Understanding the theory of purchasing power parity is important because deviations from PPP significantly affect the A) operations of the central bank. B) hedging activities of multinational firms. C) profitability of multinational firms. D) arbitrage opportunities in the banking markets. ANSWER Answer: C
Date: September 19th, 2020
Within the United States, what is the name for the power of a dollar when it is used to purchase an amount of goods and services? A) internal purchasing power B) external purchasing power C) absolute purchasing power parity D) relative purchasing power parity ANSWER Answer: A
Date: September 19th, 2020
Float is important in the cash conversion cycle of a firm because ________. A) its presence reduces a firm’s average collection period B) its presence reduces a firm’s average payment period C) its presence lengthens both a firm’s average collection period and its average payment period D) its presence reduces the investment that a firm […]
Date: September 19th, 2020
The yields on negotiable certificates of deposit are typically above those on U.S. Treasury issues and comparable to the yields on commercial paper with similar maturities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The Solar Inc has daily cash receipts of $90,000. A recent analysis of its collections indicated that customers’ payments were in the mail for an average of 4 days. Once received,the payments are processed in one and a half days. After payments are deposited, it takes an average of two and a half days for […]
Date: September 19th, 2020
A banker’s acceptance is a low-risk security because at least two, and sometimes three, parties may be liable for its payment at maturity. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ float results from the delay between the time when a customer deducts a payment from the checking account ledger and the time when the vendor actually receives the funds in a spendable form. A) Mail B) Processing C) Collection D) Disbursement ANSWER C
Date: September 19th, 2020
In exchange for the tailor-made maturity date provided by the repurchase agreement, a bank or security dealer provides a return slightly below than obtainable through outright purchase of similar marketable securities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is true of collection float? A) It represents the time delay between when payment is placed in the mail and when it is received. B) It represents the time between receipt of a payment and its deposit into a firm’s account. C) It results from the lapse between the time when […]
Date: September 19th, 2020
The higher yields on Eurodollar deposits compared with nearly all other marketable securities, governmental or nongovernmental, with similar maturities are attributable to 1. the fact that the depository banks are generally less closely regulated than U.S. banks and are therefore more risky, and 2. some foreign exchange risk may be present. Indicate whether the statement […]
Date: September 19th, 2020
