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Domino Grace is a financial services company. It has started using scientific principles of management to analyze the compensation system for its financial advisors. Under the current system, revenue goals are based on the financial advisors' performances in the previous year. Domino Grace managers believe that the financial advisors could generate much more revenue if they were encouraged to offer derivatives, a complex but potentially profitable investment product. Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument?


A) It assumes that offering derivatives could not have generated less than $5 million.
B) It claims without warrant that offering derivatives will generate high revenues in future years.
C) It fails to demonstrate that offering derivatives generated more money than any alternative would generate.
D) It fails to account for the revenues that could have been generated by alternative uses of the resources that went into offering derivatives.
E) It ignores the possibility that some investors lost money by investing in derivatives through Domino Grace.

F) A) and B)
G) A) and C)

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Explain the law of one price and the term "Big MacCurrencies."

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The law of one price is a method of dete...

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Which of the following is correct with regard to government sources of funds for businesses?


A) The Business Development Bank of Canada helps small companies sell stock to the general public.
B) The Export Development Corporation finances and insures export sales for Canadian companies.
C) The Canada Mortgage and Housing Corporation makes mortgages available to businesses, but it does not guarantee those mortgages.
D) The Department of Business Expansion gives grants for businesses that provide services, but not for business that provide physical products.
E) All of these are correct.

F) B) and E)
G) C) and D)

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Banks are permitted to own securities dealers.

A) True
B) False

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Money held by a financial institution which requires notice prior to making a withdrawal and cannot be transferred to others by a written cheque is known as


A) money market funds and accounts.
B) time deposits.
C) currency.
D) certified holdings.
E) demand deposits.

F) C) and E)
G) D) and E)

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In 2014, venture capital firms in Canada raised


A) $40 million.
B) $95 million.
C) $1.9 billion.
D) $3.9 billion.
E) $11.4 billion.

F) B) and E)
G) A) and E)

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Which of the following is a form of money?


A) Japanese yen
B) Bonds
C) A gold medallion
D) IBM common stock
E) A Visa credit card

F) A) and C)
G) A) and D)

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Banks create money through contracts with the federal government to mint bills and coins.

A) True
B) False

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A chartered bank is a privately owned, profit seeking business firm.

A) True
B) False

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When the Bank of Canada wants to slow down business activity and decrease the money supply, it


A) lowers the bank rate.
B) lowers the reserve requirement.
C) decreases government spending.
D) buys government securities.
E) raises the bank rate.

F) A) and B)
G) None of the above

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Which of the following changes have occurred in banking because of deregulation?


A) Large business firms have increased their reliance on bank loans.
B) Banks can now make whatever profits they can manage.
C) Banks are providing a narrower and more highly focused array of financial products to their customers than they did before deregulation.
D) Banks have increased the training given to employees.
E) Bank profits are now being sent to foreign financial companies.

F) B) and D)
G) B) and C)

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Which of the following accounts for nearly all the nation's money supply?


A) M-1
B) Currency
C) Demand deposits
D) Currency plus demand deposits
E) M-2

F) B) and D)
G) A) and E)

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After using her ________ card to make a purchase, Janet checks an electronic display to determine how much money is left on the card.


A) debit
B) smart
C) direct purchase
D) direct deposit
E) credit

F) C) and D)
G) A) and B)

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What is the World Bank?

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The World Bank is a United Nat...

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Credit cards serve as a temporary medium of exchange but are not a store of value; therefore, they are do not qualify as a form of money.

A) True
B) False

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Explain what is meant by the terms expansionary policy and restrictive policy that may be implemented by the Bank of Canada.

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The bank can implement either ...

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Canadians hold a total of ________ MasterCard and Visa credit cards.


A) 5 million
B) 20.6 million
C) 43 million
D) 76.3 million
E) 190.8 million

F) None of the above
G) A) and D)

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If the reserve requirement was 10 percent, a $100 deposit could result in a ________ increase in new deposits for all banks in the system.


A) $200
B) $500
C) $1000
D) $10 000
E) $100 000

F) None of the above
G) A) and B)

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Which of the following best describes the portability characteristic of money?


A) It neither dies nor spoils and if it wears out, it can be replaced.
B) Units of money can be matched with the value of goods.
C) It can be exchanged across national borders.
D) It allows people to measure the relative value of goods and services.
E) It is light and easy to handle.

F) A) and B)
G) A) and C)

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What is the Bank of Canada?

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The Bank of Canada is Canada's...

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