Question 1

If the Bank of Canada wants to decrease the money supply, it can ________; if it wants to increase the money supply, it can ________.

Accepted Answer

A)  sell government securities; buy government securities 
B)  raise the bank rate; buy government securities 
C)  increase the value of the Canadian dollar; decrease the value of the Canadian dollar 
D)  lower the bank rate; sell government securities 
E)  buy government securities; sell government securities 
A)  sell government securities; buy government securities 
B)  raise the bank rate; buy government securities 
C)  increase the value of the Canadian dollar; decrease the value of the Canadian dollar 
D)  lower the bank rate; sell government securities 
E)  buy government securities; sell government securities A

Question 2

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. D

Question 3

Money functions as a medium of exchange, a unit of account, and a store of value.

Accepted Answer

A) True 
 B)False  True

Question 4

One function of investment dealers is to

Accepted Answer

A)  manage pensions for large Canadian corporations. 
B)  create stability in the money supply. 
C)  provide equity start-up loans for small business. 
D)  underwrite new stock and bond issues. 
E)  provide debt financing to small businesses. 
A)  manage pensions for large Canadian corporations. 
B)  create stability in the money supply. 
C)  provide equity start-up loans for small business. 
D)  underwrite new stock and bond issues. 
E)  provide debt financing to small businesses.

Question 5

StarMart is a retail chain with more than 120 stores spread across the country. The company is keen to enter into a co-branding agreement with Axiom Financial Services. Under this agreement, StarMart's customers will be provided with an Axiom-Star credit card entitling them to reward points every time they swipe their credit cards at StarMart. Cardholders will be able to redeem points for special discounts, free merchandise, and exclusive services. StarMart is planning on a targeted direct marketing campaign using StarMart's knowledge of consumer buying patterns and Axiom's access to financial information. A senior manager argues that the negative perception associated with mounting credit card debt will affect StarMart. Which of the following would be the least effective measure StarMart could take to address this potential problem?

Accepted Answer

A)  Publicizing the company's policies in clear and easy-to-understand language 
B)  Charging no more than the typical interest rate for month-to-month debt 
C)  Ensuring that fees for exceeding credit limits are no higher than necessary 
D)  Increasing the value of the promotional items that attract new credit card customers 
E)  Offering free debt counselling to Axiom-Star customers 
A)  Publicizing the company's policies in clear and easy-to-understand language 
B)  Charging no more than the typical interest rate for month-to-month debt 
C)  Ensuring that fees for exceeding credit limits are no higher than necessary 
D)  Increasing the value of the promotional items that attract new credit card customers 
E)  Offering free debt counselling to Axiom-Star customers

Question 6

An order instructing the bank to pay a given sum to a specified person or firm is

Accepted Answer

A)  a time deposit. 
B)  currency. 
C)  a bank rate. 
D)  a term deposit. 
E)  a cheque. 
A)  a time deposit. 
B)  currency. 
C)  a bank rate. 
D)  a term deposit. 
E)  a cheque.

Question 7

With regard to the international payments process, which of the following statements is true?

Accepted Answer

A)  Most foreign nations will never accept dollars. 
B)  Banks do not get involved in such transactions. 
C)  Money does not actually have to flow between the two countries. 
D)  Diplomatic pouches move currency payments from one nation to another. 
E)  All of these statements are true. 
A)  Most foreign nations will never accept dollars. 
B)  Banks do not get involved in such transactions. 
C)  Money does not actually have to flow between the two countries. 
D)  Diplomatic pouches move currency payments from one nation to another. 
E)  All of these statements are true.

Question 8

What is the main function of financial institutions in Canada?

Accepted Answer

The main function of financial instituti

Question 9

The Greenmax beverage company has built a successful business, having secured a small but consistent slice of the energy drink market. The company is preparing to go global with its brand and market its product overseas. Greenmax's chief financial officer likes the idea of expanding into markets in the southern hemisphere because he argues that this will help the company generate a consistent year-round cash flow. Which of the following, if true, would strengthen the CFO's argument?

