21. the following statements describing net income are all correct except that ______.
a. net income is computed in the income statement, appears in the statement of owner's equity, and increases owner's equity in the balance sheet
b. net income is equal to revenues minus expenses
c. net income is computed in the income statement, appears in the statement of owner's equity, and increases the amount of cash shown in the balance sheet
d. net income can be determined using the account balances appearing in an adjusted trial balance
22. a strong dollar encourages ______.
a. travel to the united states by foreigners
b. purchase of american goods by foreigners
c. americans to travel abroad
d. americans to save dollars
23. in what circumstances would the beneficiary of a confirmed documentary credit not receive payment? ______.
a. failure of the applicant
b. failure of the issuing bank
c. failure to fulfil the credit terms
d. failure to fulfil the commercial contract
24. the balance in the owner's capital account of abc co. ltd. at the beginning of the year was $65 000. during the year, the company earned revenue of $430 000 and incurred expenses of $360 000, the owner withdrew $50 000 in assets, and the balance of the cash account increased by $10 000. at year-end, the company's net income and the year-end balance in the owner's capital account were, respectively .
a. $20 000 and $95 000
b. $70 000 and $95 000 c. $70 000 and $85 000
d. $60 000 and $75 000
25. assume the inflation rate is expected to be 5 percent and the unemployment rate is 8 percent. if workers wish to get a 2 percent real wage increase, they should bargain for a money wage increase of______.
a. 3 percent
b. 5 percent
c. 7 percent
d. 13 percent
26. which statement about portfolio diversification is correct? .
a. proper diversification can reduce or eliminate systematic risk b. as more securities are added to a portfolio, total risk typically would be expected to fall at a decreasing rate
c. the risk-reducing benefits of diversification do not occur meaningfully until at least 30 individual securities are included in the portfolio
d. diversification reduces the portfolio's expected return because it reduces a portfolio's total risk
27. your customer is the applicant for a documentary credit. which of the following points would appear to be illogical if they appeared on the application form? ______.
a. invoice price shown as fob, bills of lading to be marked freight paid
b. last date for shipment one week before expiry date
c. invoice price shown as c&f, but no insurance document requested
d. no mention of the latest date of shipment
28. portfolio theory as described by markowitz is most concerned with ______.
a. the effect of diversification on portfolio risk
b. b. the elimination of systematic risk
c. active portfolio management to enhance return
d. the identification of unsystematic risk
29. commercial bank deposits with the central bank are part of the bank's ______.
a. net worth
b. demand deposits c. loan portfolio
d. reserves
30. foreign trade can be conducted on the following terms except for ______.
a. open account
b. documentary collection
c. documentary credits
d. public bonds
31。risk for a security held in a diversified portfolio is ______.
a. specific risk
b. standard deviation of returns
c. reinvestment risk
d. covariance
32. the security market line depicts ______.
a. a security's expected return as a function of its systematic risk
b. the market portfolio as the optimal portfolio of risky securities
c. the relationship between a security's return and the return on an index
d. the complete portfolio as a combination of the market portfolio and the risk-free asset 33. the key factor limiting how much a commercial bank has immediately available to lend is the amount of its ______.
a. demand deposits
b. excess reserves
c. vault cash
d. savings deposits
34. a description of the current international monetary system is as follows: .
a. a free-floating system b. all currencies are pegged ( fixed in price ) to another currency or to a basket (group) of currencies
c. some currencies are pegged and some float, but few remain fixed at the same rate for very long
d. all currencies float within an agreed upon range of one another
35. in a standard spot exchange transaction, a thursday deal is settled on _____ if the day is a business day of banks.
a. friday
b. saturday c. the following monday
d. the following tuesday
36. open market operations are ______.
a. the tool used most often by the central bank
b. seldom used by the central bank
c. used more than the discount rate but not nearly as often as changes in reserve requirements by the central bank
d. used by the central bank only during inflationary periods
37. given us interest rates at 2.00% and japanese interest rates at 1.00% for the same period, where would the interest rate parity theory expect the usd/jpy exchange rate most likely to trend toward given a current spot exchange rate of 134.00 ? .
a. 135.00
b. 134.00 c. 132.00
d. it cannot be determined
38. on october 1, 2000, abc co. ltd. loaned xyz store $300 000, receiving in exchange a nine-month, 12% note receivable. abc ends its fiscal year on december 31, and makes adjusting entries to accrue interest earned on all notes receivable. the interest earned on the note receivable from xyz during 2001 will amount to ______.
a. $9000
b. $18000 c. $27000
d. $36000
39. in terms of daily volume, ______ is the largest traded financial market in the world. a. the stock market
b. the mutual fund market
c. the bond market
d. the foreign exchange market
40. which of the following practices contributes to efficient cash management? ______.
a. never borrow money—maintain a cash balance sufficient to make all necessary payments
b. record all cash receipts and cash payments at the end of the month when reconciling the bank statements
c. prepare monthly forecasts of planned cash receipts, payments, and anticipated cash balances up to a year in advance
d. pay each bill as soon as the invoice arrives