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FECT-Exercises-2(3)(2)

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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

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