1. Which of the following is not a function of money? ______.
& P- A, @; v1 }: a A. To act as a medium of exchange6 E5 C- I: ]" A0 w
B. To act as a unit of account
7 h @/ V! U1 ]6 o- n, f C. To act as a store of value' G8 R, a: N0 C. r
D. To provide a double coincidence of wants, D( U1 c- ? z' t
E. To act as a means of payment6 }" r0 u7 y- l8 f( J1 o; s
2. The price in the foreign exchange market is called ______.
. n3 K% q6 E9 y7 j A. the trade surplus
# V2 t& x, k" f! r. @2 t B. the exchange rate
5 s' t+ s) |- c' I1 K- ~7 b. Z C. the money price
/ Y6 S. ~4 }" { D. the currency rate
1 G+ B3 f) {& @) S# w+ R( k* m 3. Market risk refers to the risk of______./ ?6 y( q% ?% F+ }( u9 o* a3 P) f
A. financial prices fluctuations
- j% `* o3 o( Q6 l/ B B. default
$ x) }/ O3 f* e: n- O C. fraud a: p) V7 G! y/ J' [ C7 j
D. deferred payments( L6 w) m0 \# f5 j
4. Which of the following is not among the generally accepted accounting principles? ______.
6 |4 ?/ L0 d ]0 U& Q( s A. Cash basis
% C1 R9 C% i/ h. Q1 i: s B. Prudence ^5 h9 d |+ g0 ?7 G0 e
C. Consistency
) s; r8 O, r! x D. Going concern7 K: R0 S1 Y3 M; l5 N
E. Money measurement.9 Q7 S" l; X! D5 H. S2 ~
5. What is a documentary letter of credit? ______.) O$ v! ~& l) f( X4 |
A. A conditional bank undertaking to pay an exporter on production of stipulated documentation; ^7 N6 Q) J9 }; ?. u1 m6 m$ h
B. A method of lending against documentary security
- z1 z8 x' k8 l7 g) m& c C. An international trade settlement system biased in favour of importers
( A. A( s7 T# H7 y, V D. All of the above
' }' q/ F9 ?; f" f8 b Y' L, z ?2 r 6. Holding a group of assets reduces risk as long as the assets ______.
: |: c( H# U7 w4 } A. are perfectly correlated# R/ w# L. x$ q% Y" @- i
B. are completely independent/ _1 M8 v) z) f6 n% R, }
C. do not have precisely the same pattern of returns
0 x9 _4 G; c5 S D. have a correlation coefficient greater than one3 T! a6 H! P4 i" N
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .4 ], ^4 W% w! F6 l
A. liability
/ X% S" b. {! ^2 x. X, t B. debt
# W9 S" z% ?2 A C. equity
' U$ `$ g1 v5 O D. asset
6 V8 ]& g" O4 Z7 Q8 ^ 8. What function is money serving when you buy a ticket to a movie? ______.3 y( o ]$ x$ A. P" |' z
A. store of value
! o; G" Q( D! _% M B. a medium of exchange" l* ^# |2 e( x1 k; X! G- u' }
C. transaction demand
+ I. c: W+ }: a v7 g9 C5 J4 x$ B D. a unit of account d9 U2 }3 Q( S) A& T5 ~$ X0 X
9. If foreigners expect that the future price of sterling will be lower, the ______.; W3 u$ F" v0 z. G( }0 T j7 c
A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall' ~7 {+ ^/ P& @$ Q
B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase
& I4 a- k+ D% o7 s+ j# v C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
8 Q7 t, e- p# X/ B5 S; ` c/ G D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall |