1. Which of the following is not a function of money? ______.
, s6 j. _* x7 n# cA. To act as a medium of exchange 0 E) ]6 H* r) D0 d# l
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B. To act as a unit of account
0 V& ~5 n' O$ b7 RC. To act as a store of value( p' R) R. a# p8 l9 m
D. To provide a double coincidence of wants , {& q( {5 T5 ?( T* R- e0 M: ~8 k
E. To act as a means of payment
) V* U, |4 M8 P. u6 s- X6 O2. The price in the foreign exchange market is called ______.
' u! `7 B7 N+ W, `1 i7 X+ MA. the trade surplus
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B. the exchange rate
) I n# m! O* d0 f6 q* TC. the money price
1 u. J: W- }- rD. the currency rate , `4 V* O& r: [2 z$ D: K+ y8 r0 R% t
3. Market risk refers to the risk of______.' ?, S. E; b3 _% R2 t3 i# u
A. financial prices fluctuations % e- i- p2 N6 m
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B. default8 I! l6 M% a' j( m7 x
C. fraud
0 t2 | _' J$ }% cD. deferred payments + e/ _8 _9 |7 s
4. Which of the following is not among the generally accepted accounting principles? ______.
# t* {8 A0 C/ F$ S$ F3 r9 W+ n) U! wA. Cash basis
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B. Prudence9 X% a+ B C* F! O- c
C. Consistency 1 u1 K" H2 ]/ F1 U8 Y y
D. Going concern " _. c( T4 Y. v9 A* j/ R
E. Money measurement.
& W7 p. H, H* k" Y* p5. What is a documentary letter of credit? ______.% J% T( `, k0 p" D
A. A conditional bank undertaking to pay an exporter on production of stipulated documentation , b4 s; E$ S: Z2 R/ F' H
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B. A method of lending against documentary security' [" ~7 S l$ @" t) o
C. An international trade settlement system biased in favour of importers1 A0 W- F+ ?6 H6 Q2 P
D. All of the above $ U( J! h( ?0 l
6. Holding a group of assets reduces risk as long as the assets ______.$ u0 }" I% k8 _2 u
A. are perfectly correlated ! G) R; F/ }1 h; l3 ^! Q" i
+ z# c4 G0 S$ K) J; kB. are completely independent" _: j% ] b, C' ~ e: B
C. do not have precisely the same pattern of returns
: E) y' L0 O% i' h8 XD. have a correlation coefficient greater than one + k: u# I+ J. }5 o
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .. H2 T* H4 C" k7 w- r
A. liability , Y. @3 D! q6 v9 Q' z, r* x
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B. debt
0 I, N' F8 U6 f! D/ B; z+ H$ uC. equity
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+ L4 C8 i1 s# kD. asset
1 X- D' M, V8 K) \3 g9 U" m: [8 x$ V8. What function is money serving when you buy a ticket to a movie? ______.( C; _) a6 l8 a. S7 i B
A. store of value 0 A+ x8 j. M3 ^# G( Q* J3 ]5 u& n2 E
]4 Z0 u4 H. @2 ^B. a medium of exchange
9 O$ _3 {) o$ t* T% mC. transaction demand
$ n7 T9 A3 }* I- m9 R! f6 KD. a unit of account 8 p" v8 x/ _* ]& Y4 o
9. If foreigners expect that the future price of sterling will be lower, the ______.. O4 l$ _3 L/ E9 ]0 {
A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall # v- q; q# }' _$ ~. A' p
B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase/ ]( T& @/ b5 ]. ]
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise' O: k& l$ e) e x. `
D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall 2 E4 h5 r% F2 r$ u$ @
10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.
# A3 S; _5 f$ Y2 X2 x+ DA. open account
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B. bank's letter of guarantee% Q: W2 |! t' N! {
C. banker's draft . A1 }9 B! ~: R9 A' H
D. documentary credit
K! i; g: _; U5 I' Q11. Which of the following statements is not true of central banks? ______.! S1 p( r( O! @7 f
A. They pay the government's salaries
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( t- A9 T8 H( p3 gB. They always undertake the regulation of the banking system 9 c1 `) n' q4 o1 U! Z
C. They are always the lender of last resort8 c- W8 J; Q: h* e
D. None of the above + Y- `0 k. c% o: x; Q. Q
12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.7 D1 p- [& |4 P$ I# M* E& b
A. appreciates by 12.70% 8 e/ n9 X7 w% g, K2 B
7 x w" _0 \' F5 A' ~8 n. z! H9 l5 WB. depreciates by 14.55%
3 s+ o, {( Z; O' ^) w7 s9 ~3 u3 N$ MC. depreciates by 12.70%
8 u; o( C P% Q0 WD. appreciates by 14.55%
, |6 f$ M) I, f7 I2 n13. According to diversification principle in investment, suppose you invest Stock X and Stock Y with equal funds, which of the following is not true? ______.1 i; g3 K& G# f# d. t8 ?
A. If X and Y are totally independent with each other, the risk of the portfolio is reduced
Y- h6 |9 q1 R2 Z+ d/ _+ `# O( A
B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset
2 h7 k4 g, X* uC. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased5 K+ E' L# }1 d2 ?8 L: e3 U" [
D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased 0 O4 U- T. O5 p" B
14. These are four main methods of securing payment in international trade:' Q; w+ D& B- e6 Y8 ?
(1) payment under documentary credit6 `+ g, P9 q7 Z a+ Z9 |
(2) open account
" \+ \2 C" R! x" k; H! O3 w(3) collection, that is document against payment or acceptance of a bill of exchange" r8 N- R% p3 O# Z+ Q
(4) payment in advance
4 y# T, W6 ~) Q" v/ l* S& _From an exporter's point of view, the order of preference is ______.
9 X. C- A6 w6 i T8 O; [" s$ RA. (4) , (2) , (3) , (1)
3 H# @! Y& s4 c. H. D6 ?
7 n( Z1 c$ Z" Z" r P0 N kB. (4) , (1) , (3) , (2)
! X7 z* H6 h0 E/ W w% \ ~# {C. (4) , (3) , (1) , (2)
^4 a$ g% l7 qD. (2) , (4) , (1) , (3)
m C3 h! B/ e15. The main liability on a bank balance sheet is ______.* I, V4 C. h8 B
A. deposits & ^% X! {. W3 z0 i6 u* l
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B. capital and reserves
4 s+ ^0 ?- D I- \" [' lC. loans and overdrafts
; s: w. v( N7 y* a3 x: O5 r! JD. cash 8 o, i0 H3 c' U; M% Y/ X2 X+ w$ g9 Q
16. ______ shows that net income for a specified period of time and how it was calculated." D+ V, D5 b# L3 g
A. The income statement ! g: t& _2 t$ Y3 N! ?4 P$ s( I
1 g* n3 m# j# S( Y' P% g7 `B. The capital statement4 G- Y( z( O/ X, }
C. The accounting statement
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4 B6 I e4 M6 c8 d9 S4 XD. The statement of financial condition |