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Free CFA-Level-I Exam Braindumps (page: 306)

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PDF with 3963 Questions

The simple or linear annualized short-term interest rate is calculated according to:

  1. multiply the annual rate by the length of the period in months.
  2. divide the annual rate by the length of the period in months.
  3. multiply the annual rate by the length of the period, as a proportion of a year.
  4. multiply the annual rate by the length of the period as a percentage of six months.
  5. divide the annual rate by the length of the period as a proportion of the year.

Answer(s): C

Explanation:

The rate to be paid over the period is equal to the annual rate multiplied by the length of the period, as a proportion of a year.



________ exchange-rates are determined by the market forces of supply and demand.

  1. None of these answers
  2. Fixed
  3. Mixed
  4. Flexible

Answer(s): D

Explanation:

A system of flexible exchange rates is a system where the exchange rate is determined by the market forces.
Floating exchange rate is synonymous with flexible exchange rate.



Exports of goods (merchandise) and services minus the imports of goods and services equals ________.

  1. current account
  2. balance of merchandise trade
  3. balance on current accounts
  4. balance on goods and services

Answer(s): D

Explanation:

When the balance of service exports and imports are added to the balance of merchandise trade the balance on goods and services is obtained.



A country cannot maintain currency convertibility if:

  1. none of these answers.
  2. it allows the exchange rate value of its currency to fluctuate and follows an independent monetary policy.
  3. it fixes the exchange rate value of its currency and has a dependent monetary policy.
  4. it fixes the exchange rate value of its currency and follows an independent monetary policy.

Answer(s): D

Explanation:

A country can either follow an independent monetary policy and allow its exchange rate to fluctuate or tie its monetary policy to the maintenance of the fixed exchange rate.






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