Question 1

Devaluing a country's currency decreases its exchange value,and this will make it less expensive for other countries to buy the country's products.

Accepted Answer

A) True 
 B)False  True

Question 2

Subprime loans have higher interest rates than conventional loans.Subprime loans are designed for borrowers with low credit scores who would not qualify for conventional loans.The borrower pays a higher rate to compensate the lender for the greater risk of a default.Subprime loans typically have adjustable rates,meaning that the interest rate can change over the life of the loan.Borrowers who take out adjustable subprime loans usually try to keep the rate as low as possible at the start of the loan,even when doing so would lead to higher payments over the entire life of the loan.After many people defaulted on their subprime loans,research revealed that the majority of people who took out subprime loans could have qualified for conventional loans. The statements above most strongly suggest that if all subprime loan borrowers had taken out the loan that was most appropriate for their needs,then what would have been the outcome?

Accepted Answer

A) None of them would have taken out an adjustable loan. 
B) None of them would have taken out a subprime loan. 
C) Most of them would have paid less in interest. 
D) Most of them would have taken out a conventional loan to cover any expenses not covered by a subprime loan. 
E) Most of them would have paid money at the start of the loan in order to get a reduced interest rate over the life of the loan. 
A) None of them would have taken out an adjustable loan. 
B) None of them would have taken out a subprime loan. 
C) Most of them would have paid less in interest. 
D) Most of them would have taken out a conventional loan to cover any expenses not covered by a subprime loan. 
E) Most of them would have paid money at the start of the loan in order to get a reduced interest rate over the life of the loan. C

Question 3

The interest rate available to a bank's most creditworthy customers is the

Accepted Answer

A) discount rate. 
B) optimal rate. 
C) key rate. 
D) funds rate. 
E) prime rate. 
A) discount rate. 
B) optimal rate. 
C) key rate. 
D) funds rate. 
E) prime rate. E

Question 4

The prime rate of interest is the lowest rate charged to a bank's best customers.

Accepted Answer

A) True 
 B)False

Question 5

Currency is any object generally accepted by people as payment for goods and services.

Accepted Answer

A) True 
 B)False

Question 6

Domino Grace is a financial services company.It has started using scientific principles of management to analyze the compensation system for its financial advisors.Under the current system,revenue goals are based on the financial advisors' performances in the previous year.Domino Grace managers believe that the financial advisors could generate much more revenue if they were encouraged to offer derivatives,a complex but potentially profitable investment category. Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year.The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million.Which of the following points out a flaw in this argument?

Accepted Answer

A) It assumes that offering derivatives could not have generated less than $5 million. 
B) It claims without warrant that offering derivatives will generate high revenues in future years. 
C) It fails to demonstrate that offering derivatives generated more money than any alternative would generate. 
D) It fails to account for the revenues that could have been generated by alternative uses of the resources that went into offering derivatives. 
E) It ignores the possibility that some investors lost money by investing in derivatives through Domino Grace. 
A) It assumes that offering derivatives could not have generated less than $5 million. 
B) It claims without warrant that offering derivatives will generate high revenues in future years. 
C) It fails to demonstrate that offering derivatives generated more money than any alternative would generate. 
D) It fails to account for the revenues that could have been generated by alternative uses of the resources that went into offering derivatives. 
E) It ignores the possibility that some investors lost money by investing in derivatives through Domino Grace.

Question 7

What do venture capital firms do?

Accepted Answer

Venture capital firms provide

Question 8

Which of the following statements about chartered banks is false?

Accepted Answer

A) A chartered bank is privately owned. 
B) A chartered bank is profit-seeking. 
C) Chartered banks are the main source of short-term loans for businesses. 
D) A chartered bank is required to use funds obtained from savers to purchase portfolios of government bonds. 
E) A chartered bank serves individuals,non-business organizations,and businesses as a financial intermediary. 
A) A chartered bank is privately owned. 
B) A chartered bank is profit-seeking. 
C) Chartered banks are the main source of short-term loans for businesses. 
D) A chartered bank is required to use funds obtained from savers to purchase portfolios of government bonds. 
E) A chartered bank serves individuals,non-business organizations,and businesses as a financial intermediary.

Question 9

The principle that identical products should sell for the same price in all countries is known as the law of one price.

Accepted Answer

A) True 
 B)False

Question 10

What caused the decline of barter as a means of obtaining something needed by a consumer?

Accepted Answer

A) Development of the central bank system 
B) The discovery of gold 
C) The invention of the credit card 
D) The use of bonds 
E) The introduction of money 
A) Development of the central bank system 
B) The discovery of gold 
C) The invention of the credit card 
D) The use of bonds 
E) The introduction of money

Question 11

________ provides funds for new or expanding firms thought to have significant potential and may demand an ownership stake in the business.

