A forward exchange contract would be appropriate (or a company that

Ais due to receive a payment denominated in foreign currency today

Bis due to receive a large payment denominated in foreign currency in five months' time

Cis worried that its products are becoming less competitive due to a general appreciation of the domestic currency over lime

Dis expected to pay a substantial amount denominated in national currency to a foreign creditor m six months' time

Answer : A

The term 'financial intermediation' refers to the role of:

Acommercial banks m providing credit facilities for customers

Bbanks in providing business customers with access to financial markets

Cthe financial system in linking net savers with net borrowers.

Dcentral banks as providers of liquidity to the banking system

Answer : C

Which THREE of the following processes are likely to occur during a recession?

AA fall in the gross domestic product of the economy

BAn increase in the number of unemployed workers.

CA reduction in the amount of subsidies paid out by the government

DA worsening of the trade balance

EA fall in the government's tax income

FAn increase in the interest rate

Answer : A

Which of the following is the most likely policy response to an economic recession?

ARevaluation of the domestic currency

BDeflationary policy to prevent rising inflationary pressure

CReduce aggregate demand by raising interest rates, taxation, and reducing public expenditure.

DRaise aggregate demand by lowering interest rates, reducing taxation and raising public expenditure

Answer : D

Which of the following is a feature of nol-for-profit organisations (NFPs)?

AThey have restricted flows of income

BThey sometimes have shareholders

CTheir objectives can vary greatly

DThey use resources inefficiently

Answer : C

Free Practice Questions for CIMAPRA17-BA1-1 Exam