An increase in accounts receivable turnover for a firm due to an increase in collection efforts will ________. A) decrease the firm’s marginal investments in accounts receivable B) increase the firm’s marginal investments in accounts receivable C) decrease the firm’s collection expense D) increase the firm’s bad debt expense ANSWER A
Which account should NOT be included in the asset section of a central bank balance sheet? A) currency in circulation B) official international reserves C) domestic credit D) government bonds ANSWER Answer: A
The ________ on an asset is the expected return on the asset in excess of the return on a risk-free asset. A) risk premium B) covariance C) systematic risk D) beta ANSWER Answer: A
Official international reserves consist of three major components EXCEPT: A) gold reserves. B) foreign exchange reserves. C) deposits of private financial institutions. D) IMF-related reserves assets. ANSWER Answer: C
The special drawing rights of the IMF and the European currency unit are two examples of ________. A) currency boards B) floating exchange rates C) target zones D) baskets of currencies ANSWER Answer: D
What is the name for the set of regulations pertaining to flows of capital into and out of a country? A) capital controls B) target zone system C) crawling peg D) lead-lag operations ANSWER Answer: A
What is the name for the composite currency that consists of various units of other currencies? A) pegged currency B) seignorage C) basket of currency D) special drawing rights ANSWER Answer: C
What is the firm’s marginal profit contribution from sales under the proposed plan of initiating the cash discount? (See Table 14.7) A) $22,500 B) $40,000 C) $62,500 D) $100,000 ANSWER C
The exchange rate system in which a country allows the value of the currency to be determined by the market forces of supply and demand is known as a A) currency board. B) floating exchange rate. C) target zone. D) pegged exchange rate system. ANSWER Answer: B
In the ________ exchange rate system, the currency has limited flexibility and the rate is kept within a fixed band. A) currency board B) floating exchange rate C) target zone D) pegged exchange rate system ANSWER Answer: C
