金融英语考试模拟试题及答案(03)
1. B A D C A， C A C A B
Reading Comprehension: (10 points)
Part 1)
Your answer: B was correct!
Profitability in a particular industry attracts competition from other firms, which then forces prices down, eventually reducing profits back to a long-run normal level. The opposite holds true for industries experiencing losses.
Part 2)
Your answer: D was correct!
During economic downturns, producers of low-cost products increase their market share at the expense of high-cost producers. This also is true within firms that produce various priced products.
Part 3)
Your answer: B was incorrect. The correct answer was C!
(1 + growth of firm sales) = (1 + growth of industry sales) x (1 + fractional change of market share)
= 0.98 x 1.005
= 0.9849
Growth of firm sales = –1.51%
Part 4)
Your answer: B was incorrect. The correct answer was C!
0.97 = 1.01 x (1 + x)
0.9604 = 1 + x
–3.96% = x
Part 5)
Your answer: The correct answer was B!
An increase in its marketing budget.
The percentage change in a firm’s market share is directly proportional to the percentage change in its marketing expenditures. An increase in the overall number of cars sold would not necessarily change Ford’s market share. New competition would be negative, as would war, as Ford’s share of the SUV market (gas guzzlers) is large.
Explanations of terms：(10 points)
1. Official interest rate ：Official interest rate is the rate set by the central bank or monetary authorities. The interest rate is one of levers used by governments to regulate economy.
2. Fiat money：Money proclaimed to be money by fiat or government decree is sometimes called fiat money.
3. GDP：The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
4. Mean：A measure of central tendency of the probability distribution of a random variable that equals the weighted average of all possible outcomes using their probabilities as weights.
5. Primary markets：Financial markets in which newly issued debt or equity claims are sold to initial buyers by private borrowers to raise funds for durable-goods purchases or new ventures and by governments to finance budget deficits.
Question3：
Answer:
Since the Great Depression of the 1930s, governments have actively pursued the goal of economic stability at full employment. Known as internal balance, this objective has two dimensions; (D a fully employed economy, and ?no inflation—or, more realistically, a reasonable amount of inflation. Nations traditionally have considered internal balance to be of primary importance and have formulated economic policies to attain this goal.
Policy makers are also aware of a nation’s balance-of-payments (BOP) position. A nation is said to be an in external balance when it realizes neither BOP deficits nor BOP surpluses. In practice, policy makers usually express external balance in terms of a BOP sub account, such as the current account. In this context, external balance occurs when the current account is neither so deeply in deficit that the home nation is incapable of repaying its foreign debts in the future nor so strongly in surplus that foreign nations cannot repay their debts to it. Although nations usually consider internal balance to be the highest priority, they are sometimes forced to modify priority when confronted with large and persistent external imbalances.
Question 4
Answer:
The money markets are wholesale markets where most securities trade in large denominations. This characteristic effectively blocks most individuals from investing directly in these securities. However, the markets usually find a way to correct for such deficiencies, especially when potential customers are available. Money market mutual funds represent one such correction.
Money market mutual funds (MMMFs) are funds that aggregate money from a group of small investors and invest it in money market. They have grown enormously popular since their inception in the early 1970s because they provide a means for small investors to take advantage of the returns offered on money market securities. These securities would be out of reach to most small investors because of their large minimum denominations.
Question5：
Answer:
(1) Leasing is flexible. Companies have different needs, different cash flow patterns, different irregular streams of income. For example, start-up companies typically are characterized by little cash and limited debt lines. Mature companies might have other needs: to keep debt lines free, to comply with debt covenants, and to avoid committing to equipment that may quickly become obsolete. Therefore, your business conditions—cash flow, specific equipment needs, and tax situation— may help define the terms of your lease. Moreover, a lease provides the use of equipment for specific periods of time at fixed rental payments. Therefore, leasing allows you to be more flexible in the management of your equipment.
(2) Leasing is practical. By leasing, you transfer the uncertainties and risks of equipment ownership to the lessor, which allows you to concentrate on using that equipment as a productive part of your business.
(3) Leasing is cost effective. Equipment is costly and some of the costs are unexpected. When you lease, your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to best meet your needs.
Further, your equipment needs can change over time due to changes in your company, such as diversification. Leasing allows you to stay on the cutting edge of technology. Sophisticated business managers have learned that the primary benefits of higher productivity and profit come from the use of equipment, not owning it.
(4) Leasing has tax advantages. Rather than dealing with depreciation schedules and Alternative Minimum Tax (AMT) problems, you, the lessee, simply make the lease payment and deduct it as a business expense.
(5) Leasing helps conserve your operating capital. Leasing keeps your lines of credit open. You don’t tie up your cash in equity. Also, you avoid costly down payments. With other advantages such as offbalance sheet financing, leasing helps you better manage your balance sheet.
