ b
14. These are four main methods of securing payment in international trade:
% s3 S. x5 f8 X" Epayment under documentary credit ( z3 A+ B/ e1 K& ]! f! }
open account
5 ^" j$ m" S% N2 K# y0 g( Dcollection, that is document against payment or acceptance of a bill of exchange 6 T2 _; r' F" y( U
payment in advance . L3 g& y- f' q3 S1 B/ d9 c! G. \
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From an exporter‘s point of view, the order of preference is ______. , q2 o' D" _& H- S, W
7 v6 f2 @9 \% U5 i
/ M; t" b' r- \- M# wA. , , ,
! y1 U4 t3 j4 `0 ?9 [" I2 v* S" ]6 i& x% n/ A" [
B. , , , - Q0 _4 k: i: T& ^
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C. , , , ; i' Y' b& i, o$ }
: t$ i |( _' ^1 X( ?& }
J0 i k; F$ i0 L+ U. _& C1 zD. , , ,
! c) r' D3 T) A" Z* @9 Q6 _8 h4 {/ p D, C! {- O
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: r3 U l5 C. _! z4 o15. The main liability on a bank balance sheet is ______. : N& `2 o' z. T/ {* t" U7 h. y
A. deposits
2 g! \& }9 }0 r0 ?9 m8 `B. capital and reserves
& x7 T. E$ D, u7 AC. loans and overdrafts
$ \" E( Z; T: f" W& O7 h- e1 VD. cash ( h7 l9 G) {( j# z) J5 @
16. ______ shows that net income for a specified period of time and how it was calculated. 1 m: A5 M6 \6 s: D8 S
A. The income statement ( k6 E+ \; i2 f: }
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B. The capital statement |