练习试题：TrueorFalseQuestions[2]

练习试题：TrueorFalseQuestions[2]

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II. True or False Questions

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26. As a general rule, the shorter the maturity of an asset and the more readily it can be sold, the more liquid is the asset. #

True False #

27. Investors in the capital markets are not subject to any tax on their investments. #

True False #

28. CMO is a security backed by a pool of pass-through rates, structured so that there are several classes of bondholders with varying maturities, called tranches.

True False

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29. The purpose of the letter of credit is to facilitate trade, typically international trade by substituting the known credit worthiness of a bank for the buyer, which may be unknown or unacceptable to the seller.

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True False #

30. According to the Phillips Curve, the economy cannot be at full employment and stable prices at the same time.

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True False #

31. When total reserves are equal to required reserves, the banking system cannot extend loans anymore. #

True False #

32. A bill of lading that covers the shipment of goods on two separate vessels is known as thorough bill of lading. #

True False

33. Usually the more liquid asset is less risky.

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True False #

34. Where the bill of exchange is not accompanied by documents, these having been sent to the importer, the transaction is known as a clean collection. #

True False #

35. The velocity of money is the speed with which it can be converted into a liquid asset. #

True False #

36. Primitive securities yield returns that depend on additional factors pertaining to the prices of #

other assets, while a derivative security offers returns based only on the status of the issuer. #

True False #

37. A car loan offered by a bank is a derivative security. #

True False

38. Options give buyers the obligation to buy or sell an asset at a present price over a specific period. #

True False

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39. Futures contracts usually end in the delivery of the underlying commodity. #

True False #

40. The forward exchange rate is the current spot rate adjusted for the interest rate differentials. #

True False #

41. Dirty price is the bond price excluding accrued interest, i.e., the price paid by the bond buyer.

True False

42. Every transaction must produce a debit and credit entry of the same financial amount.

True False #

43. There are three parties to a life policy in addition to the issuing company: the insurer, the life assured and the beneficiary. #

True False #

44. A guarantee is an agreement that may be evidenced in writing or in oral form. #

True False #

45. An insurable interest is assumed where people take life assurance on their own lives or where the relationship is that of husband and wife. #

True False

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46. Profit does not equal cash and some profitable businesses have failed for want of cash. #

True False

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47. Bills are negotiated with recourse to customers in the event of nonpayment. #

True False

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48. A firm's gearing is the level of fixed assets as a percentage of total assets. #

True False #

49. A bank must obtain a judgment if it wishes to pursue its legal remedies against a debtor.

True False

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50. When a country borrows from abroad, its balance of international payments shows an outflow of foreign exchange.

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True False