Accepted Answer

A) A pension fund 
B) The International Monetary Fund (IMF) 
C) A chartered bank 
D) A global bank 
E) A venture capital fund 
A) A pension fund 
B) The International Monetary Fund (IMF) 
C) A chartered bank 
D) A global bank 
E) A venture capital fund

Question 12

The prime rate of interest is the rate charged

Accepted Answer

A) on time deposits. 
B) on consumer installment loans. 
C) to successful businesses. 
D) on all mortgages and occasionally on car loans. 
E) to the riskiest borrowers. 
A) on time deposits. 
B) on consumer installment loans. 
C) to successful businesses. 
D) on all mortgages and occasionally on car loans. 
E) to the riskiest borrowers.

Question 13

Which of the following is a form of money?

Accepted Answer

A) Japanese yen 
B) Bonds 
C) A gold medallion 
D) IBM common stock 
E) A credit card 
A) Japanese yen 
B) Bonds 
C) A gold medallion 
D) IBM common stock 
E) A credit card

Question 14

The law of one price ensures that no country's currency is overvalued.

Accepted Answer

A) True 
 B)False

Question 15

According to the Big Mac index,

Accepted Answer

A) Big Macs must be priced higher in China than in Canada. 
B) the price of a Big Mac is used to determine if a given currency is overvalued or undervalued. 
C) Big Macs are better than Mom's homemade hamburgers. 
D) Big Macs are always cheaper in France than they are in Canada. 
E) Big Macs are priced the same all over the world. 
A) Big Macs must be priced higher in China than in Canada. 
B) the price of a Big Mac is used to determine if a given currency is overvalued or undervalued. 
C) Big Macs are better than Mom's homemade hamburgers. 
D) Big Macs are always cheaper in France than they are in Canada. 
E) Big Macs are priced the same all over the world.

Question 16

Canadians hold a total of ________ credit cards.

Accepted Answer

A) 5 million 
B) 20.6 million 
C) 43.1 million 
D) 74.3 million 
E) 190.8 million 
A) 5 million 
B) 20.6 million 
C) 43.1 million 
D) 74.3 million 
E) 190.8 million

Question 17

What is the Bank of Canada?

Accepted Answer

The Bank of Canada is Canada's

Question 18

Heather told her friends she just bought $1000 worth of new clothes.Heather's statement illustrates the "unit of account" function of money.

Accepted Answer

A) True 
 B)False

Question 19

The Business Development Bank of Canada (BDC)insures export sales for Canadian companies.

Accepted Answer

A) True 
 B)False

Question 20

What is a smart card?

Accepted Answer

A smart card is a plastic card

Devaluing a country's currency decreases its exchange value,and this will make it less expensive for other countries to buy the country's products.

The interest rate available to a bank's most creditworthy customers is the

The prime rate of interest is the lowest rate charged to a bank's best customers.

Currency is any object generally accepted by people as payment for goods and services.

What do venture capital firms do?

Which of the following statements about chartered banks is false?

The principle that identical products should sell for the same price in all countries is known as the law of one price.

What caused the decline of barter as a means of obtaining something needed by a consumer?

________ provides funds for new or expanding firms thought to have significant potential and may demand an ownership stake in the business.

The prime rate of interest is the rate charged

Which of the following is a form of money?

The law of one price ensures that no country's currency is overvalued.

According to the Big Mac index,

Canadians hold a total of ________ credit cards.

What is the Bank of Canada?

Heather told her friends she just bought $1000 worth of new clothes.Heather's statement illustrates the "unit of account" function of money.

The Business Development Bank of Canada (BDC)insures export sales for Canadian companies.

What is a smart card?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Financial Decisions and Risk Management

Filters

Exam 14: Money and Banking

Devaluing a country's currency decreases its exchange value,and this will make it less expensive for other countries to buy the country's products.

The interest rate available to a bank's most creditworthy customers is the

The prime rate of interest is the lowest rate charged to a bank's best customers.

Currency is any object generally accepted by people as payment for goods and services.

What do venture capital firms do?

Which of the following statements about chartered banks is false?

The principle that identical products should sell for the same price in all countries is known as the law of one price.

What caused the decline of barter as a means of obtaining something needed by a consumer?

________ provides funds for new or expanding firms thought to have significant potential and may demand an ownership stake in the business.

The prime rate of interest is the rate charged

Which of the following is a form of money?

The law of one price ensures that no country's currency is overvalued.

According to the Big Mac index,

Canadians hold a total of ________ credit cards.

What is the Bank of Canada?

Heather told her friends she just bought $1000 worth of new clothes.Heather's statement illustrates the "unit of account" function of money.

The Business Development Bank of Canada (BDC)insures export sales for Canadian companies.

What is a smart card?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Financial Decisions and Risk Management

Filters