a. to act as a medium of exchange
b. to act as a unit of account
c. to act as a store of value
d. to provide a double coincidence of wants
e. to act as a means of payment
2. the price in the foreign exchange market is called ______.
a. the trade surplus
b. the exchange rate
c. the money price
d. the currency rate
3. market risk refers to the risk of______.
a. financial prices fluctuations
b. default
c. fraud
d. deferred payments
4. which of the following is not among the generally accepted accounting principles? ______.
a. cash basis
b. prudence
c. consistency
d. going concern
e. money measurement.
5. what is a documentary letter of credit? ______.
a. a conditional bank undertaking to pay an exporter on production of stipulated documentation
b. a method of lending against documentary security
c. an international trade settlement system biased in favour of importers
d. all of the above
6. holding a group of assets reduces risk as long as the assets ______.
a. are perfectly correlated
b. are completely independent
c. do not have precisely the same pattern of returns
d. have a correlation coefficient greater than one
7. an amount, payable in money goods, or service, owed by a business to a creditor, is known as a/an .
a. liability
b. debt
c. equity
d. asset
8. what function is money serving when you buy a ticket to a movie? ______.
a. store of value
b. a medium of exchange
c. transaction demand
d. a unit of account
9. if foreigners expect that the future price of sterling will be lower, the ______.
a. supply of sterling will increase, demand for sterling will fall, and the
exchange rate will fall
b. supply of sterling will increase, demand for sterling will rise, and the
exchange rate may or may not increase
c. supply of sterling will fall, demand for sterling will increase, and the exchange rate will rise
d. supply of sterling will fall, demand for sterling will fall, and the exchange rate may or may not fall
10. the documentary collection provides the seller with a greater degree of protection than shipping on ______.
a. open account
b. bank's letter of guarantee
c. banker's draft
d. documentary credit
11. which of the following statements is not true of central banks? ______.
a. they pay the government's salaries
b. they always undertake the regulation of the banking system
c. they are always the lender of last resort
d. none of the above
12. when gbp/usd rate goes from 1.6150 to 1.8500, we say the dollar ______.
a. appreciates by 12.70%
b. depreciates by 14.55%
c. depreciates by 12.70%
d. appreciates by 14.55%
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? ______.
a. if x and y are totally independent with each other, the risk of the portfolio is reduced
b. if x and y are perfectly negatively correlated, the risk of the portfolio is perfectly offset
c. if x and y are perfectly positively correlated, the risk of the portfolio is neither reduced nor increased
d. if x and y are perfectly negatively correlated, the risk of the portfolio is neither reduced nor increased
14. these are four main methods of securing payment in international trade:
(1) payment under documentary credit
(2) open account
(3) collection, that is document against payment or acceptance of a bill of exchange
(4) payment in advance
from an exporter's point of view, the order of preference is ______.
a. (4) , (2) , (3) , (1)
b. (4) , (1) , (3) , (2)
c. (4) , (3) , (1) , (2)
d. (2) , (4) , (1) , (3)
15. the main liability on a bank balance sheet is ______.
a. deposits
b. capital and reserves
c. loans and overdrafts
d. cash
16. ______ shows that net income for a specified period of time and how it was calculated.
a. the income statement
b. the capital statement
c. the accounting statement
d. the statement of financial condition
17. why must the liabilities and assets of a bank be actively managed? ______.
a. because assets and liabilities are not evenly matched on the same time scale
b. because assets and liabilities are evenly matched
c. because the interbank market uses libor
d. because assets and liabilities can be underwritten
18. if the expected returns of two risky assets have a perfect negative correlation, then risk .
a. is increased
b. falls to zero
c. is unaffected
d. is reduced by one-half
19. a possible disadvantage of freely fluctuating exchange rates with no official intervention is that .
a. some nations would experience continual deficits
b. the exchange rates may experience wide and frequent fluctuations
c. nations would no longer be able to undertake domestic policies designed to achieve and maintain full employment
d. nations would need a larger supply of international reserves than otherwise
20. what are your gbp/usd position and the average rate if you sell ￡4m at 1.6350 buy ￡5m at 1.6340 and sell $5m at 1.6348?
