2009年度FECT现代金融理论与实务考试试题

金融英语高级考试2009年度FECT现代金融理论与实务考试试题Financial English Certificate Test(Advanced English for Finance) Modern Financial Theories and Practices June 20091. The examination consists of THREE sections. Section 1: Answer all the questions. (20 marks) Section 2: Answer all the questions. (40 marks)Section 3: Answer ONLY TWO of four questions. (40 marks)2. All the answers should be written on the answer sheets provided. The examination papers and answer sheets must be submitted to the invigilator towards the end of the examination.3.Non-programmable and silent calculators may be used.4. Time allowed: 150 minutes.5. Pencil scripts will not be accepted.SECTION ONE (Total: 20 marks)Read the following statements and choose the best answer by writing the corresponding letter on answer sheet provided.1. Which of the following is not the theory of the term structure of interest rates? A. The Pure Expectation Theory. B. The Segmented Markets Theory. C. Cambridge Cash-Balance Approach.D. The Preferred Habitat and Liquidity Premium Theory.2. Suppose that Acme Widget issues a one-year discount bond with a face value of $1000, receives $9434 and repays $10000 within one year. The interest rate on this bond would be_____A. 4.34%B. 5.66%C. 6%D. 10%3. Which of the following statements is CORRECT? A. When expected U.S. interest rate increases, the Dollar’s value depreciates. B. When expected U.S. trade barriers increase, the Dollar’s value depreciates. C. When expected U.S. import demand increases, the Dollar’s valu e depreciates. D. When expected U.S. productivity increases, the Dollar’s value depreciates.4. It is called _____ when commercial banks can’t meet their customers’ demands for withdrawals and loans. A. credit risk B. market risk C. operational risk D. liquidity risk5. As far as foreign exchange reserve holding is concerned, which of the following statements is INCORRCET? A. The more volatile the export, the higher the level of reserves. B. The more flexible the exchange rate regime, the higher the level of reserves. C. The lower the opportunity cost of holding, the higher the level of reserves. D. The larger the size of an economy, the higher the level of reserves.6. Generally speaking, the operating targets of monetary policy include_____ A. interest rate and monetary base B. excess reserves and interest rates C. money supply and interest rates D. monetary base and bank reserves7._____ is the credit that is provided mutually between enterprises and is linked directly to exchange of goods. A. Bank credit B. Commercial credit C. Public credit D. Consumer credit 8. Which of the following statements is accurate? A. The writer of a put option has the obligation tosell the asset to the holder of the put option. B. Should the stock’s price rise above the strik e price, the holder of a call option has the obligation to sell the asset to option writer. C. Should the stock’s price rise above the strike price, the holder of a call option has the obligation to buy the asset from the option writer. D. The holder of a put option has the right to sell the asset to the option writer.9. Which of the following statements is CORRECT? A. Under a fixed exchange rate system, fiscal policy is successful in promoting internal balance, whereas monetary policy is unsuccessful. B. Under a floating exchange rate system, fiscal policy is successful in promoting internal balance, whereas monetary policy is unsuccessful. C. Under a fixed exchange rate system, monetary policy is successful in promoting internal balance, whereas fiscal policy is unsuccessful. D. Under a floating exchange rate system, both monetary policy and fiscal policy are successful in promoting internal balance.10. Which of the following assets is sometimes referred to as the commercial banks’ secondary reserve? A. Vault cash B. Treasury bills C. Repurchase agreements D. Inter-bank borrowing SECTION TWO (Total: 40 marks)Answer all the following TWO questions. Each question carries equal marks. Question 1 (Total: 20 marks)Explain the major factors that determine exchange rates from the four perspectives of relative purchasing power parity as well as changes in productivity, consumer tastes, and investment profitability. Question 2(Total: 20 marks)1. What is the money multiplier? ( 4 marks)2. What factors affect the money multiplier? (10 marks)3. Compute derivative deposits with the following given conditions(6 marks)Mr. Smith deposits $2000 with a commercial bank, supposing required reserve ratio 10% and the deposit will be fully derived. How much derivative deposits the whole banking system can create without any leakage? If there is cash leakage 6%, excess reserve ratio 3%, the ratio of the leakage into non-checkable 2%, the required reserve ratio for it is 2%, how many derivative deposit s the whole banking system can create? SECTION THREE (Total: 40 marks)Answer any TWO of the following four questions. Each question carries equal marks. Question 1 (Total: 20 marks)Currently, the financial crises is affecting every corner of the world and a wave of bankruptcies of financial institutions has exerted tremendously negative impact on the global economy. Therefore, it is crucially important to have these institutions more effectively regulated. Answer the following questions: 1. Describe the objectives of financial regulation. (6 marks)2. From the perspective of externalities, explain the reasons for financial regulation. (8 marks)3. What are the differences between the institutional approach to supervision and the functional approach to supervision? (6 marks)Question 2 (Total: 20 marks)By the end of 2008, China had owned $1.9trillion foreign reserve. 1. Define the term of “foreign reserves”. (4 marks)2. What are the key factors that affect the size of reserve holding? (10 marks)3. Explain what are the benefits and costs for China to hold such large foreign reserves. (6 marks) Question 3 (Total: 20 marks)After the monetary policy was implemented in the middle of 2008, there was a substantial credit surge and dramatic M2 increase at the end of 2008 and in early 2009. Analyze the effect of the increase from the perspective of money creation. 1. Define money supply and describe the measurement of money supply. (5 marks)2. Through what channels is monetary base put into circulation? (10 marks)3. Analyze the effect of the increase in money supply. (5 marks)Question 4 (Total: 20 marks)Inflation and deflation are contradictory phenomena in economics. Economists have once paid a close attention to combating inflation and studied the impact of inflation on economy and politics. However, in recent years, they have turned their attention to fighting deflation as it has happened more often than before. Regarding inflation and deflation, answer the following four questions. 1. How do we measure the degree of inflation or, in other words, what statistical indexes do we use to measure inflation? (3 marks)2. As various factors may cause deflation, describe the major causes of deflation. (5 marks)3. What’s the effect of deflation? (8 marks)4. As deflation is caused by different factors, the ways of dealing with it should be diversified. Explain how deflation can be better dealt with? (4 marks)。