Q&A Hero

Q: The gold standard differed from the gold bullion standard in that the gold standard ________. A. used gold coins of standard specification B. was highly liquid C. backed paper currency with gold bullions D. did not use minted gold coins

Q: Which of the following is true of the IMFs SDR? A. It cannot be added to the member states foreign currency. B. Its value is set daily using a set of four major currencies. C. All the four currencies are given equal weight while determining the value of the SDR. D. One of the currencies used for calculating the value of SDR is Russian Ruble.

Q: Which of the following is the way in which the IMFs SDR helps in controlling currency fluctuation? A. by acting as a basket currency in foreign exchange transactions B. by substituting as an international currency C. by imposing nonconvertibility from currency to gold and vice versa D. by allowing a currency's value to fluctuate according to the foreign exchange market

Q: Which of the following describes a currency basket in monetary transaction? A. an exchange rate system wherein a currency's value is allowed to fluctuate according to the foreign exchange market B. a contractual provision that says that the price will be adjusted according to the inflation rate C. a selected group of currencies whose weighted average is used to define the amount of an obligation D. a scheme for fixing the exchange rate of a currency by matching its value to the value of another single currency

Q: A(n) ________ clause is a contractual provision that says that the price will be adjusted according to the inflation rate. A. stabilization B. indemnification C. force majeure D. maintenance of value

Q: The ________ is the money used to define the amount of an obligation. A. money of payment B. money of account C. book value D. par value

Q: The principle that an obligation to pay a particular sum of money is fixed and does not change even if the purchasing power or foreign exchange rate of the money does change is known as ________. A. the choice-of-law rule B. centrism C. nominalism D. the stabilization clause

Q: Which of the following is the reserve currency used by the IMF? A. Ven B. Special Drawing Right (SDR) C. European Currency Unit (ECU) D. World Currency Unit (Wocu)

Q: Which of the following is true of private money? A. It can only be used for making payments between private parties who agree in advance to its use. B. It cannot consist of any other sort of transferable material but official money. C. It can be used to pay public debts. D. It is an example of reserve currency.

Q: Private money differs from official money in that private money ________. A. cannot be used to pay debts B. is exclusively used by the government C. cannot be lent to private individuals D. can also consist of stocks of rare metal

Q: In an option contract, if the right is to buy a commodity, the option is known as a call.

Q: The holder of an option contract is obligated to complete its transaction within the stipulated time.

Q: Accounts in domestic banks that are maintained and paid in a foreign currency are commonly free of the monetary control restrictions imposed by their issuing country.

Q: Bank deposits made by individuals cannot be commingled by the bank for its own use.

Q: One of the functions of a central bank is regulating the quantity of money in circulation.

Q: One of the major reform measures of the Basel III is to improve risk management and governance of the banking system.

Q: The Bank for International Settlements does not provide bridging loans.

Q: The president of the Bank for International Settlements nominates its general manager.

Q: All the shares of the Bank for International Settlements are owned by the World Bank and the IMF.

Q: The World Bank is the worlds oldest international organization involved in monetary cooperation.

Q: The World Bank decides what projects are to be funded by the Global Environment Facility.

Q: Only members of the IMF can become members of the World Bank.

Q: An IMF member is entitled to two credit tranches, each equivalent to 50 percent of its quota.

Q: The IMFs Articles of Agreement requires a member to buy its own currency from other members who have acquired it as the result of current transactions.

Q: The IMF forbids member states from imposing restrictions on the payments or transfers involving current international transactions.

Q: The American interpretation of the term exchange contracts excludes securities contracts.

Q: During 1945, the IMFs par value system of currency exchange allowed members to define the value of their currency by any criteria except gold.

Q: The currency exchange system established by the IMF at its inception was known as the gold bullion standard.

Q: A member state obligates itself upon joining the IMF to observe a code of conduct.

Q: The Board of Governors is the highest authority of the IMF.

Q: The IMF was created immediately after the collapse of the gold standard system.

Q: The first modern international monetary system was the Special Drawing Right of the IMF.

Q: The IMFs unit of account is the SDR.

Q: The value of official money is nominally constant.

Q: Reserve currency can consist of any commodity that is easily transferable and reasonably nonspoilable.

Q: Private money is a unit of exchange issued by a government agency (such as a treasury department) or government-controlled financial institution (such as a central bank).

Q: Describe the significance of the Williams Act.

Q: What is a depository receipt?

Q: Differentiate between a registered security and a bearer security.

Q: Explain appraisal rights.

Q: Differentiate between nationalization and expropriation.

Q: What is a bonded warehouse?

Q: What are the different types of free zones?

Q: Differentiate between closed sectors and restricted sectors.

Q: What are the criteria for evaluating a foreign investment proposal?

Q: Describe the significance of foreign investment policies.

Q: The ________ is a law enacted by the United States in 1968 that authorizes the Securities and Exchange Commission to issue rules regulating takeover bids. A. National Banking Act B. Militia Act C. Williams Act D. Sarbanes-Oxley Act

Q: In the context of the securities market, a(n) ________ is a person who acts for his or her personal account on information knowing that the information is not available to the public. A. bona fide purchaser B. tippee C. whistle-blower D. boundary spanner

Q: A ________ is a person who has access to material nonpublic information about a company or the securities market and who discloses it to someone who acts on that information. A. bona fide purchaser B. whistle-blower C. boundary spanner D. tipper

Q: A(n) ________ is a person, such as a corporate officer, director, or majority shareholder, who has access to material nonpublic information about a company or the securities market. A. bona fide purchaser B. whistle-blower C. insider D. boundary spanner