a. short ￡2 058 478.10 long $3 370 000 at 1.6371
b. long ￡5 941 521.90 short $9710 000 at 1.6342
c. short ￡5 941 521.90 long $9 710 000 at 1.6342
d. long ￡4 058 478.10 short $6 630 000 at 1.6336
21. a correlation coefficient of +1.0 means two stocks are ______.
a. perfectly negatively correlated
b. opposite the market beta
c. equal to the market beta
d. perfectly positively correlated
22. the percentage analysis of increases and decreases in corresponding items in comparative financial statements is called ______.
a. external analysis
b. horizontal analysis
c. vertical analysis
d. comparative analysis
23. what is the name of the document which can make a buyer feel confident that goods are of a certain standard? ______.
a. inspection certificate
b. commercial invoice
c. insurance policy
d. certificate of origin
24. sometimes financial intermediaries by "borrowing short and lending long" find themselves in difficult financial situations because .
a. short-term rates are falling
b. long-term rates are rising
c. deposits increase too rapidly
d. short-term rates rise relative to rates of their holdings
e. long-term rates rise more sharply than short-term rates
25. incoterms were written ______.
a. by the international chamber of commerce
b. under the united nations convention for the international sale of goods (vienna convention )
c. under the kyoto protocols as adopted in 2000
d. under "fast track" authority granted by the u.s. congress
26. the purpose of keeping account is to .
a. determine whether the business has made a profit or a loss
b. find out why the business has lost money
c. see how much has been spent
d. find out why the business cannot fulfil its commitments
27. if reserves are 20 percent, then the multiplier effect will be ______ times, so the original deposit of rmb40 000 can create up to ______ of new deposits.
a. 5……rmb200000
b. 4……rmb120000
c. 3……rmb80000
d. 6……rmb20000
28. abc company is the beneficiary of a confirmed irrevocable letter of credit. ______ bank ( s ) will assure the company that it will be paid.
a. one
b. none
c. three
d. two
29. legal tender includes .
a. notes and coins
b. notes only
c. coins only
d. notes, coins and checks
30. the following are the basic functions of a bill of lading except to act as ______.
a. a receipt for the goods from the shipping company to the exporter
b. a document of title for goods being shipped overseas
c. a certificate of origin, which certifies that the goods were produced in a particular country
d. evidence of the carriage contract between the exporter and the carrier
31. persistent foreign trade deficits under a flexible exchange rate system usually lead to ______.
a. inflation in the domestic economy
b. speculation of future devaluation
c. falling interest rates
d. rising imports
32. the additional amount paid in buying or selling a currency at a given future date is called .
a. premium
b. commission
c.tariff
d. dividend
33. banks manage their assets considering ______.
a. risk
b. some optimum combination of the above
c. earnings
d. liquidity
34. what is the function of the book-keeping system in bank accounting? ______.
a. to prove that all the day's transactions have gone through for the right amount
b. to prove that all the day's transactions have all been posted to the right account
c. to prove that the fresh balance of those accounts is correct after recording the transactions
d. all of the above
35. the risk that is specific to individual stocks is called ______.
a. systematic risk
b. country risk
c. unsystematic risk
d. market risk
36. the main objective of the exchange equalization account is to ______.
a. prevent undue fluctuation in the exchange value of one country's own currency against other currencies
b. control the rate of inflation
c. ensure that notes and coins continue to be acceptable as a medium of exchange
d. permit the exchange of payments between banks
37. how can you prove that no transactions are missing or wrong at the end of the day? ______.
a. there is no other way than have these transactions reposted to the proper entries
b. we can examine all the transactions carefully and find the wrong records
c. we can balance the total debits and the total credits by calculating them again
d. we can do that by checking the total debits and the total credits to see whether they are in state of balance
38. money _____.
a. serves as the critical function of a medium of exchange
b. facilitates trade in goods and services
c. overcomes the inefficiencies of barter
d. all of the above
39. if dealers buy currency forward but do not sell forward at the same time, their position is known as .
a. short
b. forerunner
c. speculation
d. long