1. Usually the low interest rate currency trades at a ______ to the high interest rate currency in the forward market., h% S$ y1 C5 @
A. premium. X" X/ f7 ~. {
B. par) {) l F# Q% F* p t
C. discount) |9 O: Y' r( w+ v3 ^
D. bar; R; G/ ]1 u. b4 V& X" {
2. Which of the following statements about standby letters of credit is true______.
- w5 e, K# X1 U$ o$ o% ` A. They can serve as a guarantee to a buyer against a seller defaulting: g! p* m* O- L; b
B. They are contrary to the general rule that letters of credit may only be used for the actual movement of goods
; E4 d: Q `, j, Z$ a8 R1 N4 R C. They are unlike a tender (or other) bond in their legal standing and method of operation. }5 F, K7 K. |! a3 ]- s) B+ I1 Q
D. They are unlike a tender bond with its fixed expiry date1 U0 F5 b0 z8 t$ ~8 ]2 n$ Q j
3. The most liquid of all assets is ______.
2 v- H e& }6 I7 y% n+ a% A A. the stock of commercial banks5 W6 y( d7 ?% p: L* ~
B. M 1
3 @0 k1 L: S7 Z7 ^# }, Q C. intelligence
$ D& U1 e, t. J/ V5 b D. the debt of major corporations* [7 p4 l! j, `) c( F
4. Beta and standard deviation differ as risk measures in that beta measures ______.& I W5 x j. |- ]- ^% r
A. only unsystematic risk, while standard deviation measures total risk; [; f) v! E# V* \( B* m
B. only systematic risk, while standard deviation measures total risk! [8 Z7 W+ A6 t% W8 O
C. both systematic and unsystematic risk, while standard deviation measures only unsystematic risk4 a4 |3 Z7 C% J& A
D. both systematic and unsystematic risk, while standard deviation measures only systematic risk
/ E$ S0 z7 @! f; S 5. What information would you find in a statement of cash flows that you would not be able to get from the other two primary financial statements______.
3 D. q1 W( ^0 @2 d( T A. Cash provided by or used in financing activities" h; U. |5 d% Q; P6 S
B. Cash balance at the end of the period
) x2 {$ C, L' l0 B. ~ t( _ C. Total liabilities due to creditors at the end of the period
! h6 C8 ^4 T0 R Y/ `( X, j9 n' m D. Net income
4 k' o) g0 e7 K- U 6. An analyst estimates that a stock has the following probabilities of return depending on the state of the economy:
) C! t, }$ r* H D4 T2 }! l State of economy Probability Return
8 G4 a4 a+ ~6 H5 V6 Z Good 0.1 15%# Q' A9 N8 K5 e
Normal 0.6 13%
- u8 J) O0 r/ R/ M6 P6 i% _7 M Poor 0.3 7%4 R1 Q: Y6 K0 ?7 T6 I
The expected return of the stock is ______.4 n8 n- X$ k1 F5 L+ {1 n; V
A. 7.8% C. 11.7%
& _5 ]7 r% A2 E* K* l. O4 D D. 13.0%8 W. }5 S# @: i+ M' |9 @5 | M$ K
B. 11.4%
! [$ r7 k: s. N 7. According to the rules of debit and credit for balance sheet accounts ______.
: R- v4 q* @( U( H% ~ A. increases in asset, liability, and owner's equity accounts are recorded by debits2 B* a; K; e3 K, l1 I
B. decreases in asset and liability accounts are recorded by credits
7 S! h9 Y" l: `4 R+ p C. increases in asset and owner's equity accounts are recorded by debits( `0 ~4 w2 c- W
D. decreases in liability and owner's equity accounts are recorded by debits 265
0 H7 P. U4 y' m' @- o& l 8. Individuals will accept the medium of exchange in return for goods and services only if they are confident that ______.
6 C8 [& D( b7 u2 ^2 z A. the inflation rate is zero
: s! w' z% X* Y0 Q2 m9 y B. it possesses intrinsic value' p6 H2 p$ l R3 D: O$ u* F: ^
C. they can pass it on to others/ a$ `5 L, } r
D. they can exchange it for gold7 G& x P; ?9 g7 c
9. When a country's currency appreciates, the country's goods abroad become ______ and foreign goods in that country become ______.6 t5 T& D+ v# [& v0 }3 b
A. cheaper... more expensive5 x, \* Z. W" j' r( b1 ^
B. more expensive... cheaper% @: u" M3 W: z! U V
C. cheaper...cheaper
/ {4 t9 _5 B! U6 m0 c; E/ [3 M' P D. more expensive... more expensive# m+ X4 V7 K7 C
10. A US company is bidding for a contract in China. Its Chinese customer asks for a performance bond. What is the most likely course of action______.
7 I. f5 [+ G; X; L A. It asks its bank to issue a tender bond which can be converted into a performance bond
; T5 ^: G: R, G! U9 y% `9 Z B. It gives up its bid C. It consults its bank about issuing a standby letter of credit
& Y& ^) M& L0 i/ d4 q: X D. It asks its bank to issue a performance bond |