1. Which of the following is not a function of money? ______.9 H# o( m5 y0 R2 c
A. To act as a medium of exchange
" ?8 ]( X% r5 H }& c2 r8 G B. To act as a unit of account4 Y/ B, L! A* f0 N |
C. To act as a store of value: y) r8 a. Y1 L! H; _; e
D. To provide a double coincidence of wants0 y* m M, G9 Z* V1 p! K5 F
E. To act as a means of payment- N" e- P# p" I. O
2. The price in the foreign exchange market is called ______.0 ]8 c0 Z1 A0 Z2 y# R g9 w
A. the trade surplus8 ]& X; N$ |6 T2 z
B. the exchange rate
$ C* \" J$ ?3 Y2 a% X3 f C. the money price
U2 K q- m3 p* C% r" G; D D. the currency rate
5 u$ k; ^$ ~) x2 {, Q8 G 3. Market risk refers to the risk of______., e1 E# |$ D" W3 n% O0 i
A. financial prices fluctuations3 }, P& s' O2 \* m4 d
B. default
3 Y+ m' G+ m5 z; S+ ?9 j; m C. fraud
$ u! D/ p# T6 ]6 z/ u$ ? Z& { D. deferred payments% [" v3 l" {+ M) e, h
4. Which of the following is not among the generally accepted accounting principles? ______.
1 O2 D Y2 \! L A. Cash basis
* j! U& f7 P* q: K/ ] } B. Prudence* v4 l% ?; E9 v) L
C. Consistency2 O5 D( W- q/ k1 _# i6 m
D. Going concern! s0 D8 E: E6 k" s& b2 r
E. Money measurement.
9 |8 s+ d; C6 Q1 i9 ? 5. What is a documentary letter of credit? ______.! q4 A% u7 L# n$ \/ ~
A. A conditional bank undertaking to pay an exporter on production of stipulated documentation
: }% c% \/ g1 F; P4 ` B. A method of lending against documentary security
, b; M4 [' X8 f8 z% p8 P7 n7 W3 N- S C. An international trade settlement system biased in favour of importers R: }" [" J$ }2 Z+ U; g
D. All of the above
5 I8 c: u; I" M 6. Holding a group of assets reduces risk as long as the assets ______.) ?" u6 {5 Q8 h
A. are perfectly correlated" w% Z3 p- W3 n7 c
B. are completely independent
d0 D5 T6 w/ e* L: M5 o6 X C. do not have precisely the same pattern of returns! b% h8 `' ^* a
D. have a correlation coefficient greater than one
5 y8 [. k* Q! A! Y) O, Q 7. An amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .
* l6 ]8 ^7 a3 K9 _ A/ W A. liability
v+ j6 j9 h' h# a l- d. H/ t1 B B. debt d/ ?4 P- H& b+ i
C. equity
/ g- o# M' R! y2 d& g4 a. g* ? D. asset" N9 o/ X" W2 C1 _7 h# g
8. What function is money serving when you buy a ticket to a movie? ______.7 c" H2 F1 x! ~1 m1 V
A. store of value$ u$ c" F' Q- n
B. a medium of exchange
$ |) T. t) p) O: d C. transaction demand$ d) A! o M5 K+ [
D. a unit of account
, t: K, ]4 J/ Z8 E3 E 9. If foreigners expect that the future price of sterling will be lower, the ______.6 {) Q t" Z6 n( v# `$ D/ L
A. supply of sterling will increase, demand for sterling will fall, and the exchange rate will fall
& X9 h; A$ D! c! Q5 g+ _! c8 y B. supply of sterling will increase, demand for sterling will rise, and the exchange rate may or may not increase- h* o m! d8 N( w
C. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise" n8 Q% {; d) K. S! N
D. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall1 L. r1 X/ L2 \" J
10. The documentary collection provides the seller with a greater degree of protection than shipping on ______.3 X2 }' W6 M- h
A. open account
- |' n/ H+ E% o3 _3 p B. bank's letter of guarantee! ^* i- _9 m! R
C. banker's draft
4 J# K( D8 q- [( u7 x2 E8 y D. documentary credit
4 @7 {% y, f! b& b9 `* h6 J( s 11. Which of the following statements is not true of central banks? ______. _9 p+ V. Q; I. X) ]& I
A. They pay the government's salaries
, x8 U4 a; v) e% w* L( v B. They always undertake the regulation of the banking system
6 P, @9 ?, P: F& t ^ C. They are always the lender of last resort
5 t" E2 h6 ~( n' a; {; C D. None of the above
/ ~0 F1 a0 J+ y& A% V% ^ 12. When GBP/USD rate goes from 1.6150 to 1.8500, we say the dollar ______.7 {3 B) A+ ^. Q( ^3 k5 c
A. appreciates by 12.70%- j1 w0 y* y0 e2 K, {. I& w1 d6 W
B. depreciates by 14.55%
+ |4 _. ]$ i) ^, l& \4 `7 G! h5 Z C. depreciates by 12.70%8 @! [3 K8 h/ F& ?0 S0 P6 Y
D. appreciates by 14.55%7 d1 a7 O& u" \' L% c
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? ______.! V8 M+ e' e' a0 {7 P* N
A. If X and Y are totally independent with each other, the risk of the portfolio is reduced
' K# y+ J9 H. Y, L* ~. ^( _8 g! E B. If X and Y are perfectly negatively correlated, the risk of the portfolio is perfectly offset, R, [: W) _( d6 o
C. If X and Y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased
" [/ u7 t k! p D. If X and Y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased6 \3 r( h% q# c3 q
14. These are four main methods of securing payment in international trade:" j' q$ G# R; r5 H, i! Y4 s1 E6 n+ T( t7 ?
(1) payment under documentary credit
Z* G; L1 X3 y) d4 N& x, } (2) open account
2 H' y1 d3 v$ v; {, v W( J (3) collection, that is document against payment or acceptance of a bill of exchange( a. D) J9 @/ G% [
(4) payment in advance; u: E; t: d$ _1 C1 v' |6 N! W
From an exporter's point of view, the order of preference is ______. `) G! p E5 }8 N, I/ l8 Z
A. (4) , (2) , (3) , (1)
8 o9 V& l I& t ` u% _: ? B. (4) , (1) , (3) , (2)
9 I" x* B5 j0 t' Q, J C. (4) , (3) , (1) , (2): ^2 b. |$ n5 R
D. (2) , (4) , (1) , (3)! i- o& @- @3 a& _2 b
15. The main liability on a bank balance sheet is ______.
: y& d7 k2 |, D! w6 M x A. deposits
+ g3 X/ U! a8 E B. capital and reserves4 o! v3 v" g# U# |! M
C. loans and overdrafts
& B% f' }% J; ] D. cash
/ L4 M/ q3 ^( e: @% O0 H$ u 16. ______ shows that net income for a specified period of time and how it was calculated.1 ~$ m& K/ Q, m0 H* S0 t
A. The income statement |