1. Which of the following is not a function of money? ______.& i( n" P- G5 R3 C4 G _
A. To act as a medium of exchange
P. f2 E6 q3 B2 x! G+ NB. To act as a unit of account N0 [8 ?3 [' L
C. To act as a store of value: m& G M3 n* M
D. To provide a double coincidence of wants 8 X; `7 }* v2 k( k
E. To act as a means of payment
2 d9 V7 l, v% z: X2. The price in the foreign exchange market is called ______.
: K' U3 R- t% @+ G( kA. the trade surplus; l: O* g! i* Z8 c0 b0 [' t
B. the exchange rate
3 W" ]) E* K+ ^1 ^" y. `' ]2 GC. the money price & ]& ~; U9 p1 @) E! U
D. the currency rate
4 D3 \6 |/ V9 c6 s/ s3. Market risk refers to the risk of______.- v) I! a5 e2 r6 y1 o1 [2 r
A. financial prices fluctuations + {6 J9 Z) ^- }* x2 ~, e% r# C
B. default O: C9 J4 s+ S R5 b, H
C. fraud
# S+ }# x3 ~2 z' ]D. deferred payments ) M# A) W- M3 E* j+ \
4. Which of the following is not among the generally accepted accounting principles? ______.
4 O8 R8 O1 u8 t" L3 j% ~8 u$ t7 zA. Cash basis 3 l9 v4 U, o6 G! i. X
B. Prudence- N1 v- O, X( a" ]
C. Consistency 3 I1 J0 J+ W" u, C" z
D. Going concern 5 T" [7 |+ p. z' G4 `
E. Money measurement.3 k/ V n2 S1 f% \' J2 T1 B: O
5. What is a documentary letter of credit? ______.3 j7 B" [+ ?! R8 f' E# y9 k9 V
A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
" O: |9 ]# H; Q( g% JB. A method of lending against documentary security
" K }0 E" X; Q; R$ V( V+ OC. An international trade settlement system biased in favour of importers- e' g# A u# h' k; r
D. All of the above 3 |* F" c6 A8 D3 z9 w, V# R
6. Holding a group of assets reduces risk as long as the assets ______.. C! O4 ?4 @' g4 `% u5 L( a2 A
A. are perfectly correlated
8 z, P+ F- u3 B5 dB. are completely independent* j) S7 E8 @+ N
C. do not have precisely the same pattern of returns
$ D& ]7 O! E1 T9 [7 U# \: }D. have a correlation coefficient greater than one
: W }, \5 o/ U& M4 \- Q& e* a7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .2 G T' D% s7 b/ z; l1 ^) R3 d
A. liability
5 Z+ _/ r0 n, H* N7 z; Z& _B. debt
3 q2 X. Q% V/ {+ c' {3 X ?C. equity
1 e3 G" u. y9 }9 X, t: zD. asset1 c: O" ~% T0 Y* Z3 U
8. What function is money serving when you buy a ticket to a movie? ______.: e7 r2 x7 j" [# n/ ]: y4 A
A. store of value - O9 |' Y3 u- o0 A5 v
B. a medium of exchange 7 C7 y. c# E; i. }( r3 s" X0 M2 f
C. transaction demand $ j3 u# w/ C' d" n% w6 s# J5 e
D. a unit of account Z1 ]7 K) D' Z" A5 r
9. If foreigners expect that the future price of sterling will be lower, the ______.2 y/ ` f( y/ f7 j+ ?8 r5 a. M( b
A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall
4 d8 h& o! I4 g( n% M& {B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase9 A6 q ?; e8 |% U( p) v
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
$ E, I: J' N- T9 e7 s5 [5 k/ v5 I) Y! [3 AD. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
/ C( E, N, |2 q# U4 ~. u10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.
; X" H/ h' s5 M+ O6 A& _A. open account
5 K" Y) |0 D( l2 r' W( z bB. bank‘s letter of guarantee, V# k; p4 K- D8 v
C. banker‘s draft
8 |' F: ^1 |/ T" J% J UD. documentary credit |