1. Which of the following is not a function of money? ______. A. To act as a medium of exchange
7 q; W) g+ y4 J/ }$ C B. To act as a unit of account
& p$ W" x, t1 R% l/ h C. To act as a store of value
4 _3 S4 G, X- b" y# X D. To provide a double coincidence of wants% e: Z/ v2 [# A2 j+ X2 N
E. To act as a means of payment
% [5 L. U' Y% y, [ 2. The price in the foreign exchange market is called ______.7 R$ B& u* R; z
A. the trade surplus
2 h* ~- I/ Q Q" d B. the exchange rate
- z( P( C: ?& l T6 r C. the money price
# ]( L% D4 q' t: z! V m+ R D. the currency rate
9 p$ n( }# R1 K) q 3. Market risk refers to the risk of______.
( H6 D+ {! _, ?0 \; e: M! [ A. financial prices fluctuations
! v- V3 q6 I+ D0 \! H B. default
& F' e8 @2 J( ^# i' y C. fraud
) ~5 P" }6 X. U5 U; r D. deferred payments, u# r6 j' m; @( B' b$ L! [4 E+ f$ {
4. Which of the following is not among the generally accepted accounting principles? ______.
) u/ ]0 o7 N0 Q; k- d# a" O* }6 r A. Cash basis
! M2 V3 |9 B7 N2 d B. Prudence6 V f# ?7 }+ \
C. Consistency
8 @5 b: ^$ l. Z% j* M6 \4 n8 O D. Going concern
6 s" g0 ]8 y% }3 Y. z- [" t4 T& p: _ E. Money measurement." X# Y( A; C$ ?! x1 v$ I* j2 b
5. What is a documentary letter of credit? ______.
1 s$ `- s$ e+ a8 X1 i+ P- C A. A conditional bank undertaking to pay an exporter on production of stipulated documentation: y7 @* i8 R5 Q/ v
B. A method of lending against documentary security0 @4 J+ ` u) X6 u
C. An international trade settlement system biased in favour of importers6 \! b X6 c7 n: n3 {) j/ M: Z
D. All of the above, i! W, `9 I7 T: S" i, c& v
6. Holding a group of assets reduces risk as long as the assets ______.
8 \* ]+ K$ W" \: K! m' }: ~, D A. are perfectly correlated+ I4 S) O) E8 R, H' ?* o
B. are completely independent
. V0 \, L: h' h C. do not have precisely the same pattern of returns8 J- v! h- X: {/ ~. K; j4 }0 [
D. have a correlation coefficient greater than one8 R- ], d) q% s
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .
5 s+ r, w2 x5 |+ E0 F A. liability
; h- P M' h: ]6 T) U B. debt6 [$ Z& k) m% G, f& g! j; ^4 ]
C. equity- F+ p- P2 u* h2 y7 E
D. asset8 `7 t2 H/ P1 o
8. What function is money serving when you buy a ticket to a movie? ______.
: ~1 D0 Z4 P2 ~! V0 p A. store of value9 g( }. K/ N1 [' e i- {
B. a medium of exchange7 m5 g9 w8 e4 }7 K }
C. transaction demand
- I0 x& K) M+ G7 J1 O8 M D. a unit of account- i1 L5 ^9 `) [5 i
9. If foreigners expect that the future price of sterling will be lower, the ______.
; R7 e; j( x) w A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall1 @ |! e2 X( }5 u( b2 k0 ^
B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase0 y- p- ?2 }& R
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
6 n4 d: f r7 P3 \ D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
$ w9 U' }* ]0 y, M+ m% } 10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.- c( l* U+ ~& U; ]) W5 ]
A. open account0 u" d% c% @' W
B. bank‘s letter of guarantee
, A+ H! b2 {& }( ^( @6 { C. banker‘s draft
x, A4 r1 |/ z D. documentary credit
5 ~8 ~& P7 o1 F 11. Which of the following statements is not true of central banks? ______.2 I+ z/ n- C( R
A. They pay the government‘s salaries
" @0 d; S' ]9 O B. They always undertake the regulation of the banking system
- ?3 G8 h# n% X& I C. They are always the lender of last resort" I8 X; Q! T" Y0 C- [
D. None of the above
3 I7 Q x! `1 B1 s. } 12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.! s! Y3 T" L# q; T
A. appreciates by 12.70%
# `& R _. V \4 p/ O B. depreciates by 14.55%
1 s4 E1 [- W" h& U/ P8 D( j" U% n C. depreciates by 12.70%2 l+ U$ {5 Q$ c; u6 s
D. appreciates by 14.55%
6 J1 k2 X& h0 g% t8 M9 E# m7 ? 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? ______.
- ] `: v1 m; K A. If X and Y are totally independent with each other, the risk of the portfolio is reduced. [: s& S9 k) ~" X0 R4 E1 }
B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset8 t& m B9 |1 h
C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased t+ l5 c, o( M! ~8 ]' k/ O" k
D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased
( J [: V) J+ e! I6 Z0 v 14. These are four main methods of securing payment in international trade:" P$ Y7 A2 L& s0 k: u# [
payment under documentary credit! V, }' ]$ `7 ~. p
open account
0 c- y+ i7 C8 o0 b- r! @* n. q collection, that is document against payment or acceptance of a bill of exchange
6 a4 y m! S4 c# p. Q payment in advance
; g+ A+ e; k2 X0 r! j5 Y From an exporter‘s point of view, the order of preference is ______.' b" u& H" X) ]$ K% @5 t& z. M
A. , , ,
2 M1 u+ X8 p0 e B. , , ,
}9 [. D- x" o! ?( X& g C. , , ,
2 e7 X+ o5 J: P) J J7 ` D. , , ,
; Z) ^2 J0 ~3 Q. n8 D 15. The main liability on a bank balance sheet is ______.
& ]) r) D. u7 _% R; q! G! I7 ` A. deposits$ Z2 `0 n7 A' b- f$ ^
B. capital and reserves
: t! X9 e+ I3 K M0 n C. loans and overdrafts
4 W2 f/ ^7 l. Y% b. Z6 Q' ` D. cash% }/ E' p+ Z! ^1 Y
16. ______ shows that net income for a specified period of time and how it was calculated.
$ |& u$ g1 ?+ J8 ]* ? A. The income statement
+ {- y7 B" E; i+ B B. The capital statement) Q$ e) }- {, X
C. The accounting statement |