1. When a country runs a foreign trade deficit under a flexible foreign exchange rate system, its .
) F/ l4 i. q3 HA. imports automatically increase
@9 k1 T$ o, T+ {1 C3 r. uB. currency automatically depreciates ; ^: F( l$ S9 ]3 o! T
C. exports automatically decline: M& S! C. ^8 G; ~, i
D. currency automatically appreciates
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2. Which of the following statements is not true of accounting? ______.8 [" D" T1 a( S4 A
A. Accounting is language of business9 _6 B* R6 {2 G7 I. B$ }7 Q
B. The user of accounting includes business, government, nonprofit organizations and individuals.2 R% v+ b" ?6 k q- b3 |
C. Accounting is useful for decision making
" h, h. X. n& ]! A$ U! O" b! y2 oD. Accounting is an end rather than a means to an end ) l) L% o0 S: Q9 l- D
6 n; L7 B: h7 }' L4 X$ C3 K# Z3. The term foreign exchange is best defined by the following statement: it is ______.
( O2 K o0 j2 R8 IA. the rate of exchange between two currencies
/ }0 x1 ~9 ^. H% o% ZB. synonymous with currency exchange
! f5 J+ g9 N) z% n2 h% vC. the place in which foreign currencies are exchanged/ \2 ~6 Z/ ]/ k# a. z1 M
D. an instrument such as paper currency, note, and check used to make payments between countries$ C& y/ c3 k/ ]8 E7 \9 t
3 }# U' v$ ]8 n P( m K9 t4. What is Asset Allocation? ______.
+ ?2 l" |) L6 Q. I; t0 Z- x: w3 ?A. Buying assets of different types, risks, and potential returns
9 O. v+ p: B; f5 q+ s$ VB. Buying assets with more than one brokerage account
& {8 i: M0 ]) |5 A; BC. The ability to buy mutual funds0 f' p% @6 @$ I O2 h6 _! [
D. Buying stocks for the long term
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4 ^# e( D& f& Z5. External users of financial accounting information include all of the following except .# `. s" I4 }; E9 C
A. suppliers 9 C6 q, ?$ B3 `' h! z. L+ e4 V9 A
B. line managers
+ S8 c" w( @: _8 M/ m$ H0 ^C. general public , M1 }* ^8 h$ k+ K/ u$ d4 x3 F
D. creditors
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7 n. p0 }7 K% ~6. CAPM is short for .$ t9 y# q) H8 W" g$ q
A. Capital Asset Pricing Model
1 i% ^5 i+ V: O6 i6 A# ~, sB. Cash Added Price Matrix4 \! c& I2 k5 q8 |8 I6 k3 j7 [
C. Capital Asset Pricing Matrix ( a' H1 G; n8 Q4 k
D. Cost and Price Model
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7. Liquidity measures the ______.
. ?2 n( |) E4 \& P( f. q0 x( h K$ b3 gA. value of an asset4 ~' h; O4 K% P
B. ease with which an asset can be exchanged 7 b0 v5 Y. F( n i: f
C. usefulness of an asset% A+ o" X0 N; g8 M3 M$ d4 d
D. economic and monetary reliability of an asset compared with other assets: s/ u) b1 T* ?* c
; C# l6 l$ F( [* G0 Y$ f8. In a letter of credit transaction, the bank pays the seller against ______ which agree(s) with______.
! S: X2 e% F' {6 N, i5 LA. documents... the credit
5 d) t* [& u3 A) j. U4 DB. merchandise... the contract; G/ _) e# p, E3 @2 `: Q6 s, y
C. documents... the contract
1 S" M/ P, E( r% ~: ?& X, \D. merchandise...the buyer ordered
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) V! E M6 o: A M1 d9. A barter economy is one that does not possess _______.
7 Q p; ^2 k- |; S5 n; D0 RA. any wealth P. L4 o- w$ ]# Y' e
B. printed currency4 y% x: r( Y6 N( |
C. a medium of exchange
4 F* U* Y2 Y4 p) T1 A! k7 d0 l; iD. gold
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10. Which of the following is not true of airway bill? ______.
