单选题 Liquidity risk arises from the inability of a bank to accommodate unexpected decreases in {{U}}(21) {{/U}} or to fund increases in {{U}}(22) {{/U}}. When a bank has {{U}}(23) {{/U}} liquidity, it cannot obtain sufficient funds, either by increasing liabilities or by {{U}}(24) {{/U}} assets promptly, at a reasonable cost, thereby affecting profitability. In extreme cases, insufficient liquidity cam lead to the {{U}}(25) {{/U}} of a bank.

单选题A major type of risk that banks face is credit risk or the failure of a counter-party to perform according to a contractual arrangement. This risk applies not only to loans but also to other on-and-off balance sheet exposures such as guarantees, acceptances and securities investments. Serious banking problems have arisen from the failure of banks to recognize impaired assets, to create reserves for writing off these assets, and to suspend recognition of interest income when appropriate.

单选题 Portfolio management is becoming an {{U}}(21) {{/U}} part of the credit process. In the management of their portfolio, commercial banks emphasize the importance of asset and earning {{U}}(22) {{/U}}, the immediate recognition as losses of all credit judged to be {{U}}(23) {{/U}}, and the maintenance of appropriate credit loss {{U}}(24) {{/U}}. All identified losses should be immediately {{U}}(25) {{/U}}

单选题Apart from borrowing from banks, a firm or an individual can obtain funds in a financial market in two ways. The most common method is to issue a debt instrument, such as a bond or a mortgage, which is a contractual agreement by the borrower to pay the holder of the instrument fixed amounts at regular intervals (interest and principal payments) until a specified date (the maturity date), when a final payment is made. The maturity of debt instrument is the time (term) to that instrument"s expiration date. A debt instrument is short - term if its maturity is less than a year and long- term if its maturity is ten years or longer. Debt instruments with a maturity between one and ten years are said to be intermediate- term. The second method of raising funds is by issuing equities, such as common stock, which are claims to share in the net income (income after expenses and taxes) and the assets of a business. If you own one share of common stock in a company that has issued one million shares, you are entitled to one millionth of the firm"s net income and one millionth of the firm"s assets. Equities usually earn periodic payments (dividends) and are considered long - term securities because they have no maturity date. The main disadvantage of owning a corporation"s equities rather than its debt is that an equity holder is a residual claimant; that is, the corporation must pay all its mature debt holders before it pays its equity holder. The advantage of holding equities is that equity holders benefit directly from any increase in the corporation"s profitability or asset value because equities confer ownership rights on the equity holders. Debt holders do not share in this benefit because their dollar payments are fixed.

单选题 Passage 2 Once you own an option, there are three methods that can be used to make a profit or avoid loss : exercise it, offset it with another option, or let it expire worthless. By exercising an option you have purchased, you are choosing to take delivery of (call) or to sell (put) the underlying asset at the option's strike price. Only option buyers have the choice to exercise an option. Option sellers, on the other hand, may experience having an option assigned to an option holder and subsequently exercised. Offsetting is a method of reversing the original transaction to exit the trade. If you bought a call, you have to sell the call with the same strike price and expiration. If you sold a call, you have to buy a call with the same strike price and expiration. If you bought a put, you have to sell a put with the same strike price and expiration. If you sold a put you have to buy a put with the same strike price and expiration. If you do not offset your position, then you have not officially exited the trade. If an option has not been offset or exercised by expiration, the option expires worthless. If you originally sold an option, then you want it to expire worthless because then you get to keep the credit you received from the option premium. Since an option seller wants an option to expire worthless, the passage of time is an option seller's friend and an option buyer's enemy. If you bought an option, the premium is nonrefundable even if you let the option expire worthless. As an option gets closer to expiration, it decreases in value. It is important to note that most options traded on U.S. exchanges are American style options. In essence, they differ from European options in one main way. American style options can be exercised at any time up until expiration. In contrast, European style options can be exercised only on the day they expire. All the options of one type (put or call) which have the same underlying security are called a class of options. For example, all the calls on IBM constitute an option class. All the options that are in one class and have the same strike price are called an option series.

单选题The larger a corporation's taxable income, the closer its average tax rate comes to the higher ______ pate.

单选题{{B}}Passage Three{{/B}} Banks with large international credits limit their concentrations of loans in any one country according to the perceived "country risk". Country risk generally refers to economic and political conditions existing in a country. In any case, a loan to the foreign nation's government or its agencies is generally safer than a loan to a private-sector borrower. Even loans to governments may be unsafe, however, because of what is called "sovereign risk". When foreign governments experience economic or political pressures, there is a risk that they will divert resources to the correction of their domestic problems at the expense of servicing their debts to external lenders. In the 1980s, several less-developed nations requested the rescheduling of bank loans at considerable sacrifice in interest income to the banks involved. At the extreme, governments might simply repudiate their debts; that is, they might no longer recognize their obligations to external creditors.