Reading Comprehension: (10 points)
Part 1)
Your answer: B was correct!
Profitability in a particular industry attracts competition from other firms, which then forces prices down, eventually reducing profits back to a long-run normal level. The opposite holds true for industries experiencing losses.
Part 2)
Your answer: D was correct!
During economic downturns, producers of low-cost products increase their market share at the expense of high-cost producers. This also is true within firms that produce various priced products.
Part 3)
Your answer: B was incorrect. The correct answer was C!
(1 + growth of firm sales) = (1 + growth of industry sales) x (1 + fractional change of market share)
= 0.98 x 1.005
= 0.9849
Growth of firm sales = –1.51%
Part 4)
Your answer: B was incorrect. The correct answer was C!
0.97 = 1.01 x (1 + x)
0.9604 = 1 + x
–3.96% = x
Part 5)
Your answer: The correct answer was B!
An increase in its marketing budget.
The percentage change in a firm’s market share is directly proportional to the percentage change in its marketing expenditures. An increase in the overall number of cars sold would not necessarily change Ford’s market share. New competition would be negative, as would war, as Ford’s share of the SUV market (gas guzzlers) is large.
Explanations of terms：(10 points)
1. Official interest rate ：Official interest rate is the rate set by the central bank or monetary authorities. The interest rate is one of levers used by governments to regulate economy.
2. Fiat money：Money proclaimed to be money by fiat or government decree is sometimes called fiat money.
3. GDP：The monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.
4. Mean：A measure of central tendency of the probability distribution of a random variable that equals the weighted average of all possible outcomes using their probabilities as weights.
5. Primary markets：Financial markets in which newly issued debt or equity claims are sold to initial buyers by private borrowers to raise funds for durable-goods purchases or new ventures and by governments to finance budget deficits.
Question3：
Answer:
Since the Great Depression of the 1930s, governments have actively pursued the goal of economic stability at full employment. Known as internal balance, this objective has two dimensions; (D a fully employed economy, and ?no inflation—or, more realistically, a reasonable amount of inflation. Nations traditionally have considered internal balance to be of primary importance and have formulated economic policies to attain this goal.
Policy makers are also aware of a nation’s balance-of-payments (BOP) position. A nation is said to be an in external balance when it realizes neither BOP deficits nor BOP surpluses. In practice, policy makers usually express external balance in terms of a BOP sub account, such as the current account. In this context, external balance occurs when the current account is neither so deeply in deficit that the home nation is incapable of repaying its foreign debts in the future nor so strongly in surplus that foreign nations cannot repay their debts to it. Although nations usually consider internal balance to be the highest priority, they are sometimes forced to modify priority when confronted with large and persistent external imbalances.
Question 4
Answer:
The money markets are wholesale markets where most securities trade in large denominations. This characteristic effectively blocks most individuals from investing directly in these securities. However, the markets usually find a way to correct for such deficiencies, especially when potential customers are available. Money market mutual funds represent one such correction.
Money market mutual funds (MMMFs) are funds that aggregate money from a group of small investors and invest it in money market. They have grown enormously popular since their inception in the early 1970s because they provide a means for small investors to take advantage of the returns offered on money market securities. These securities would be out of reach to most small investors because of their large minimum denominations.
Question5：
Answer:
(1) Leasing is flexible. Companies have different needs, different cash flow patterns, different irregular streams of income. For example, start-up companies typically are characterized by little cash and limited debt lines. Mature companies might have other needs: to keep debt lines free, to comply with debt covenants, and to avoid committing to equipment that may quickly become obsolete. Therefore, your business conditions—cash flow, specific equipment needs, and tax situation— may help define the terms of your lease. Moreover, a lease provides the use of equipment for specific periods of time at fixed rental payments. Therefore, leasing allows you to be more flexible in the management of your equipment.
(2) Leasing is practical. By leasing, you transfer the uncertainties and risks of equipment ownership to the lessor, which allows you to concentrate on using that equipment as a productive part of your business.
(3) Leasing is cost effective. Equipment is costly and some of the costs are unexpected. When you lease, your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to best meet your needs.
Further, your equipment needs can change over time due to changes in your company, such as diversification. Leasing allows you to stay on the cutting edge of technology. Sophisticated business managers have learned that the primary benefits of higher productivity and profit come from the use of equipment, not owning it.
(4) Leasing has tax advantages. Rather than dealing with depreciation schedules and Alternative Minimum Tax (AMT) problems, you, the lessee, simply make the lease payment and deduct it as a business expense.
(5) Leasing helps conserve your operating capital. Leasing keeps your lines of credit open. You don’t tie up your cash in equity. Also, you avoid costly down payments. With other advantages such as offbalance sheet financing, leasing helps you better manage your balance sheet.