/ p; B2 B( c8 l# c) k7 wA. When goods are delivered to the airline, the airway bill is signed by them or their agents as a receipt of the goods
% K$ n( B7 W- h/ I9 @6 C& j8 H1 pB. Airway bill is a document of title to the goods
. h& X W# i7 t5 jC. Airway bill may also provide evidence of despatch of the goods where it has been stamped indicating details of the relevant flight
$ L( K8 e8 _" N; M1 |" j) BD. None of the above 11. The value of money varies _____.! ]8 B% Q* Z7 ^$ l
A. directly with the unemployment rate o' F+ w1 x: H Z& V5 N
B. directly with the price level
- u$ U3 I9 g- o0 F0 tC. inversely with the unemployment X& _) M$ ]) H% g1 D$ y6 k
D. inversely with the price level) Q# ]$ S/ I; x, A q' q
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12. The economics news on the television reports that the dollar has strengthened relative to the Japanese yen. This means that ______.8 k, y* }! K( ~
A. the dollar has depreciated relative to the yen
& `% A8 y" w. z1 g( C+ J( }B. the dollar can now purchase more yen
4 x. l. D- M3 h9 z9 g( K$ C) KC. the yen can now purchase more dollars
, p1 W0 G: B; h3 m$ P9 S3 b, rD. the US trade balance with the Japanese economy has improved
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( d* ?& R! g- [+ k9 c+ r( `13. The theory of international exchange that holds that exchange rates are set so that the price of similar goods in different countries is the same is the ______.
b" T, {5 |, w9 R. f3 i |A. price feedback theory ) ?) C7 D0 d+ t9 t) I
B. trade feedback theory
) |* {5 ]/ ^+ B- u3 f/ M" d: FC. purchasing power parity theory & f8 N& A1 K7 w9 {; }2 u8 h
D. J-curve theory
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! }0 t% D! m: q' k4 K) L1 n, f8 B14. According to the optimal portfolio theory, where should portfolios lie? ______.
* A) n% N1 p% n1 ZA. On the efficient frontier
' ]' x+ Z2 W- f* I, v- S! J0 zB. Above the efficient frontier
; `8 I( E) u' J4 e, _0 t% h }. c) CC. Under the efficient frontier
. T) ^2 o4 R A G$ q* w% t. JD. Anywhere, as long as the portfolio is diversified3 b' `$ z/ }' t
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15. Which of the following is not a user of management accounting information? ______./ j0 \: [4 W* A( Q8 Z O# l1 b+ O
A. Store manager : u+ |8 _! c: \+ r
B. Creditor , W+ I( E. V- E1 b% b2 F1 P6 u
C. CEO
$ U; m5 V4 b5 O: \7 jD. CFO
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16. Based on the scenarios below, what is the expected return for a portfolio with the following return profile? ______.
2 ~- N# W/ U$ g# RMarket Condition2 [/ }; }. Z0 I7 d8 }# D8 h
bear Normal Bull
; C6 Z$ P9 m2 ZProbability 02 0.3 05
0 ~4 n ^$ z0 F$ m! l' fRate of return —25% 10% 24%4 J' t+ } l9 p0 r8 e' o
A. 4% % M {) p8 V" h! q5 `- X# N9 i
B. 10%6 X0 w: \- y9 G2 u6 V/ H7 V/ u
C. 20% - D: X! a$ x) s p* Q, o! G* G
D. 25%% i C, D2 \: m9 R N R
' @6 o3 B0 H) h# ?Use the following expectations on Stocks X and Y to answer questions 17 through 19 (round to the nearest percent).( K, i, U( p4 g$ H# k- D: J7 v
Bear Market Normal Market Bull Market! k! B2 T: k1 m) I/ J1 e
Probability 0.2 0.5 0.3
8 k7 J( B' ^8 v4 PStock X_ -20% 18% 50%" B' c% j! B. T/ d6 Y2 c2 o
Stock Y -15% 20% 10%
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6 {( V( v1 o2 i0 D8 g1 J17. Financial markets serve to channel funds from ______. |