20 MCQ's

1. A British importer of U.S. computer equipment would take which action in the foreign exchange markets?
a. supply dollars

b. demand dollars
c. demand pounds d. both a and c above
e. none of the above
 
2. Capital accounts transactions are all of the following except they:
a. are made with the expectation of a future gain or to settle a debt.
b. are reversible.
c. represent a flow of income.
d. represent a geographic repositioning of wealth.

3. Under freely floating exchange rates a government would
a. do nothing.
b. sell assets to foreign investors for foreign exchange to buy the domestic currency.
c. buy assets to foreign investors for domestic currency.
d. intervene in the markets for the benefit of its exporters

4. The Eurocurrency market serves as a place to store excess liquidity for multinational corporations, countries and individuals because of all of the following except:
a. Lack of regulation allows investors to hold debt securities in bearer form.
b. The presence of a withholding of tax.
c. Investments earn higher returns.
d. Eurocurrency deposits are highly liquid because of very short maturities with nearly 90 percent of deposits being less than 180 days.

1. A __________ draft would be paid on demand; whereas a bank would pay a __________ draft at maturity as stated in the __________.
a. time; sight; bill of lading
b. sight; time; bill of lading
c. time; sight; letter of credit
d. sight; time; letter of credit

2. Under freely floating exchange rates a government would
a. do nothing.
b. sell assets to foreign investors for foreign exchange to buy the domestic currency.
c. buy assets to foreign investors for domestic currency.
d. intervene in the markets for the benefit of its exporters

3. A British importer of U.S. computer equipment would take which action in the foreign exchange markets?
a. supply dollars
b. demand dollars
c. demand pounds d. both a and c above
e. none of the above

4. The Eurocurrency market serves as a place to store excess liquidity for multinational corporations, countries and individuals because of all of the following except:
a. Lack of regulation allows investors to hold debt securities in bearer form.
b. The presence of a withholding of tax.
c. Investments earn higher returns.
d. Eurocurrency deposits are highly liquid because of very short maturities with nearly 90 percent of deposits being less than 180 days.

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1.Bank regulation is intended to provide a trade-off between bank ________ and bank ______________ .

2.Historically, when banks have failed, government has responded with increased _______________ .

3.Banks are regulated to protect the ___________ and maintain a __________ economy.

4.Many banks that failed in the 1930s did so because the central bank did not supply sufficient ___________ and did not prevent bank _________ .

1.Bank regulation is intended to provide a trade-off between bank safety and bank competitiveness or performance
2.Historically, when banks have failed, government has responded with increased __ regulation ___.
3.Banks are regulated to protect the money supply and maintain a stable economy.
4.Many banks that failed in the 1930s did so because the central bank did not supply sufficient liquidity and did not prevent bank panics

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1. Bank failures of the 1980s stemmed more from regional economic distress in the areas of _________ and ___________ .

2.Historically, when banks have failed, government has responded with increased ______________ .

3.Many banks that failed in the 1930s did so because the central bank did not supply sufficient _________ and did not prevent bank _________ .

4.Bank regulation is intended to provide a trade-off between bank _________  and bank _________________ .

1. Bank failures of the 1980s stemmed more from regional economic distress in the areas of energy and agriculture
2.Historically, when banks have failed, government has responded with increased __ regulation ___.
3.Many banks that failed in the 1930s did so because the central bank did not supply sufficient liquidity and did not prevent bank panics
4.Bank regulation is intended to provide a trade-off between bank safety and bank competitiveness or performance

1.Which of the following affects the level of insurance premiums?
a. probability of loss
b. value of loss
c. expected operating expenses
d. all of the above
 

2. Which of the following is likely to be a material component of an insurer’s revenue?
a. interest on bonds
b .interest on mortgages
c. dividends on stocks
d. all of the above

3. “Objective risk” is
a. synonymous with “pure risk”
b. determined according to principles of probability and statistics
c. uninsurable
d. synonymous with “speculative risk”

4. The “Law of Large Numbers” is
a. a statistical principle relied on by insurers in managing objective risk
b. an informal rule of thumb for valuing pure risks
c. a principle of portfolio diversification that helps manage interest rate risk
d. none of the above