Accepted Answer

A)  Energy drinks are popular in many different parts of the world. 
B)  Demand for energy drinks is much greater in developed countries than in emerging markets. 
C)  Greenmax has tapped about as much of the energy drink market share in Canada as it can get. 
D)  The energy drink market in the southern hemisphere is dominated by the biggest name brands. 
E)  Demand for energy drinks is heavily seasonal, with products selling much better at the hottest times of the year than others. 
A)  Energy drinks are popular in many different parts of the world. 
B)  Demand for energy drinks is much greater in developed countries than in emerging markets. 
C)  Greenmax has tapped about as much of the energy drink market share in Canada as it can get. 
D)  The energy drink market in the southern hemisphere is dominated by the biggest name brands. 
E)  Demand for energy drinks is heavily seasonal, with products selling much better at the hottest times of the year than others.

Question 10

List the three functions of money.

Accepted Answer

Medium of exchange,

Question 11

Deregulation has allowed banks to shift away from their historical role as intermediaries between depositors and borrowers.

Accepted Answer

A) True 
 B)False

Question 12

A corporation selling bonds to investors will often use a ________ to protect the bondholders' interests.

Accepted Answer

A)  trust company 
B)  chartered bank 
C)  credit union 
D)  caisses populaire 
E)  finance company 
A)  trust company 
B)  chartered bank 
C)  credit union 
D)  caisses populaire 
E)  finance company

Question 13

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 product. Which of the following, if true, would weaken the argument of Domino Grace's management?

Accepted Answer

A)  Competitors of Domino Grace have lured new customers by offering access to exotic new investment options. 
B)  A new political administration is expected to pass new financial regulations affecting derivative investments. 
C)  Derivative investments are similar to most investments in that when a trade is made, a gain on one side is mirrored by a loss on the other. 
D)  Many of the investors who are interested in derivative investments are also interested in traditional investments. 
E)  The opinions of Domino Grace stockholders are representative of the opinions of the investment community in general. 
A)  Competitors of Domino Grace have lured new customers by offering access to exotic new investment options. 
B)  A new political administration is expected to pass new financial regulations affecting derivative investments. 
C)  Derivative investments are similar to most investments in that when a trade is made, a gain on one side is mirrored by a loss on the other. 
D)  Many of the investors who are interested in derivative investments are also interested in traditional investments. 
E)  The opinions of Domino Grace stockholders are representative of the opinions of the investment community in general.

Question 14

Money frees society from a system of barter. In doing so, money is performing which of the following functions?

Accepted Answer

A)  Store of value 
B)  Measure of worth 
C)  Unit of account 
D)  Determination factor 
E)  Medium of exchange 
A)  Store of value 
B)  Measure of worth 
C)  Unit of account 
D)  Determination factor 
E)  Medium of exchange

Question 15

Which of the following describes the requirements that the International Monetary Fund has made on certain developing countries?

Accepted Answer

A)  That the government decrease spending in order to bring inflation under control 
B)  That private industries decrease prices in order to bring inflation under control 
C)  That the government increase loans in order to create more money in the local markets 
D)  That the local banks increase loans in order to create more money in the local markets 
E)  That the government and private industries partner in creating more jobs in the region 
A)  That the government decrease spending in order to bring inflation under control 
B)  That private industries decrease prices in order to bring inflation under control 
C)  That the government increase loans in order to create more money in the local markets 
D)  That the local banks increase loans in order to create more money in the local markets 
E)  That the government and private industries partner in creating more jobs in the region

Question 16

The law of one price says that identical products should sell for the same price in all countries, except for those countries that have a large agricultural sector.

Accepted Answer

A) True 
 B)False

Question 17

A personal chequing account represents demand deposits because the bank must pay "on demand" to the person receiving the cheque.

