The financial account is divided into three subcategories: direct investment, portfolio investment, and other investment. Portfolio investment involves acquisitions of controlling interests in foreign businesses. O investments in foreign stocks and bonds that do not involve acquisitions of control. bank deposits, currency investment, trade credit, and the like. All of the above
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- Write Notes on the Following A: Off Balance Sheet Assets and Liabilities B: Interest Rate Risk Management C: Sterilized Intervention in Foreign Exchange D: Unsterilized Intervention in Foreign Exchange E: Balance of PaymentWhich of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above. Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costsWhich of the following is a matured money market instrument widely used in the USA, Europe and Asia where both cash and securities are the motivators? a. Commercial Papers b. Treasury Bills c. Repurchase Agreements d. Certificate of Deposits
- An open market operation is an instrument of monetary policy which involves buying or selling of ________from or to the public and banks: a. Bonds and Other local securities b. Debentures and Shares c. Government Securities d. None of TheseDefine each following terms: p. American depository receipts (ADRs); repatriation of earnings q. Country risk; exchange rate risk; political risk; business climateWhich of the following assets are not included in “cash equivalents” in a typical balance sheet?a. Foreign government securitiesb. Certain very low-risk equity securitiesc. U.S. government securitiesd. Time depositse. All of the above might be included in“cash equivalents.”
- Investment bank trade securities in the ? a. Secondary market b. Primary and secondary market c. Primary market d. Investment bank typacally do not trade securitiesFinancial institutions engage in the purchasing and selling of foreign currencies for all of the following reasons except to: a. Hedge against foreign exchange exposures. b. Allow customers access to foreign markets to transact business. c. Avoid trading in speculative investments. d. Allow itself and/or customers to trade and invest in foreign financial markets.Question 23 (a) and (b) is based on the following Balance Sheet: 2$ $ Current assets Current liabilities Accounts payable Overdraft Cash 1000 10 000 Accounts receivable 8000 ? Inventory 9000 Non-current liabilities Non-current assets Loan 5 000 5 000 Equipment Vehicle Total equity Capital 10 000 8 000 (a) Calculate the current ratio (current assets ÷ current liabilities) for this business. Show all working. (b) Recommend a cash flow management strategy for this business.
- Which foreign exchange risk relates to the value of assets held in foreign currency on the statement of financial position of financial institutions which trades? a. Economic risk b. Transaction type risk c. Currency risk d. Translation risk44. Noncash investing and financing transactions include all of the following, except:a. Noncash items such as depreciation, deferred taxes and unrealized foreign currency gains and losses.b. The acquisition of asset either by assuming directly related liability or by means of a finance lease.c. The acquisition of an entity by means of an equity issue.d. The conversion of debt to equity. 45. In which section of the statement of financial position should cash that is restricted for the settlement of liabilitydue 18 months after the reporting period be presented?a. Current assetsb. Equityc. Noncurrent liabilitiesd. Noncurrent assets 46. Bloom Company was incorporated on January 1, 2018, with P500,000 from the issuance if share capital andborrowed funds of P150,000. During the first year of operations, net income was P250,000. On December 15,Bloom paid a P50,000 cash dividend.No additional activities affected shareholders’ equity in 2018. On December 31, 2018, Bloom’s liabilities had…What type of banking risk includes deterioration of the value of the local currency in terms of the bank’s base currency; convertibility or transfer risks. a. Credit Risk b. Liquidity Risk c. Foreign Exchange Risk d. Interest Rate Risk