2012年金融专业英语证书考试FECT模拟试题及答案-8

1、2012年金融专业英语证书考试FECT模拟试题及答案-8SECTION ONE (Compulsory)：Single-choice questions Multiple-choice questions: from the following four options, select a correct and fill in its labeling the brackets. (A total of 10 points) 1. Tom cannot tell the difference between Coke and Pepsi. For Tom, these goods are:

2、() A. Perfect substitutes. B. Perfect complements. C. Necessities. D. None of the above. 2. Suppose the economy is running at the level of potential GDP, an increase in government spending in the long run will _ the price level and _ the output level, A. Increase, not change B. Increase, increase C.

3、 Increase, decrease D. Decrease, increase 3. For a natural monopoly, the optimal policy for a regulator to set is a price such that: () A. The price level equals marginal cost. B. The price level equals average variable cost. C. The price level equals average total cost but higher than marginal cost

4、. D. The price level is lower than marginal cost but higher than average total cost. 4. If AD shifts to the right to adapt to oil shocks from OPEC, then: () A. P and GDP will remain normal automatically. B. GDP may be unchanged although P will rise. C. GDP will rise and P will drop. D. The domestic

5、P of oil will drop. 5. School students paying a lower fare than adults on the MTR trains, or cheaper tickets to the theatre, is an example of: () A. The suppliers making less profit because some customers pay a lower price. B. Consumers obtaining more consumer surplus. C. Price discrimination allowi

6、ng the suppliers to make more profit from charging a higher price to customers whose demand is more elastic. D. Price discrimination allowing the suppliers to make more profit from charging a lower price to customers whose demand is more elastic. 6. When the nominal interest rate rises, () A. Econom

7、ic activity is encouraged. B. The real interest rate rises and the price of bonds rises. C. Inflation rises and the real interest rate falls. D. The real interest rate rises and the price of bonds falls. 7. A firm has fixed costs of 100,000 per month and variable costs of 25 for item. It proposes to

8、 sell these items for 50 each. What is the break-even output for this firm? () A. 4,000 units B. 4,000 units in a month. C. Cannot be worked out from the information. D. 2,000 units per month. 8. For an A- rated corporate bond that has deteriorating fundamentals, but is expected to remain investment

9、 grade, the greatest risk is most likely: () A. Event risk. B. Default risk. C. Liquidity risk. D. Credit spread risk. 9. An investor currently has a portfolio valued at $700,000. The investors objective is long-term growth, but the investor will need $30,000 by the end of the year to pay her sons c

10、ollege tuition and another $10,000 by year-end for her annual vacation. The investor is considering four alternative portfolios: Portfolio Expected Return Standard Deviation of Returns 18% 10% 210% 13% 314% 22% 418% 35% Using Roys safety-first criterion, which of the alternative portfolios minimizes

11、 the probability that the investors portfolio will have a value lower than $700,000 at year-end? () A. Portfolio 1. B. Portfolio 2. C. Portfolio 3. D. Portfolio 4. 10. A futures trader must deposit an additional amount of money into a margin account at the clearinghouse if the margin account ending

12、balance is below the: () A. Initial margin requirement. B. Variation margin requirement. C. Maintenance margin requirement. D. Amount of the loan borrowed from the clearinghouse. SECTION TWO(Compulsory)：Reading Comprehension(10 points) Jason Johnson, CFA, is a principal of a large private equity fir

13、m in New York. One of the associates in his firm has identified a potential investment opportunity for the firm. Gasline, Inc. is a major producer of pipeline used in the production of natural gas in the Southwest United States. Last year, Gasline had approximately $150 million in sales, and sales a

14、re expected to increase as a result of increasing demand for their product. The company was founded over twenty-five years ago, and has been publically traded for the last ten years. The founder of the company, along with other members of the family, holds the majority of the common stock, and the g

15、roup is amenable to liquidating their collective position at this time. Johnsons associate believes there is significant opportunity in the industry, based upon new technology that allows for the extraction of natural gas from locations and depths that previously were too cost-prohibitive. This new

16、technology should translate into increased demand for the industry, both domestically and abroad. Johnson concurs with this forecast for the industry, but believes further in-depth analysis must be performed before any investment decision can be made. Of particular concern to Johnson is Gaslines num

17、erous, complicated transactions related to the companys various stock-based compensation plans. Over the past decade, the company has participated in varying degrees in programs involving stock option grants, an employee stock purchase plan, and performance-based awards. Johnson believes that thorou

18、gh analysis of each program will determine whether or not the programs were properly accounted for in Gaslines financial statements. The CEO of Gasline was awarded a stock option package at the beginning of 2006, which could ultimately have a significant impact on the companys future earnings. Detai

