41. The danger to the exporter in open account trading is that by surrending the shipping documents to the importer, he ______ control of the goods before he has obtained payment for them.
A. is in
B. loses
C. retains
D. gives up
42. The primary purpose of showing special types of events separately in the income statement is to .
A. increase earnings per share
B. minimize the income taxes paid on the results of ongoing operations
C. prevent unusual losses from recurring
D. assist users of the income statement in evaluating the profitability of normal, ongoing operations
43. If commercial banks have ample excess reserves, a lower discount rate will _______.
A. encourage them to borrow more
B. encourage them to raise interest rates on loans
C. have little impact on bank behavior
D. increase bank reserves
44. A bill of lading is a receipt for goods. When is a bill of lading issued? ______.
A. When the shipper makes up the order
B. When the carrier receives the goods
C. When the carrier delivers the goods to the consignee
D. When the manufacturer produces the goods
45. ABC Co. Ltd. sold marketable securities costing $80 000 for $92 000 cash. In the company's income statement and statement of cash flows, respectively, this will appear as ______.
A. a $12 000 gain and a $92 000 cash receipt
B. a $92 000 gain and a $80 000 cash receipt
C. a $12 000 gain and a $80 000 cash receipt
D. a $92 000 sale and a $92 000 cash receipt
46. Which of the following central bank actions would be appropriate to combat rapid inflation? .
A. A reduction in the discount rate
B. A reduction in reserve requirements
C. A cut in taxes
D. A sale of government securities
47. In a currency pair, the first currency is referred to as ______ and the second as ______.
A. the base currency…the counter currency
B. the quote currency…the base currency
C. the base currency…the exchange currency
D. the trade currency…the base currency
48. What is the expected return of a zero-beta security? ______.
A. Market rate of return
B. Zero-rate of return
C. Risk-free rate of return
D. Negative rate of return
49. Capital asset pricing theory asserts that portfolio returns are best explained by ______.
A. economic factors
B. systematic risk
C. specific risk
D. diversification
50. The______ informs the beneficiary that another bank has issued a credit in his favor without adding its own engagement.
A. advising bank
B. confirming bank
C. drawee bank
D. issuing bank
51. The foreign exchange market is organized as ______.
A. a physical market
B. a capital market
C. a speculative market
D. over-the-counter market
52. If the central bank purchases government securities directly from a commercial bank, bank excess reserves will immediately ______.
A. fall by a multiple of the purchase
B. fall by an amount equal to the purchase
C. rise by a multiple of the purchase
D. rise by an amount equal to the purchase
53. The______ is obligated to pay the beneficiary of an irrevocable unconfirmed letter of credit.
A. account party
B. advising bank
C. confirming bank
D. issuing bank
54. Which of the following is not true? ______.
A. The British Pound is the base currency against all other global currencies
B. In the AUD/USD currency pair, the base and quote currencies are respectively AUD and USD
C. When an investor buys 20 000 EUR/USD, he is said to be buying EUR20 000 and selling the equivalent amount of USD
D. None of the above
55. What is a collection? ______.
A. A form of debt enforcement
B. A method of guaranteeing that exporters get paid
C. An international trade payment method
D. None of the above
56. When a currency pair goes from a low price to a higher price, the quote currency is said to .
A. have strengthened
B. have weakened
C. remain the same value
D. none of the above
57. Which of the following is the collecting bank's responsibility? ______.
A. Examination of the goods
B. Keeping the remitting bank fully advised of what is going on
C. Obeying the importer's instructions
A. All of the above
58. According to the theory of arbitrage, ______.
A. high-beta stocks are consistently overpriced
B. low-beta stocks are consistently overpriced
C. positive alpha investment opportunities will quickly disappear
D. rational investors will pursue arbitrage consistent with their risk tolerance
59. APT differs from the single-factor CAPM because, the APT ______.
A. places more emphasis on market risk
B. minimizes the importance of diversification
C. recognizes multiple unsystematic risk factors
D. recognizes multiple systematic risk factors
60. The primary function of reserve requirements is to serve as ______.
A. a means of disciplining overly aggressive commercial banks
B. a means of reducing bank profits
C. an instrument of monetary control
D. a source of bank liquidity