1. Which of the following is not a function of money? ______.

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