19、ls of the CEOs stock option grant are outlined below. The company established an employee stock purchase plan in 2004. Under the existing plan guidelines, full-time employees of Gasline that have completed 3 years of service are eligible to purchase up to 1,000 Gasline shares per year at a 15% disco

20、unt. Since inception of the program, employees of the company have purchased approximately 75,000 shares. In the footnotes to the companys financial statements, it states that Gaslines management has determined that the plan is noncompensatory and therefore no compensation expense has been recognize

21、d in association with the plan. Part of the total compensation package for Gasline employees comes through participation in a service-based stock awards grant program. Under this program, all full-time employees are awarded 100 shares of Gasline common stock on July 1st of each year. Employees vest

22、at the rate of 20% each year, and are fully vested after the completion of five years of service. Employees that leave the company or retire prior to being fully vested forfeit all interest in the stock. Johnson questions whether or not Gaslines accounting treatment of this program is fully in accor

23、dance with FASB standards. CEO Options (grant date January 1, 2006) Part 1) For the valuation of the CEOs stock options granted on January 1, 2006, Gasline estimated a fair value of $100,000 by using Monte Carlo simulation. In accordance with SFAS No. 123(R), which of the following statements is mos

24、t accurate? Gaslines accounting treatment of the options is: () A. In compliance because a Monte Carlo simulation is an acceptable method of valuing options in the absence of a market-based instrument. B. Not in compliance because the fair value must be established by using the Black-Scholes option

25、pricing model. C. Not in compliance because the options had no intrinsic value as of the grant date. D. In compliance because the firm can elect to use either the intrinsic value model or the fair value model in the valuation of stock option plans. Part 2) Assume that the CEO of Gasline exercises 25

26、,000 of his options on December 31, 2006, and the market price of the stock on that date is $39.50. Calculate the total compensation expense for the year ending 2006 that Gasline should recognize in association with the CEO option grant. () A. $62,500. B. $25,000. C. $100,000. D. $0. Part 3) In acco

27、rdance with SFAS No. 123(R), which of the following statements regarding Gaslines employee stock purchase plan is most accurate? () A. The plan cannot be considered noncompensatory because the discount exceeds the per share transaction cost of a public offering. B. The plan can be considered noncomp

28、ensatory because it is offered equally to all full-time employees, not just upper management. C. The plan cannot be considered noncompensatory because participation is voluntary on the part of the employees. D. The plan can be considered noncompensatory because of the existence of the service-based

29、stock awards grant program. Part 4) If an employee stock purchase plan is considered noncompensatory in accordance with SFAS No. 123(R): () A. Compensation expense is recognized over the projected remaining service life of each employee. B. Compensation expense is deferred until the shares are sold.

30、 C. No compensation expense is recognized. D. Compensation expense is limited to the amount of the discount. Part 5) SFAS No. 123(R) gives specific guidelines as to what date is to be used to establish the fair value of the stock awarded through a service-based award program, and whether or not any

31、adjustment for awards that did not vest must be made to compensation expense at the end of the vesting period. Which of the following guidelines is most applicable to Gaslines program? () Date that fair value is established True-up adjustment necessary? A) Grant date No B) Last day of grant year Yes

32、 C) Grant date YesD) Last day of grant year NoSECTION THREE(Compulsory)：Explanations of terms(25 points) 1. Speculative demand for money 2. Time lag 3. Floating exchange rate 4. Present value 5. The OTC MarketSECTION FOUR(Compulsory)：Answer questions(32 points) Question1: What is Common Stock？ Quest

33、ion2: What is the Controllability? Question3: What is the monetary base? Question4: List the Counter-measures of Inflation as more as possible.参考答案SECTION ONE: A A C B D ，B B D C CSECTION TWO ： Part 1) A was correct! Under SFAS No. 123(R), firms are required to use the fair value method of valuing s

34、tock option plans. In the absence of a market-based instrument, firms may select and use an option-pricing model such as the Black-Scholes, the binomial model or Monte Carlo. Part 2) B was correct! Under the fair value method, as required by SFAS No. 123(R), Gasline will recognize compensation expen

35、se over the 4 year vesting period. For the year ending 2006, Gasline will recognize $25,000 (= $100,000 / 4 years) in compensation expense. Compensation expense is not affected when options are exercised Part 3) A was correct! If an employee stock purchase plan is considered noncompensatory under th

36、e guidelines of SFAS No. 123(R), then the company is not required to recognize any compensation expense associated with the program. One of the several criteria that must be met in order to be considered noncompensatory is that the discount cannot exceed the per share transaction cost of a public of

37、fering, typically 5% or less. The 15% discount offered by the Gasline plan is clearly in excess of the safe harbor amount, and therefore the plan cannot be considered noncompensatory. Part 4) B was incorrect. The correct answer was C! If an employee stock purchase plan is considered noncompensatory

