2012年金融专业英语证书考试FECT模拟试题及答案-9.doc

www.TopS大家网9 / 92012年金融专业英语证书考试FECT模拟试题及答案-9SECTION ONE (Compulsory)：Answer all ten questions in this section. Each question carries 1 mark. 1. Multiple-choice questions: from the following four options, select a correct and fill in its labeling the brackets. (A total of 10 points) 1. Chu Wang, CFA, gathered the following data to estimate the implied growth rate of dividends for Shenghai Toys Co. to use as an input for valuing the companys common stock. Return on Assets 10% Profit Margin 5% Total Assists CNY 50 million Debt Ration 40% Payout Ration 25% Wangs estimate of Shenghai Toys implied growth rate would be closest to: () A. 4.17%. B. 6.25%. C. 12.50%. D. 18.75%. 2. If market interest rates rise, the price of a callable bond, compared to an otherwise identical option-free bond, will most likely: () A. Increase by less than the option-free bond. B. Decrease by less than the option-free bond. C. Decrease by more than the option-free bond. D. Decrease by the same amount as the option-free bond. 3. Strongsville Fabricators Inc. uses the FIFO method of inventory valuation. Assuming a rising costs environment and other factors held constant, Strongsvilles price-to-earnings and price-to-book multiples relative to those for another company that uses the LIFO method of inventory valuation would be: () A. Answer A. B. Answer B. C. Answer C. D. Answer D. 4. Economic growth is measured by a positive change in which of the following? () A. The money supply. B. The Producer Price Index. C. The Gross Domestic Product. D. The balance of payments. 5. Five years ago, the DCA Corporation issued 20-year bonds with a coupon rate of 12%. If the investors required rate of return (IRR) on these bonds is currently 9%, the bonds will be priced: () A. Below par. B. Above par. C. Above and below par. D. At par. E. As perpetuity. 6. Which of the following is NOT true? () A. If interest rates rise, it is good for bondholders. B. The Fed just cut interest rates C. For a straight bond, the coupon rate goes up as interest rates drop. D. Inflation leads to lower bond prices. E. The more compounding periods, the higher the amount of interest you must pay if you are the issuer of a bond. 7. Karen, CFA, is the investment manager of a corporate pension plan. Under ERISA, she owes her fiduciary duty to: () A. The plan sponsor. B. The firms shareholders. C. The plan participants and beneficiaries. D. None of the above. 8. Which of the following statements concerning the AIMR Performance Presentation Standards about the calculation of composite returns is true? () A. Asset weighting within composites is not required using beginning of period weights. B. Portfolios no longer under management should be included in historical composites. C. Model results may be presented if they conform to the portfolios investment strategy and objectives. D. All of the above. 9. When calculating the risk premium for equity market using historical returns, which of the following is most accurate? () A. Geometric mean returns should be used because they are more applicable to multi-period time horizons. B. Geometric mean returns should be used because they are more applicable to single time horizons. C. Arithmetic mean returns should be used because they are more applicable to single time horizons. 10. Vivian, CFA, a research analyst assigned to Double Limited, has been recommending the stocks purchase in her quarterly report. Vivian has recently married and just discovered her husbands trust account owns several million dollars worth of Double Limited. The stock makes up more than 50 percent of the trusts value but less than 5 percent of Double Limiteds outstanding shares. According to AIMR Standards of Professional Conduct, Vivian should: () A. Take no action because the stock is not in her name. B. Disclose her interest in the stock at the time of her next report. C. Cease including Double Limited stock in her report. D. Take no action because the holding is less than 5 percent of the outstanding shares. SECTION TWO(Compulsory)：Answer the questions in this section. Reading Comprehension: (10 points) Joseph Glass, CFA, is a consultant who provides advisory services to large manufacturing companies. Glass has been retained by ABCO, a leading manufacturer of widgets for automobiles in the United States. ABCO has hired Glass to evaluate the possibility of expanding their current base of operations by building an additional facility in South America. Management of ABCO has identified an increase in demand for widgets in South America over the past decade, and any new manufacturing facility would produce goods to satisfy that void and would be distributed and sold across South America. Glass is not familiar with the current economic climate in South America, but is aware that several governments have attempted to encourage economic development in their countries through the enactment of pro-business legislation. Two of these countries, Venezuela and Peru, both have the reputations of being “friendly” to foreign economic investment within their borders. The two countries share some similarities: both, until the past twenty years, were primarily agricultural economies with little industrial development. Also, both countries can offer a relatively low-cost labor force, although their workers in general, are not highly skilled. The government of Peru has declared that protecting the countrys environment is of utmost importance, and has established a regulatory body that oversees any environmental concerns that may arise as the country becomes more industrialized. Fairly stringent regulations have already been put into place in order to ensure that going forward, the operating practices of manufacturers within their countrys borders