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Fundamentals of Business Economics

Last Update 4 hours ago Total Questions : 468

The Fundamentals of Business Economics content is now fully updated, with all current exam questions added 4 hours ago. Deciding to include BA1 practice exam questions in your study plan goes far beyond basic test preparation.

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Question # 131

What is meant by the term ' mezzanine finance ' ?

A.

Short-term loans to help a firm through a cash flow crisis

B.

Finance that is neither pure debt nor pure equity

C.

Loans made by non-financial institutions

D.

Loans made in foreign currency

Question # 132

Which of the following is an example of regulation as a form of government intervention in the economy?

A.

The government requiring that seat belts are fitted in all coaches and regularly tested

B.

The government announcing the abolition of rules which restrict the number of commercial radio stations allowed by law to operate

C.

The government encouraging the General Medical Council to discipline doctors judged to be professionally negligent

D.

The government selling a state-owned industry such as Air Traffic Control to private ownership

Question # 133

Every year a household allows its bank account to become overdrawn for 3 months to pay for its annual holiday. Which one of the following statements correctly describes this?

A.

A short term lack of synchronization between payments and receipts

B.

Long term borrowing

C.

Medium term borrowing

D.

Maturity transformation

Question # 134

If a country were to join a currency union (for example, the European single currency, the Euro), its businesses would experience all of the following except which one?

A.

Reduced transaction costs on overseas transactions.

B.

Exchange rate certainty.

C.

A common monetary policy.

D.

Reduced price transparency.

Question # 135

According to the purchasing power parity theory, if a country ' s inflation rate is 5% higher than the inflation rates of the country ' s competitors in the world economy

A.

The country ' s exchange rate will fall by 5% to restore the terms of trade

B.

The domestic purchasing power of the currency must fall

C.

The country ' s firms must reduce their export prices to remain competitive

D.

The overseas demand for the country ' s exports will be price elastic

Question # 136

Calculate the yield to an investor available from the following commercial bill:

Face value $100,000

Market price $98,500

Maturity 90 days time

A.

1.5%

B.

4.5%

C.

6.1%

D.

$1,500

Question # 137

Following the emergence of the global banking crisis in 2007 many central banks undertook quantitative easing through purchasing bonds back from banks with new money. Which function of a central bank does this describe?

A.

Banker to the banking system

B.

Supervision of the banking system

C.

Banker to the government

D.

Lender of last resort to the banking system

Question # 138

Financial intermediation is the process by which

A.

Net savers and net borrowers are brought together.

B.

Banks create credit on the basis of their liquid assets.

C.

The central bank acts as a link between commercial banks and the government.

D.

Banks provide commercial services for their customers.

Question # 139

All of the following were contributory causes of the banking crisis of 2008 (the ' credit crunch ' ) except one. Which ONE is the exception?

A.

Large scale default in the in the US sub-prime mortgage market

B.

Over- capitalization of commercial and investment banks

C.

The bundling of mortgages into collateralized debt obligations which were sold onto banks

D.

Erroneous credit rating of collateralized debt obligations by credit rating agencies

Question # 140

The real rate of interest is

A.

The rate of interest charged by banks on loans.

B.

The nominal rate of interest adjusted for inflation.

C.

The compound rate of interest.

D.

The rate of interest charged on loans plus administrative charges.

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