1. What are the expected returns for Stocks X and Y respectively? ______.
A. 20% and 10%
B. 18% and 12%
C. 20% and 11%
D. 18% and 5%

2. Which of the following payment terms eliminates the exchange risk, assuming the exporter invoices in foreign currency? ______.
A. Confirmed irrevocable documentary credit
B. Open account
C. Documentary collection D/A
D. None of the above

3. ABC Co. Ltd. purchased a car for $ 12 000, making a down payment of $5 000 cash and signing a $7 000 note payable due in 60 days. Which of the following is not correct? ______.
A. From the viewpoint of a short-term creditor, this transaction makes the business less solvent
B. Total liabilities increased by $7 000
C. Total assets increased by $12 000
D. This transaction had no immediate effect on the owner's equity in the business

4. Which of the following terms of payment will entirely eliminate country risk? ______.
A. Revocable documentary credits
B. Confirmed Irrevocable documentary credits
C. Documentary collection D/P
D. Documentary collection D/A

5. The expiry date of a documentary credit is Sunday, 24 February, and documents have to be A presented to you. Which of the following is an acceptable presentation? (Assume there is no latest stated date for shipment stipulated.) ______.
A. Presentation to you on Monday 25 February with the bill of lading dated 25 February
B. Presentation on Monday 25 February with the bill of lading dated Sunday 24 February
C. Presentation on Tuesday 26 February with the bill of lading dated Sunday 24 February
D. Presentation on Friday 22 February with the bill of lading dated Sunday 29 January

6. What are the standard deviations of returns on Stocks X and Y respectively? ______.
A. 15% and 26%
B. 24% and 13%
C. 20% and 4%
D. 28% and 8%

7. Who makes the first presentation of documents under a transferable credit? ______.
A. Applicant
B. First beneficiary
C. Second beneficiary
D. None of the above

8. A transaction caused a $10 000 decrease in both total assets and total liabilities. This transaction could have been ______.
A. repayment of a $ 10 000 bank loan
B. an asset with a cost of $10000 was destroyed by fire
C. purchase of a delivery truck for $10 000 cash
D. collection of a $10 000 account receivable

9. Money ceases to serve as an effective store of value when ______.
A. the government runs large deficits
B. the unemployment rate is very high
C. productivity in the economy declines
D. rapid inflation occurs

10. An indication that the money supply is greater than the desirable amount would be .
A. insufficient spending and excessive saving
B. deflation
C. inadequate spending and rising unemployment
D. rising wages and prices