单选题Directions: In this section, you will hear ten short conversations. At the end of each conversation, a question will be asked about what was said. The conversation and the question will be spoken only once. During the pause, you must read the four choices marked A, B, C, D, and decide which is the best answer. Then mark the corresponding letter on the ANSWER SHEET with a single line through the center.

单选题Consumer Credits are high risk and high interest credit products, which are usually classified into three sorts: amortization loan, credit card and non- installment loan for purchasing cars or non - structure houses or investing a little amount and so on. Their maturity usually range from two to five years. Education loan is just one type of amortization loans. Credit card, first issued by Franklin National Bank in 1952, is a kind of revolving loan, and is getting more and more popular. Non - installment loan is a kind of short - term loan to meet temporary need and is supposed to pay back at one rime. It is also called bridge loan. Commercial banks provide long- term Mortgage Loans to borrowers (consumers) to purchase homes/land. The ownership of the property remains in mortgagees and the possession of property usually remains in mortgagors mdess and until the occurrence of default or full repayment. Maturity of such loans is usually 30 years and the interest rates are fixed. Maximum amount of such loans is 70% of the property value, and the balance shouhl be paid in cash as down payment. A home mortgage plan is much more than a mortgage loan. It has additional benefits. For example, the loan remount is up to 85% of borrower"s property value, and repayment periods are up to 30 years. Repayment schemes include straight line repayment schemes, reducing balance repayment schemes, step- up repayment schemes, and fortnightly repayment option. Other financial services include home owner"s overdraft, up to HK $ 400,000 decoration loan as much as HK $ 400,000 with a repayment period of up to three years. Bridging Loan, which will help borrowers to complete the purchase of the new property before borrowers" receipt of safe proceeds from borrowers" existing property, equity Loan, up to HK $ 2,000,000 for use as a deposit for a new house, or for other personal financial needs exclusive preferential interest rate.

单选题______ is a large loan, generally more than USD10 million, negotiated between a borrower and a single bank, but actually funded by a number of banks. A. A project loan B. A syndicated loan C. An export credit D. Consumer credit

单选题Which one is not included in the financial statement footnote? (a)changes in accounting estimates. (b)accounting methods used in preparing the financial statement. (c)contingent liabilities can not be, reasonably estimated. (d)debtors which happened before the balance sheet date are collected between the balance sheet date and the issue of statement for that year.

单选题Retained Earnings is most appropriately classified as ______. (a)a fixed asset (b)an intangible asset (c)shareholder's equity (d)a fictitious Iiability

单选题Sam Company Ltd. produces a range of products and absorbs production overhead using a rate of 168% on direct wages. The absorption rate was calculated from following budgeted figures: ＄ Direct wages 100,000 Fixed production overhead 90,000 Variable production overhead 78,000 Sam is making component W, which is an essential part of product M. The cost of making component W is as follows: ＄ Raw material 10 Direct wages 8 Production overhead 18 36 It is found that component W could be bought from an outside supplier at ＄21. It is unlikely to reduce any production costs even if component W is acquired from outside. Required: (a)Determine the overhead absorption rate. (b)Advise whether the company should continue making component W or buy it from outside.

单选题A cheque payable to ABC Company is credited to the personal account of Mr. Gao. The bank ______.

单选题A documentary collection can be defined as the collection of a sum due from a buyer by a bank ______ against delivery of certain documents.

单选题The spot rate of United States dollars is 1.59～1.60; the three month premium is 0.50～0.45 cents. What is the rate at which a UK bank would buy dollars under a three -month fixed forward contract?

单选题The applicants sometimes provide short - term loans to the beneficiary.

单选题Mr. Wong is a small company. And it failed to record every transaction. Now you are provided with the following information: capital at 1 January 2003 is ＄30,000, capital at 31 December 2003 is ＄31,000. During 2003, drawings are ＄2,000. Then the net profit for the year 2003 is ______. (a)＄3,000. (b)＄-1,000. (c)＄1,000. (d)＄-3,000.

单选题The middleman will approach the ultimate buyer and ask him to arrange a transferable documentary credit in his (the middleman's) favour. Here "in the middleman's favour" means that ______.

单选题A forward exchange rate can move for two reasons: (1) because the spot rate moves, and (2) ______. A. because of changes in interest rate which affect the forward rates B. because of changes in interest rate which affect the forward differential C. for the changes in interest rate affect the forward rates D. because of changes in interest rate which affect the spot rates