1. Which of the following is not a function of money? ______. A. To act as a medium of exchange
+ N0 x) B; Y5 W3 a9 ` d& j B. To act as a unit of account# I3 @8 k* u8 s& R( Y Y
C. To act as a store of value
# \9 K7 @6 d D D. To provide a double coincidence of wants& i: A {2 S8 \8 X9 u5 E/ B! g
E. To act as a means of payment
: C: d9 O* |3 Z; q5 z* H( g2 | 2. The price in the foreign exchange market is called ______.+ j/ g% V# z8 O( f
A. the trade surplus8 E3 U% E" }& B; a
B. the exchange rate& J" q3 i- e& D
C. the money price) z, u# u3 D9 c, r2 N; ]
D. the currency rate4 b5 R# n/ s; d% P5 K! ]
3. Market risk refers to the risk of______.
) W# s7 ~. G+ l( M A. financial prices fluctuations
) D! F" C$ S! H) H; [: c! a1 V B. default
( Q% f3 n$ o4 ~8 X C. fraud d9 O1 q5 e5 a/ q w% O
D. deferred payments4 e, N7 G- J" q5 n2 G" P
4. Which of the following is not among the generally accepted accounting principles? ______.! c K9 G9 W" h! M" }* t4 z
A. Cash basis
5 p0 Q& U C( W$ @) L/ \$ w7 X B. Prudence
8 T/ W0 [6 m j9 x+ F C. Consistency- T( r; q( Z. ^$ J
D. Going concern, T1 ^! D/ \% b1 B
E. Money measurement.
2 W* w0 d: K u/ i7 o 5. What is a documentary letter of credit? ______.
/ R. v& U. _9 V' @# [' I; [+ e3 ~# C A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
( a1 E$ E2 N- W7 q7 H ~! _% L B. A method of lending against documentary security2 r" }, B- h3 K% G
C. An international trade settlement system biased in favour of importers$ ^; C' u# P) P
D. All of the above
\3 r; h" a1 r. W# } 6. Holding a group of assets reduces risk as long as the assets ______., A# Q& P2 q/ Z# E. f- G
A. are perfectly correlated# J# U7 E, o5 A
B. are completely independent- g- _ v3 p; S3 D4 q( V) \# w9 E
C. do not have precisely the same pattern of returns
- l5 w+ \5 ?! E& e" x7 @' J D. have a correlation coefficient greater than one
! d" f& U% T d& c5 d% T; y 7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an ./ q1 n- F; _& g. Q- ]6 |
A. liability
( d+ K E) c8 A1 N, r+ @ B. debt1 Q4 E6 y Q( n! P- c
C. equity
0 z8 {9 M) w8 f; _( u- b! ~/ c6 ` D. asset% J5 s2 Z9 C; Y. K) Q% S8 }3 \/ u
8. What function is money serving when you buy a ticket to a movie? ______.
6 x0 l' z8 u. t6 [ W: N9 Q% e A. store of value: H3 }# A1 u! B& k3 e; ~ b1 S
B. a medium of exchange
a' I: j( u5 X& D3 I C. transaction demand
+ J8 a9 L. _7 {/ e D. a unit of account
- S* t( u! u/ Q% | 9. If foreigners expect that the future price of sterling will be lower, the ______.
! ^% }. U$ G; {3 q: ?% o A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall
6 d. G* Z" ]5 k2 k B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase( A- P: `9 }9 U
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise {, l' B; C- V
D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
' [; A: H( o/ ]8 p, U+ }" ~6 ` 10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.) ?+ q6 t9 h7 Z J, P$ i, B
A. open account
1 d% \4 [6 L1 Y( I& y. f1 v B. bank’s letter of guarantee
& h. ]6 a, F% {' g' M6 c C. banker’s draft
5 V$ y: H4 f2 y" T* D$ q- T+ T$ [, I D. documentary credit
2 j9 L! b, M7 U; b4 L, P$ V 11. Which of the following statements is not true of central banks? ______.
/ K6 m2 p) {: Y0 C) I; `6 p6 ]; N A. They pay the government’s salaries
* L$ i% A* Q( y8 C5 ] B. They always undertake the regulation of the banking system" c( z4 {% H( S: D. m; v# H$ j! j
C. They are always the lender of last resort) ?* q( p7 ~2 p6 o
D. None of the above
' B0 E% G6 H; D% [ 12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.+ q2 X ~1 A3 w6 a9 S k
A. appreciates by 12.70%5 i3 d* R4 ` `# Z9 }: ^
B. depreciates by 14.55%
. k7 q4 W1 ~- \$ j C. depreciates by 12.70%
5 v( ~- e0 i! K% u/ n9 N" e' h. G D. appreciates by 14.55%
' X3 Q5 R0 }; ]$ R8 @6 e8 b 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? ______.
% y! \( l( E" d0 i# z7 H3 j; Y A. If X and Y are totally independent with each other, the risk of the portfolio is reduced
r& `: e7 C' _6 n! @2 \ B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset% I( i' z3 U7 c6 g) X2 `' N2 M$ o; V) l
C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased. `. M# j# L) S8 c# `% ~* m
D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased9 w- y( W' W% |: `
14. These are four main methods of securing payment in international trade:
. G' ]. w: L( \7 d payment under documentary credit0 ?/ Y9 F" ~8 S9 h, a/ R3 K# c
open account; u+ j! {' p5 W) m2 }% Y, _
collection, that is document against payment or acceptance of a bill of exchange0 {+ r! N5 ^0 [( r0 K, R
payment in advance
3 P; G. `3 O7 e8 b From an exporter’s point of view, the order of preference is ______.
! j4 s& C& \: k' M/ ~ A.,,,. i! s) t6 M9 u0 g9 Z+ S
B.,,,, v- J+ h8 A1 ?- v8 |- I; B
C.,,,
: X$ _. u0 l4 }; { D.,,,2 O% X4 q2 d2 i1 d2 Y9 w
15. The main liability on a bank balance sheet is ______.
, Z5 K- M, g) k: B: r A. deposits
4 ~8 o X% \! a0 P1 @6 ^& g" V/ B B. capital and reserves, O0 O8 G8 h0 Q4 u, v# S
C. loans and overdrafts
' O! e% C' m4 w% x+ ^3 l D. cash
2 I) _4 A6 h- y3 x) S) f 16. ______ shows that net income for a specified period of time and how it was calculated.
! k$ Z8 ~8 N* q; C7 U6 K. z5 t" x A. The income statement
& R) M+ j7 B( B, T B. The capital statement/ p- q4 D; q7 A% o. y' T) x
C. The accounting statement6 m% J% N Y6 A1 L% D' [! e8 W
D. The statement of financial condition |