will be in balance with the governments concern for their countys natural resources. Regulations cover areas of concern such as air emissions, water conservation and the use of sustainable resources. Glass advised ABCO that a cost-benefit analysis must be performed to accurately determine both the direct and indirect costs of compliance with the regulations. The Venezuelan government has taken steps to ensure that it can carefully manage the development of its countrys emerging economy, and to ensure that a competitive market is maintained. A regulatory agency was established five years ago to provide guidance for any new manufacturing concern seeking to operate in Venezuela. The head of the agency is Juan Santos, the former CEO of one of the first modernized manufacturing facilities in the country. During his tenure as head of the agency, he has demonstrated his ability to render decisions that attempt to simultaneously satisfy legislators, industry participants, and consumers. Glass is impressed by Santos work so far, but realizes that over the past five years, Venezuela has experienced a period of relatively slow economic development. Glass believes that Santos skills will truly be put to the test in the upcoming years of the anticipated economic expansion. Glass acknowledges the need for governmental regulation of industry, but recognizes that there always are offsetting costs, both short-term and long-term of such controls. Based upon his knowledge of events that have occurred in the United States over the past thirty years, Glass recommends that ABCO continue to carefully monitor economic developments in both countries even after a site for a new manufacturing facility is selected. Part 1) Should ABCO build a new facility in either of the two countries, it is almost a certainty that they would be the low-cost producer of widgets, with the capacity to satisfy nearly all demand in the region. A natural monopolist operating in an unregulated industry will produce at the point where: A. Marginal costs equal marginal revenue. B. Average costs equal marginal revenue. C. Average costs equal average revenue. D. The marginal cost curve intersects the demand schedule. Part 2) The social regulation policies enacted by the government of Peru would least likely to cause which of the following outcomes? () A. Higher costs of production. B. A disproportionately higher compliance expense for larger firms rather than smaller firms. C. Higher prices for the end consumer. D. Attempts by industry participants to avoid compliance through creative response. Part 3) If ABCO were to build its new facility in Peru, compliance with the countrys regulatory policies will increase the price of their product by approximately ten percent. Some consumers may respond by not replacing the widgets in their automobiles as frequently as before, which will cause decreased fuel efficiency. This unintended effect of regulation is an example of: () A. The capture hypothesis. B. A creative response. C. A feedback effect. D. The share-the-gains, share-the-pains theory. Part 4) The appointment of Santos, an industry “insider”, to head the regulatory agency in Venezuela has the potential to cause a reaction predicted by which of the following theories of regulatory behavior? () A. Rate-of-return regulation. B. Share-the-gains, share-the-pains theory. C. The capture hypothesis. D. Cost-of-service regulation. Part 5) Santos, as the head of the main regulatory body in Venezuela, must decide how to manage the effects of an unanticipated sharp increase in the cost of electricity. Santos proposed regulation that will allow manufacturers to pass on the increased costs at scheduled intervals over a five year period. This approach is an example of: () A. Rate of return regulation. B. Cost-of-service regulation. C. Share-the-gains, share-the-pains theory. D. Social regulation. Explanations of terms：(10 points) 1. Liquidity 2. Cost-push inflation 3. Surveillance 4. External debt 5. Foreign reserve Question3: How many factors to explain the reserve holdings? Question4: What is The Monetary Policy Instruments of the Central Bank? Question5: What is Concept of Trust Market？And what the composition of it is? Question6: What is the Money Laundering?参考答案1. C B D C B ，A C B A BReading Comprehension: (10 points) Part 1) Your answer: B was incorrect. The correct answer was A! A monopolist operating free of price regulation will produce at a rate where marginal revenue equals marginal cost. Part 2) Your answer: B was correct! Increased regulation typically results in a disproportionately higher compliance expense for smaller firms, because the expense is allocated over a smaller base of production than for a larger firm. Part 3) Your answer: C was correct! A feedback effect occurs when consumers change their behavior as a result of a regulation. In this instance, regulations originally enacted to protect the environment may unintentionally lead to practices that are harmful to the environment. Part 4) Your answer: C was correct! The capture hypothesis assumes that at some point, a regulatory body will at some point be influenced or even controlled by the industry being regulated. An industry veteran will still have contacts or relationships with current industry participants, which may affect his ability to render impartial decisions. Part 5) Your answer: B was incorrect. The correct answer was C! Under the share-the-gains, share-the-pains theory, regulators attempt to satisfy all three interested parties of an industry: the customers, the regulators, and the regulated firms themselves. By regulating that manufacturers and customers must share the increased costs, Santos is attempting to ensure that no one party bears an unfair burden. Explanations of terms：(10 points) 1. Liquidity：Liquidity refers to the ease and willingness with which an asset may be converted into money on short notice. 