1. Which of the following is not a function of money? ______. A. To act as a medium of exchange0 u" V9 |6 z* z8 E# z! A
B. To act as a unit of account9 g' t2 E& r4 Q: E& T: _9 s
C. To act as a store of value
$ ` J9 S5 M/ K: X* a D. To provide a double coincidence of wants
/ q* |- ^" ?; r9 \1 c4 d5 x E. To act as a means of payment3 k6 f t: g" o* g; o
2. The price in the foreign exchange market is called ______.
6 T$ G$ ?4 H% {/ Y* f% I7 m A. the trade surplus. a7 X8 W4 d2 W
B. the exchange rate
. ^$ d) p" s: o- P" ?# i6 \$ r% b# k) H C. the money price( L9 X: L' ?9 V8 v* ?7 _! D" S6 D4 Z
D. the currency rate! O) C3 ]' J# x! H" @* q, B
3. Market risk refers to the risk of______./ Z t( W: z8 l7 M! q& u
A. financial prices fluctuations
# G2 J/ ]% {! W6 Y. l5 B3 Y5 I4 ] B. default, @* s! u4 K( N- m% m1 w2 Q
C. fraud
1 _$ l- N; w& H; v. c D. deferred payments
9 w4 y" k" M8 t* @# ~/ v0 p2 u 4. Which of the following is not among the generally accepted accounting principles? ______.
! e- D! K/ y9 r8 G9 v, B A. Cash basis
5 z- X" P; ~5 M/ F1 B' N2 ]* V$ Q B. Prudence
$ m- W& U- U& r, l6 u0 b C. Consistency
2 i e0 o0 k+ p+ b" y' L; S D. Going concern$ n5 k8 y) Q5 e* T/ |
E. Money measurement.! f9 Q* {" ?" j: i3 p7 l# B
5. What is a documentary letter of credit? ______.
/ t6 w4 a; @ `6 m A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
. \; S' ~9 Q( w; T0 i& T0 l B. A method of lending against documentary security
2 b8 r' d9 V2 d" {: r' `; l C. An international trade settlement system biased in favour of importers" P4 [) s7 \# S$ e# R. P5 ]
D. All of the above
: c: R% t6 m& o' E 6. Holding a group of assets reduces risk as long as the assets ______.
) l* J" q' r2 w$ n% Y A. are perfectly correlated* t1 c' D* y' Y
B. are completely independent
) h; y8 X& O- k$ }" s C. do not have precisely the same pattern of returns3 q) B: U$ y |: E
D. have a correlation coefficient greater than one
* c9 H7 }; Y+ G" G* H3 J1 s 7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .
1 D/ n* F! F* M5 |( J, z A. liability! c0 B% [+ X7 {5 c
B. debt6 l4 H; |7 L- O0 i) {0 [6 w
C. equity
7 U# `3 W0 J& r) ]/ i' j D. asset
; U) m$ g# O# o* g) o# X u; |- I 8. What function is money serving when you buy a ticket to a movie? ______.
1 L2 q' i' w% D5 E% F- j A. store of value' d0 j- F6 q% C+ v# t* i
B. a medium of exchange
/ _! @* g5 s6 Y# G) _7 K C. transaction demand, f/ \$ {" t) M% w
D. a unit of account& ?+ j% v: V% s8 o7 G( l
9. If foreigners expect that the future price of sterling will be lower, the ______.
: L& M8 h, V$ _6 c+ i/ ~ A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall
2 N; ?% {& m1 N5 j( K, Z B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase1 R2 \; q& W4 d( n# M0 S9 k7 n
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise% A" y7 u- p; l: T$ H9 T
D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
. g6 H j/ K: D+ @. R! C 10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.. s `7 L7 ^2 q9 l
A. open account
( ^+ l+ }- ^) M$ F) P9 B B. bank’s letter of guarantee6 q! ]; Q: z+ w, z9 `
C. banker’s draft
$ K, x* |. ~5 L8 c, U' U& Z D. documentary credit
" N- b; U5 \" I- H0 d+ P* M 11. Which of the following statements is not true of central banks? ______.
. E" Q; f; D# B% i; S A. They pay the government’s salaries' m" z5 h R# m4 i9 K
B. They always undertake the regulation of the banking system
8 X+ t+ J' j/ n; y8 N% S C. They are always the lender of last resort& `, u& T. S. {6 [0 w
D. None of the above- J; p& _& j7 B( `# j, T Z
12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.
w/ s* u4 O; m$ K% y) U( l; Z A. appreciates by 12.70%2 e7 U( Y7 M3 u- g
B. depreciates by 14.55%$ c9 m5 r1 G" V; H+ b
C. depreciates by 12.70%0 _4 `! D& o# H. z
D. appreciates by 14.55%
1 Z( B& V& r2 q 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? ______.
: q( F! [2 |5 ^' } _ A. If X and Y are totally independent with each other, the risk of the portfolio is reduced
+ j" B: i! Q7 q3 z1 u( u9 U# \8 A B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset
& T; I& |$ k6 N# ^6 O+ h C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased9 c$ L- {" b. l5 e$ X" ?' s
D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased
/ y/ B# s+ @' j% A 14. These are four main methods of securing payment in international trade:
$ z9 l: \8 t7 A6 c' O3 a A payment under documentary credit1 q# W( k; h: s" t
open account
; _4 `7 k. G# X) w3 y collection, that is document against payment or acceptance of a bill of exchange
8 y( k7 p2 S, T6 r+ O% I4 M, z9 z payment in advance
* N, g& e" d, Y9 f, G# R, F From an exporter’s point of view, the order of preference is ______.
. v+ n% ^$ ^$ ~' F4 S A.,,,
, h5 n3 \& ^& [. ? B.,,,' R$ B+ }, ?: u- A
C.,,,- T$ s [1 C e$ ?6 N6 C) I4 D8 A; b
D.,,,, p, l6 C) C4 G4 ]! \
15. The main liability on a bank balance sheet is ______.
1 B3 j3 Z2 k" n4 j2 Z4 M* ^ A. deposits9 `0 r& x) p! M+ e: F) N% Y
B. capital and reserves
3 [4 j! I' o$ _9 ~. x* t8 | C. loans and overdrafts
$ F4 n0 h3 a. \5 I D. cash% f# c. q' |9 Z
16. ______ shows that net income for a specified period of time and how it was calculated.
% Q& x1 ]0 B* {+ |/ S A. The income statement
9 {% {1 T7 @. x) i B. The capital statement
, J0 l) s( C- O6 C8 Y8 _- {. C( f6 _7 f C. The accounting statement1 l8 u% J" m9 U6 s/ B0 @0 a1 X$ ^% i
D. The statement of financial condition |