1. Which of the following is not a function of money? ______.$ l+ d/ b3 w3 \- [& }" {0 {$ l
A. To act as a medium of exchange# T0 l7 z& f& ?* |& h5 ^; U+ F7 V+ R
B. To act as a unit of account
; p1 K$ {6 b( F- K3 z C. To act as a store of value
3 Q$ o& K) f/ D( J: N* f3 {. x3 R D. To provide a double coincidence of wants
1 i6 |+ |) S! P3 ~8 k! G6 n E. To act as a means of payment& e# U; B! j& v/ J; b7 r- V( s' W
2. The price in the foreign exchange market is called ______.
9 Z9 ]3 r5 S6 A2 E8 n A. the trade surplus
" Q& J3 S5 |0 P- } B. the exchange rate1 r) a) O8 j" T9 F* J! z
C. the money price
, ]% U! f$ X$ E5 r5 e" t D. the currency rate
2 n& y! u0 k" V- k3 T 3. Market risk refers to the risk of______.& A3 E) U. R4 Q/ }+ m8 P
A. financial prices fluctuations
4 o- Z# z7 d2 H5 } B. default
/ \! k% n9 J8 Z: J4 n C. fraud9 h1 Z0 K7 n0 r6 Y- n2 }
D. deferred payments' D) X0 S/ K& j( k- t6 O7 l* L
4. Which of the following is not among the generally accepted accounting principles? ______.. d4 T$ j# t- D
A. Cash basis; P" E4 u8 q- L; R
B. Prudence4 p" ~: k, x+ E4 U
C. Consistency
) {+ S9 i) F/ V D. Going concern
' {. A. l- Y+ ]/ R0 O+ D7 D E. Money measurement.
( z$ t* \+ {6 ~, i4 H5 Y R 5. What is a documentary letter of credit? ______.
, g! G. P0 d1 q, x A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
6 J, R9 O* M7 }1 ~. e B. A method of lending against documentary security x* H1 ^2 p' |) {( h- o n. l% w
C. An international trade settlement system biased in favour of importers
1 W! Y2 e. v0 m D. All of the above& m1 G! e+ ?9 u8 Q; Q6 _& Z
6. Holding a group of assets reduces risk as long as the assets ______.
- V5 c* f6 v8 W+ n) U A. are perfectly correlated! D" Q/ L* t1 D" M- O3 Z; A% d4 k
B. are completely independent
2 L# h' H7 ?* {7 c3 U( D C. do not have precisely the same pattern of returns# E% ~ N' J2 G) i ^
D. have a correlation coefficient greater than one# `3 Y3 U b( I/ D
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .
5 R; K* n4 n+ R! p$ K7 v* b A. liability
" S. B* ?- W/ B0 T( o5 B3 P7 f B. debt0 M2 f4 w* U# q8 `0 ~* |
C. equity8 N+ J9 h1 f, a* N ~$ B R
D. asset* v* F1 a+ j& f; m; Q* c
8. What function is money serving when you buy a ticket to a movie? ______.* \4 H8 h8 B4 g* s7 ?2 }; g
A. store of value
# J. @. p+ ~9 z9 V B. a medium of exchange& t+ Q4 V+ C$ M' N
C. transaction demand1 i' L8 f5 e( g- G" X9 m
D. a unit of account
9 L' T S) G7 S7 B3 L8 C, @ 9. If foreigners expect that the future price of sterling will be lower, the ______.
# Y l6 F- k1 E. Q( z A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall; ?/ m* ]. I& S" z' E. v1 s& _
B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase
( I% @" { D( l; h' B C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
& f0 H0 f2 \+ ]% }1 u D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall- D% r5 Z+ n/ s5 J" M; S" J8 \+ `3 m
10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.1 R8 o! a7 ^4 d) K
A. open account
, I1 l, W3 ]1 d0 | B. bank's letter of guarantee/ c# [" w. T2 W; v9 j# i9 C, z
C. banker's draft
, h% g! i6 m! |* p5 f1 \0 z D. documentary credit
! |. U/ J5 W8 b( v 11. Which of the following statements is not true of central banks? ______.
/ D! C) e: }6 u, \8 U A. They pay the government's salaries
# v. |$ R4 @$ V3 X" V; H B. They always undertake the regulation of the banking system K8 w3 i! R k, E7 N
C. They are always the lender of last resort
8 i, X5 v; Z0 N. ^ D. None of the above
2 r- N8 h: s# H7 _) ~ 12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.
0 _, K. g' F7 C u& P6 a A. appreciates by 12.70%7 B. Y) v$ N# B# o y: }
B. depreciates by 14.55%% j9 P# @+ \! G% [/ y
C. depreciates by 12.70%) A: n7 [% F5 X8 k
D. appreciates by 14.55%. {3 f$ D- B/ |1 \" J1 y8 g
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? ______.9 V: ]% Y, d9 g, M i$ N
A. If X and Y are totally independent with each other, the risk of the portfolio is reduced
8 u* F+ D) R' Q4 Z3 S B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset
8 z4 \& a4 @. v- A# e( C7 V C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased
2 C! S& r' B: ~( M) D D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased7 H! W8 v6 T# Y: V; W
14. These are four main methods of securing payment in international trade:7 m1 N/ ]8 Q2 L) c7 t" s
(1) payment under documentary credit% J8 H$ y/ z6 V# C; |
(2) open account( y( n& b+ q* D4 w7 B& F* G4 D
(3) collection, that is document against payment or acceptance of a bill of exchange3 E0 [ z) Z' m7 {# V7 a7 w/ U
(4) payment in advance
; f7 |1 t; ]8 ~9 q9 ?6 r0 O0 F# @ From an exporter's point of view, the order of preference is ______.5 P" m7 A: Z+ E9 { O/ C
A. (4) , (2) , (3) , (1)4 r9 {" J+ k& R0 y5 o
B. (4) , (1) , (3) , (2)+ @; Y4 w0 J! m& L, w
C. (4) , (3) , (1) , (2)+ C' a. R- A# i p- C8 q& f
D. (2) , (4) , (1) , (3)) r/ W" p* V6 Z8 l
15. The main liability on a bank balance sheet is ______. E. N/ \; Q7 {4 K; V
A. deposits
. F# c' X! P8 E, o: W: d6 M B. capital and reserves
U. w& n5 i2 g6 g% j" H8 d6 }* K L+ H: m C. loans and overdrafts
2 e3 a: g0 ?( C9 ^' m) { D. cash; ]8 @9 e' M' V6 F
16. ______ shows that net income for a specified period of time and how it was calculated.
" t$ j, w6 e' {' l. a A. The income statement |