1. Which of the following is not a function of money? ______.
' l2 h& A! Q* H' YA. To act as a medium of exchange
! i! w7 s2 X6 R9 J, tB. To act as a unit of account
% N: d$ k# h: {% {* BC. To act as a store of value
4 `9 Z. o( ]6 w; uD. To provide a double coincidence of wants
1 E$ ~) D# t! U7 t+ yE. To act as a means of payment
: Q; Z- {; }& G* ~+ V2. The price in the foreign exchange market is called ______.
/ A7 [/ Y4 A& O7 ]. X2 hA. the trade surplus
+ w8 `) N+ D' P" ~B. the exchange rate
# E% X1 n7 G* F3 N& oC. the money price + F* E7 J& { F
D. the currency rate
! j N/ ]6 N% C9 U$ X3. Market risk refers to the risk of______.9 ?8 |1 [& l: s8 v0 w
A. financial prices fluctuations 2 m, k& W! j( w2 m* S) p; F; V* G, j
B. default9 w2 g* W" g0 W+ }7 f( o! r
C. fraud
2 U, k$ X/ O6 _' h* @1 `D. deferred payments : |3 Q! M, y; e( _; `/ @
4. Which of the following is not among the generally accepted accounting principles? ______.
: `- ?/ v4 E- X' NA. Cash basis
& j0 L' r& x& T$ j, R& \B. Prudence
) v' k) U% H; ~ B3 a" R$ F, I! o ?C. Consistency ) _/ W! M: ]* N9 y% _4 y0 Z0 X
D. Going concern
9 Z' L$ C( J% i" [E. Money measurement.0 n2 s' g$ b$ r
5. What is a documentary letter of credit? ______.9 t, p# L k# z7 S2 x
A. A conditional bank undertaking to pay an exporter on production of stipulated documentation , s7 v- o$ {6 u5 o! }
B. A method of lending against documentary security
6 F; {, |" R: ?% a/ rC. An international trade settlement system biased in favour of importers
& p2 E) O5 {+ Y$ |D. All of the above / c1 q" ~5 A4 |% i9 r% _$ J
6. Holding a group of assets reduces risk as long as the assets ______.( M+ s. e" n9 d2 C ^0 B m9 \
A. are perfectly correlated 0 E( O8 [+ G8 n8 M0 I/ S
B. are completely independent; g# ]$ V& W% b
C. do not have precisely the same pattern of returns
6 T5 c- X/ t3 a- ?D. have a correlation coefficient greater than one 1 k0 Q% H k' j' p) |6 K
7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .$ L- I% y! D7 k$ n8 }
A. liability . z4 M. m+ Z2 X2 o
B. debt
/ l8 [; Z& l0 {% Z8 x, A: uC. equity
* R7 ?$ {6 u* p, eD. asset
( H- s% H, a+ c& V [+ w( H, V8. What function is money serving when you buy a ticket to a movie? ______.
( {# u- H# Z% @7 B: y( Q5 Q$ G* p+ eA. store of value 1 P1 Y& @3 Y/ ~, @+ F
B. a medium of exchange - g4 b* b. w" H
C. transaction demand
" W0 A5 [1 e$ XD. a unit of account
& {' }; p8 m( M6 [& _0 j2 V9. If foreigners expect that the future price of sterling will be lower, the ______.& H- h$ G2 n- U
A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall 2 _2 `6 q; f7 C! ^( X
B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase! N' f3 B3 W- E+ |. s# V/ k: N) Y6 O3 m
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
, o( p( p6 x( [" KD. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall , U1 [4 S: M3 N: s# [
10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.
3 {6 s: ]; H1 c: C3 G9 eA. open account ! y# E9 u p" C( g5 J; S- i
B. bank‘s letter of guarantee
) }, ]$ f7 C2 w( z& D: cC. banker‘s draft ( N6 ~9 X3 |' h2 e" }7 [! \
D. documentary credit |