38、under the guidelines of SFAS No. 123(R), then the company is not required to recognize any compensation expense associated with the program Part 5) B was incorrect. The correct answer was C! Grant date Yes The fair value is measured on the grant date of the award, which is the date the award is appr

39、oved by the board of directors or compensation committee. There is an adjustment, referred to as a “true-up”, to compensation expense at the end of the vesting period for awards that did not vest. Compensation expense is adjusted downward for those awards that did not vest.SECTION THREE： Explanation

40、s of terms：(10 points) 1. Speculative demand for money：The money held with the intention of securing profit from speculating activities is called the speculative demand for money, but it is difficult to foresee because it all depends on peoples expectation of the market. 2. Time lag：The time lag of

41、monetary policy is the delay between the time at which policy actions are taken and the time at which the expected results of monetary policy are achieved. 3. Floating exchange rate：A rate of exchange between one currency and others is permitted to float according to market forces. Most major curren

42、cies and countries now have floating exchange rates but governments and central banks intervene, buying or selling currencies when rates become too high or low. 4. Present value：A concept that is used to evaluate credit market instruments by placing all payments in terms of todays dollars so that th

43、ey can be added together. 5. The OTC Market：The OTC market is called the market for unlisted stocks. As explained previously, technically while there are listing requirements for exchanges, there are also listing requirements for the NASDAQ National and Small Capitalization OTC markets. Nevertheless

44、, exchange traded stocks are called listed, and stocks traded on the OTC markets are called unlisted.SECTION FOUR： Question1： Answer: A share of common stock in a firm represents an ownership interest in that firm. Common stockholders vote, receive dividends, and hope that the price of their stock w

45、ill rise. There are various classes of common stock, usually denoted as type A, type B, and so on. Unfortunately, the type does not have any meaning that is standard across all companies. The differences among the types usually involve either the distribution of dividends or voting rights. It is imp

46、ortant for an investor in stocks to know exactly what rights go along with the shares of stock being contemplated. In the event of liquidation, common stockholders have rights to a companys assets only after bondholders, other debt holders, and preferred stockholders have been satisfied. Typically,

47、common stockholders receive one vote per share to elect the companys board of directors (although the number of votes is not always directly proportional to the number of shares owned). The board of directors is the group of individuals that represents the owners of the corporation and oversees majo

48、r decisions for the company. Common shareholders also receive voting rights regarding other company matters such as stock splits and company objectives. In addition to voting rights, common shareholders sometimes enjoy what are called “preemptive rights. Preemptive rights allow common shareholders t

49、o maintain their proportional ownership in the company in the event that the company issues another offering of stock. This means that common shareholders with preemptive rights have the right but not the obligation to purchase as many new shares of the stock as it would take to maintain their propo

50、rtional ownership in the company, also called junior equity. Question2： Answer: It refers to the fact that a central bank is able to effectively control and regulate the financial variables to be chosen as targets through the use of various monetary policy instruments. If a particular variable is to

51、 be a useful intermediate target, the central bank must be capable of exerting predominant influence over it in the short run. In the parlance of economists, an intermediate target variable should not be endogenous, or strongly influenced by such forces as the business cycle and inflation expectatio

52、ns. Interest rates are said to be endogenous because they are heavily influenced by business cycle forces and the outlook for inflation. Because the central bank exerts only marginal influence over long-term interest rates, they are not a satisfactory intermediate target of monetary policy. A variab

53、le that is not significantly influenced by the business cycle and other economic forces, called an exogenous variable, is a more appropriate intermediate target. The central bank may face little difficulty in dictating the magnitude of such variables, which are sitting ducks rather than moving targe

54、ts. Ideally, an intermediate target variable would be entirely exogenous and controllable. In the real world, however, the variables proposed as intermediate targets are neither totally exogenous nor totally endogenous. Part of the disagreement among economists over the appropriate variable to be ch

55、osen as an intermediate target，stems from disagreements concerning the central banks ability to exert short-run control over various variables. Question3： Answer: The monetary base, or high-powered money, is defined as banking system reserves plus currency held by the public. More specifically, the

56、monetary base consists of reserve deposits held in the central bank, vault cash or currency held by commercial banks, and currency held by the public. Thus the monetary base can be used either as cash holdings for the public or as reserves to support bank deposits. The monetary base is often express

57、ed in formula as: B = C + R B stands for monetary base, R for banking system reserves, and C for currency held by the public. The monetary base is the central banks liabilities. In Western countries, the monetary base accounts for an absolutely large percentage in the central banks liabilities. And, because R = Fb + Cb B = Fb+Cb+C The monetary base consists of the net monetary liabilities of a consolidated balance sheet of the monetary authoritiestaking U. S. for instance. The Treasurys net monetary liabilities are the outstanding currency and coin it has issued, exclusive of that held in t