Accepted Answer

A) True 
 B)False

Question 18

Financing new, untested businesses is risky, so the most likely route to financing would be to go to

Accepted Answer

A)  a venture capital firm. 
B)  the Economic Development Bank. 
C)  an institutional lender. 
D)  the Industrial Development Bank. 
E)  a brokerage house. 
A)  a venture capital firm. 
B)  the Economic Development Bank. 
C)  an institutional lender. 
D)  the Industrial Development Bank. 
E)  a brokerage house.

Question 19

________ are operated by investment companies that bring together pools of assets from many investors and purchases a collection of short-term, low-risk financial securities.

Accepted Answer

A)  All mutual funds 
B)  Global development funds 
C)  Money market mutual funds 
D)  Schedule B banks 
E)  Pension funds 
A)  All mutual funds 
B)  Global development funds 
C)  Money market mutual funds 
D)  Schedule B banks 
E)  Pension funds

Question 20

All of the following are purposes of the International Monetary Fund except

Accepted Answer

A)  promoting the stability of exchange rates. 
B)  providing temporary loans to member countries. 
C)  encouraging members to cooperate on international monetary ideas. 
D)  equalizing exchange rates as much as possible to facilitate world trade. 
E)  encouraging development of a system for international payments. 
A)  promoting the stability of exchange rates. 
B)  providing temporary loans to member countries. 
C)  encouraging members to cooperate on international monetary ideas. 
D)  equalizing exchange rates as much as possible to facilitate world trade. 
E)  encouraging development of a system for international payments.

If the Bank of Canada wants to decrease the money supply, it can ; if it wants to increase the money supply, it can .

Which of the following statements about chartered banks is false?

Money functions as a medium of exchange, a unit of account, and a store of value.

One function of investment dealers is to

An order instructing the bank to pay a given sum to a specified person or firm is

With regard to the international payments process, which of the following statements is true?

What is the main function of financial institutions in Canada?

List the three functions of money.

Deregulation has allowed banks to shift away from their historical role as intermediaries between depositors and borrowers.

A corporation selling bonds to investors will often use a ________ to protect the bondholders' interests.

Money frees society from a system of barter. In doing so, money is performing which of the following functions?

Which of the following describes the requirements that the International Monetary Fund has made on certain developing countries?

The law of one price says that identical products should sell for the same price in all countries, except for those countries that have a large agricultural sector.

A personal chequing account represents demand deposits because the bank must pay "on demand" to the person receiving the cheque.

Financing new, untested businesses is risky, so the most likely route to financing would be to go to

________ are operated by investment companies that bring together pools of assets from many investors and purchases a collection of short-term, low-risk financial securities.

All of the following are purposes of the International Monetary Fund except

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, Promotion, and Distributing Products

Finacial Decisions and Risk Management

Filters

Exam 14: Money and Banking

If the Bank of Canada wants to decrease the money supply, it can ________; if it wants to increase the money supply, it can ________.

Which of the following statements about chartered banks is false?

Money functions as a medium of exchange, a unit of account, and a store of value.

One function of investment dealers is to

An order instructing the bank to pay a given sum to a specified person or firm is

With regard to the international payments process, which of the following statements is true?

What is the main function of financial institutions in Canada?

List the three functions of money.

Deregulation has allowed banks to shift away from their historical role as intermediaries between depositors and borrowers.

A corporation selling bonds to investors will often use a ________ to protect the bondholders' interests.

Money frees society from a system of barter. In doing so, money is performing which of the following functions?

Which of the following describes the requirements that the International Monetary Fund has made on certain developing countries?

The law of one price says that identical products should sell for the same price in all countries, except for those countries that have a large agricultural sector.

A personal chequing account represents demand deposits because the bank must pay "on demand" to the person receiving the cheque.

Financing new, untested businesses is risky, so the most likely route to financing would be to go to

________ are operated by investment companies that bring together pools of assets from many investors and purchases a collection of short-term, low-risk financial securities.

All of the following are purposes of the International Monetary Fund except

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, Promotion, and Distributing Products

Finacial Decisions and Risk Management

Filters

If the Bank of Canada wants to decrease the money supply, it can ; if it wants to increase the money supply, it can .