Which of the following is not true of forfaiting? ______.
   A. Forfaiting is a form of trade finance with recourse
   B. Forfaiting is the act of purchasing an exporter's receivables (the amount the importer owes the exporter) at a discount by paying cash
    C. The forfeiter takes over the buyer risk
    D. The purchase is usually guaranteed by a bank in the buyer's country

Market risk refers to the risk of ______.
    A. default                               B. financial prices fluctuation
    C. fraud                               D. deferred payment

Which of the following is true of a mortgage? ______.
    A. The mortgagee retains possession of the mortgaged property
    B. The mortgagor retains possession of the mortgaged property
    C. The lender acquires the right to retain the mortgaged property until the mortgage debt is repaid
    D. None of the above

Which of the following is usually least important as a measure of short - term liquidity? ______.
    A. Quick ratio                           B. Current ratio
    C. Debt ratio                            D. Cash flows from operating activities

Which of the following statements is true? ______.
    A. To decrease a receivable, debit the account
    B. To decrease revenue, debit the account
    C. To increase owner's equity, debit the account
    D. To increase an expense account, credit the account

Investment banks are ______.
     A. banks that specialize in the management of wealthy people's investments
    B. financial institutions that make loans to corporations
    C. dealers in primary markets
    D. none of the above

What is the name of the document which can make a buyer feel confident that goods are of a certain standard? ______.
    A. Certificate of origin                   B. Commercial invoice
    C. Insurance policy                      D. Inspection certificate

In documentary collection, the exporters present the documents to ______ after goods have been shipped.
    A. the remitting bank                    B. the collecting bank
    C. the reimbursing bank                 D. the opening bank

John writes a check on his ABC Bank account to pay for goods at Peter. Who is the drawee?
    A. John            B. ABC Bank      C. Peter           D. Both A and C

From a Chinese bank's point of view, the currency account which it maintains abroad is known as ______, while a RMB account operated in China for a foreign bank is termed
        A. a vostro account...a nostro account
        B. a nostro account...a vostro account
        C. a mirror account...a nostro account
        D. a vostro account...a mirror account

trade, above, expiration, respond, strike, profitable, seller, how, most, financial

   In general, an option gives to the buyer the right, but not the obligation, to buy or sell a good, whereas the option seller must  (21)   accordingly. Many different types of option contracts exist in the  (22)   world. The two major types of contracts  (23)   on organized options exchanges are calls and puts.
   A call gives to the buyer of the option contract the right to buy a specified number of units of an underlying asset, at a specified price called the exercise or  (24)   price, on or before a specified date called the expiration date or strike date. A put gives its the buyer the right to sell a specified number of units of an underlying asset at a specified price on or before a specified date. In all cases the  (25)   of the option contract, the writer, is subordinate to the decision of the buyer, and the buyer exercises the option only if it is  (26)   to him or her. The buyer of a call benefits if the price of the asset is  (27)   the exercise price at expiration. The buyer of a put benefits if the asset price is below the exercise price at expiration.
    The complete definition of an option must clearly specify  (28)   the option can be exercised. A European - type option can only be exercised on a specified date, usually the  (29)   date. An American -type option can only be exercised by the buyer at any time until the expiration date. American options are used on  (30)   of the organized options exchanges in the world.  Both types of options can be freely traded at any time until expiration.

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The importer will require a full set of bills of lading in order to obtain the goods from overseas port. The bills of lading can only be obtained by payment of the bill of exchange (D/P), or by acceptance (D/A). Therefore, the importer cannot obtain the goods without paying or accepting the bill of exchange, and conversely an exporter retains control of the goods until payment or acceptance of bill of exchange. When goods are sent by air, the airway bill could show the importer's bank as consignee. Once again the importer must pay or accept a bill of exchange to be able to obtain the goods. Once the importer has paid or accepted the bill of exchange, the importer's bank will issue a delivery order. The delivery order is an authority, signed on behalf of the bank, authorizing the airport to release the goods to the named importer. An exporter should obtain the prior agreement of the importer's bank before he consigns goods to that bank. In practice, the importer's bank will not agree to be named as consignee, unless its own customer is of major importance.
   When D/P terms are used, it is unnecessary to include a bill of exchange, since the over- seas bank can release documents on payment of the invoice amount. However, sight drafts are usually included.

A firm’s cash flows can be divided into cash flow from: (1) operating activities (2) investment activities, and (3) financing activities. The operation activity cash flows are cash flows--inflows and outflows--directly related to origination and sale of the financial firm's assets and to operating costs such as general market activities, security trading activities, interest received and foreclosed collateral. Investment activity cash flows are cash flows and financial investments. Clearly, purchase transactions would result in cash outflows whereas sales transaction would generate cash inflows. The financing activity cash flows result from debt and equity financing transactions.  Borrowing and repaying either short - term debt or long - term debt would result in a corresponding cash inflow or outflow. Similarly, the sale of common or preferred stock would result in a cash inflow whereas the repurchase of stock or payment of cash dividends would result in a financing outflow. Summarizing the firm's operating, investment, and financing activity cash flows during a given period helps to account for changes in the firm's cash position from the beginning to the end of the period chosen.
   Managing cash is a very important activity for financial intermediaries. The cash flow statement provides the basics structure of all sources and uses of cash.

Securities regulators, at both the domestic and international levels, shall be guided by a constant concern for investor protection.

The New Basle Capital Accord is more extensive and complex than the 1988 Basle Accord, which is a natural reflection of the advancement and innovations in the financial marketplace and the need for a more risk -sensitive framework.

A credit card is a plastic card (or its equivalent) to be used upon presentation by the cardholder to obtain money, goods, or services, possibly under a line of credit established by the card issuer. The cardholder is billed for any outstanding balance.
   Credit card customers are given a credit limit on the credit card account and can buy goods and services up to this amount. Normally, banks will set different credit lines to the different groups of cardholders. Every time cardholder uses a credit card for purchasing, he/she must sign a sales slip in the presence of the seller, and the signature is then compared to the signature on the card. Copies of the sales slips have the details of the card and they also show the details and amount of the sale.
   Each month the cardholder receives a statement from the bank which details all the trans- actions in the month, together with the total amount outstanding and any minimum amount that needs to be paid. When the full balance is not settled each month, the cardholder is charged a compound interest ( say 0. 05% ) on the outstanding balance , and this is supposed to provide the bank with a main source of income ( although in China , this revenue is still low because people are reluctant to run into debt) . Other two major sources of credit card services are the annual fee from the cardholders and the percentage of the sales revenue as the commission paid by the seller.

Open account is an arrangement between the seller whereby the goods are manufactured and delivered before payment is required. Open account provides for payment at some stated specific future date and without the buyer issuing any negotiable instrument evidencing his legal commitment. The seller must have absolute trust that he will be paid at the agreed date. The seller should recognize that in certain instances it is possible to discount open accounts receivable with a financial institution.

You work as an accountant for an electric equipment producer. You delivered two orders to one customer on 10 December 1996 and 20 January 1997 respectively, but haven't received any payment yet. The customer has been sent two detailed statements each after 20 days of delivery. So you are sending him one more in a letter form.
   Write a letter about 100-120 words advising your customer to settle his accounts as soon as possible.