Q: ________ is the use of material nonpublic information about a company or the securities market to buy or sell securities for personal gain. A. Insider trading B. Safeguarding C. Dumping D. Expropriation

Q: A ________ is a negotiable instrument issued by a bank that represents a foreign companys publicly traded securities and that, in turn, is traded on a local securities exchange. A. bill of exchange B. banknote C. promissory note D. depository receipt

Q: ________ is a procedure by which a buyer turns over the purchase price and the seller turns over the securities in a securities transaction. A. Expropriation B. Insider trading C. Clearance and settlement D. Conformity assessment procedure

Q: A(n) ________ is a printed statement given to prospective securities investors setting out a full, true, and plain disclosure of all material facts relating to the securities and the issuer. A. prospectus B. article of incorporation C. memorandum of association D. charter

Q: Which of the following is true regarding an uncertificated security? A. A registered security is a type of an uncertificated security. B. Its ownership is recorded only on the books of the issuer. C. It is dealt in on securities exchanges. D. Most developed countries prevent companies from using uncertificated certificates.

Q: A(n) ________ is someone who buys in good faith, pays value, and is unaware that the transferor is not the rightful owner. A. tipper B. bona fide purchaser C. tippee D. insider

Q: Which of the following is true of a certificated security? A. Its ownership is recorded only on the books of the issuer. B. A bearer security is not a certificated security. C. It cannot be transferred by negotiation. D. It is dealt in on securities exchanges.

Q: A(n) ________ is a contractual obligation of a company to repay the holder the amount of his or her original investment plus interest at a specified future date. A. bond B. equity C. common stock D. capital stock

Q: A ________ is a share in the ownership of a company that entitles its owner to rights in the company, including a proportionate part of the dividends and, upon liquidation, of the capital assets. A. debenture B. bond C. stock D. banknote

Q: Which of the following statements is most likely to be true regarding the supervision of foreign investment? A. The foreign investor whose application has been approved by the host state is usually subject to some time limit in which to start construction and/or begin operation. B. Very few countries require investors to submit periodic reports during the start-up period. C. Once a foreign-owned enterprise is in full operation, it is usually not subject to periodic monitoring. D. Investment laws usually provide that any modification to an investment agreement, including an increase or decrease in the size or scope of a project, has to be approved by the home state.

Q: Which of the following is a characteristic of stabilization clauses? A. They can be changed by the mutual agreement of the parties. B. They can prevent a state from nationalizing a foreign investment. C. They can prevent a state from expropriating a foreign investment. D. They guarantee equality of treatment with regard to ownership rights, taxation, and, social matters.

Q: ________ promise foreign investors that the host government will not change its tax, foreign exchange, or other legal rgime for a certain period of time, or that changes subsequent to the establishment of an enterprise will not affect that enterprise. A. Nondiscrimination guarantees B. Repatriation guarantees C. Stabilization clauses D. Appraisal rights

Q: Which of the following terms refers to the assurance of a host government that foreign investors will be treated the same way as local investors? A. nondiscrimination guarantee B. repatriation guarantee C. stabilization clause D. appraisal right

Q: Which of the following terms refers to the assurance of a host state government that foreign investors will be able to take out of the state both the investment capital they brought in and the profits they earned? A. nondiscrimination guarantee B. repatriation guarantee C. stabilization clause D. appraisal right

Q: Depriving a person or company of private property without compensation is called ________. A. expropriation B. nationalization C. privatization D. municipalization

Q: Acquisition by a state of property previously held by private persons or companies, usually in exchange for some consideration is called ________. A. expropriation B. nationalization C. privatization D. municipalization

Q: Which of the following is true of bonded warehouses? A. They are operated by transportation firms. B. They are intended to be places for trade and business. C. They help shippers in avoiding tariffs and quotas. D. They are owned by the government.

Q: A(n) ________ is a facility at a port of entry where shippers can store goods until they clear customs. A. export processing zone B. data warehouse C. bonded warehouse D. free retail zone

Q: ________ are areas in international airports and harbors where travelers can buy goods free of local sales and excise taxes. A. Free retail zones B. Export processing zones C. Bonded warehouses D. Foreign priority sectors

Q: A(n) ________ is a special-purpose free zone associated with, but physically apart from, a free trade zone, in which limited-purpose trading activities are carried on. A. exclusive economic zone B. closed sector C. free trade area D. subzone

Q: A free zone located within or near a port city is called a(n) ________. A. free trade zone B. free retail zone C. special economic zone D. exclusive economic zone

Q: Which of the following is the oldest type of free zone? A. free trade area B. free perimeter C. free city D. special economic zone

Q: The largest free zones are called ________. A. free trade areas B. free cities C. free trade zones D. subzones

Q: ________ are geographical areas wherein goods may be imported and exported free from customs tariffs and in which a variety of trade-related activities may be carried on. A. Foreign priority sectors B. Closed sectors C. Free zones D. Exclusive economic zones

Q: The parts of a states economy in which foreigners are encouraged to invest are called ________. A. exclusive economic zones B. special economic zones C. foreign priority sectors D. restricted sectors

Q: The parts of a states economy that are not fully open to foreign investors are called ________. A. exclusive economic zones B. special economic zones C. closed sectors D. restricted sectors

Q: Which of the following is true of closed sectors? A. They limit the percentage of foreign investment. B. They are not open to foreign investors. C. They have the highest tax rates. D. They are usually present in developing countries.

Q: According to U.S. law, information is material when something is of significance to a reasonable person.

Q: An insider is a person, such as a corporate officer, director, or majority shareholder, who has access to material nonpublic information about a company or the securities market.

Q: Depository receipts are identical to the securities themselves.