2. Cost-push inflation：The process of a continuous rise of price level caused by cost increase of productive factors, such as wages, raw materials and so on is called cost-push inflation. Cost-push inflation mainly includes two kinds; wage-cost-push inflation and profit-push-inflation. 3. Surveillance：Monitoring system that alerts banking regulators to sudden change in a banks condition. 4. External debt：Gross external debt, at any given time, is the outstanding amount of those actual current, and not contingent, liabilities that require payment(s) of principal and/or interest by the debtor at some point (s) in the future and that are owed to non-residents by residents of an economy. 5. Foreign reserve：External assets that are readily available to and controlled by monetary authorities for direct financing of payments imbalances, for indirectly regulating the magnitude of such imbalances through intervention in exchange markets to affect the currency exchange rate, and/or for other purposes. Question3： Answer: There are five key factors that explain reserve holdings. Economic size. To the extent that international transactions increase with economic size, reserves are expected to rise with population and real GDP per capita. Current account vulnerability. A more open economy is more vulnerable to external shocks, so greater trade openness would be associated with higher reserve holdings. Also, the larger the external shocks (say, export volatility), the higher the level of reserves. Capital account vulnerability. As with the current account, greater financial openness could be associated with higher crisis vulnerability and thus influence the demand for reserves. In addition, the greater the potential for resident-based capital flight from the domestic currency, the higher the level of reserves. Exchange rate flexibility. Greater flexibility reduces the demand for reserves, because central banks no longer need a large stockpile of reserves to manage a pegged exchange rate. However, many countries that have adopted more flexible. Question4： Answer: In order to hit the monetary policy targets, a central bank should have sufficient and sound monetary policy instruments. In the process of long time development, a set of systematic monetary policy instruments has been developed, included are general policy tools, selective tools, direct credit-control tools and indirect credit-control tools. Thus, a central bank has a set of tools that together enable it to influence the size of the money supply in order to attain its broader economic objectives. Question5： Answer: (1) The formation of modern trust marks the change from the civil trust taking the natural person as the trustee, to the business trust considering the corporate as the trustee. The contractors trust activities for the purpose of making profits for the trustee, making trust a commercial activity and enable trust service become an important component of the financial services business. When the trust becomes a commercial activity, in particular after its special advantage becomes an important component in financial system of the industry, the sum of demand and supply of the service way of the trust forms trust market. Also, we can say trust market is the place where trust service industry fulfills its value. Trust market, together with the capital market, monetary market, and insurance market, forms the modern financial markets. (2) Composition of Trust Market The main body of trust market is the trust parties. Trust parties include trust settler, trustee and beneficiary. The beneficiary and the trustee may be the identical people, also may not be the identical person. A trustee may be a beneficiary, but may not be the only beneficiary of the identical trust. The three compositions above form not only an economical relation, but also a kind of legal relationship, which all together constitute the main body of trust market. The settler Trust is the creation of the settler who demands the trust services. Settler provides trust property, he determines who the beneficiary is and the right beneficiary enjoys; and he appoints the trustee and are authorized to supervise the trustee to implement the trust. Chinas Trust Law stipulates that the trustee must be organization which is established by the completely civil capacity natural person. A settler generally should have the following three conditions; the completely civil capacity; certain amount of property; not having the debts unable to pay in their assets position. The trustee Trustee is the provider of trust service, and he is the person who provides management, the usage of an transaction according to the trust behavior stipulation, which usually refers to Trust and Investment Corporation. Beneficiary Beneficiary is the person who enjoys the trust benefit in the trust relation. Question6： Answer: (1) Criminals and their associates use the financial system to make payments and transfers of funds from one account to another; to hide the source and beneficial ownership of money; and to provide storage for bank notes through a safe deposit facility. These activities are commonly referred to as money-laundering. (2) Money laundering often involves a complex series of transactions and numerous financial institutions from many jurisdictions. Non-banking financial institutions such as bureau de change, check cashing services, insurers, brokers and traders are also increasingly utilized by money launderers. The money laundering process is more broadly classified into three basic steps; placement, layering and integration. (3) The placement stage is accomplished by changin