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Assuming Country A has a floating exchange rate which of the following would lead to a fall of the exchange rate for Country A and which rise m the exchange rate for Country A.

Complete the table below by matching the relevant label on the exchange rate of the scenarios listed.

A government issues a security which promises to pay $100 per year indefinitely. What is it worth if the required rate of return is..

A.

$2, 400

B.

$1, 400

C.

$2, 500

D.

$4, 000

Which of the following equations is correct regarding interest rates?

A.

Real interest rate = Nominal interest rate + Expected inflation rate

B.

Real interest rate = Nominal interest rate + Market risk premium

C.

Nominal interest rate = Real interest rate + Expected inflation rate

D.

Nominal interest rate = Real interest rate + Market risk premium

A forward exchange contract would be appropriate (or a company that

A.

is due to receive a payment denominated in foreign currency today

B.

is due to receive a large payment denominated in foreign currency in five months' time

C.

is worried that its products are becoming less competitive due to a general appreciation of the domestic currency over lime

D.

is expected to pay a substantial amount denominated in national currency to a foreign creditor m six months' time

A business has a short-term problem with its payments exceeding its receipts. Which TWO of the following would be appropriate for meeting this financial shortfall?

A.

A bank overdraft

B.

A bill of exchange

C.

A mortgage

D.

Issuing shares

E.

A leasing arrangement

If the production of a good involves an external social cost, resource allocation could be improved by:

A.

providing a subsidy for the consumers of the good

B.

imposing an indirect tax on the good

C.

providing a subsidy for the producers of the good

D.

the government imposing price controls to reduce the price of the good.

Which global financial institution is responsible for making long term loans to assist developing countries to invest and develop?

A.

The IMF

B.

The World Bank

C.

The World Trade Organization

D.

The G20

Which of the following is not taken into account by the discount factor applied to future earnings when calculating shareholder value?

A.

Shareholders rate of time preference for money

B.

The amount of earnings that will be lost as taxation

C.

The amount of risk the investment is subject to

D.

The rate of inflation

Select the best definition of a regressive tax from the options below:

A.

A tax which rises proportionately with income

B.

A tax which rises more than proportionately with income

C.

A tax which rises less than proportionately with income

D.

A tax on expenditure

An important distinction between a free trade area and a customs union is that

A.

Only a customs union erects a common external tariff

B.

Only a free trade area allows free internal trade in services as well in goods

C.

Only a customs union is an example of a multilateral trading agreement

D.

Only a free trade area involves common economic policies