BANKING QUIZ 9 AND 10 It is the probability that a borrower will not pay in full

Identification the promised interest, principal, or both.

⁃ default risk
A graphic representation of the correlation between the
cost of a good or service. True or False
⁃ supply curve
Expected Inflation: an increase in the expected rate of
It determines the equilibrium interest rate in terms of inflation lowers the expected return for bonds, causing
the supply of and demand for money. the demand curve to shift to the right
⁃ keynesian model ⁃ false - left
This is a concept used by economists to make The expected-inflation effect lasts only as long as
assumptions about the relationship between two prices continue to rise.
specific variables. ⁃ true
⁃ ceteris paribus
The degree of uncertainty associated with the return on
Increased budget deficits shift the supply curve to the one asset relative to alternative assets.
right. ⁃ true
⁃ government budget
The quantity demanded of an asset is negatively related
In an expansion with growing wealth, the demand to wealth.
curve for bonds shifts to the right. ⁃ false - positively
⁃ wealth
Ceteris Paribus is a Latin word which means "other
Increased liquidity of bonds results in the demand things being unequal."
curve shifting right. ⁃ false - equal
⁃ liquidity
Interest rates will fall as people expect higher inflation
The relationship between the price and the quantity of over the course of the year.
bonds that investors demand, all else equal. ⁃ false - rise
⁃ demand curve
The return expected under the next period on one asset
occurs when short-term and long-term interest rates are relative to alternative assets.
roughly equal. ⁃ false - over
⁃ flat yield curve
Yield curves almost always slope upward.
The _________ theory asserts that long-term interest ⁃ true
rates not only reflect investors' assumptions about
future interest rates. Bonds of different maturities are not substitutes at all.
⁃ liquidity premium ⁃ true
occurs when long-term interest rates are lower than Bond holders consider bonds with same maturities to
short-term interest rates. be perfect substitutes.
⁃ inverted yield curve ⁃ false - different
They consider bonds with different maturities to be Generally, the larger the default risk, the smaller the
perfect substitutes. risk premium, the higher the interest rate.
⁃ bond holders ⁃ false - larger
the spread between the interest rates on bonds with The yield curve is normally downward sloping,
default risk and the interest rates on (same maturity). meaning that interest rates rise with maturity.
⁃ risk premium ⁃ false - upward
is a theory that long and short-term interest rates are The risk structure of interest to the relationship
not related to each other. between the interest rates of same securities with
⁃ market segmentation theory varying degrees of risk.
⁃ false - different

 Interest rates on bonds of different maturities move

apart over time.
⁃ false - together
Matching Type

The degree of uncertainty associated with the return on

one asset relative to alternative assets.
⁃ risk
In an expansion with growing wealth, the demand
curve for bonds shifts to the right.
⁃ wealth
Occurs when the amount that people are willing to buy
(demand) equals the amount that people are willing to
sell (supply) at a given price.
⁃ market equilibrium
The ease and speed with which an asset can be turned
into cash relative to alternative assets.
⁃ liquidity
in a typical illustration, the price will appear on the left
vertical axIs, while the quantity supplied will appear
on the horizontal aXIS.
⁃ supply curve
The bond demand curve slopes downward.
⁃ demand curve
Is Interest income earned from investments that are
subject to income tax.
⁃ taxable interest income
Is interest income earned from investments that are
exempt from income tax.
⁃ tax-income interest rate
⁃ tax-exempt interest income
Occurs when long-term interest rates are higher than
short-term interest rates.
⁃ upward-sloping yield curve
It is the relative ease with which an asset can be
converted into cash.
⁃ liquidity
A plot of the yields on bonds with different
maturities but same risk, liquidity and tax
considerations.
⁃ yield curve
Refers to the impact that income taxes have on an
individual or entity's financial decisions, particularly
with respect to Investment
⁃ income tax consideration

 INBUSTRA QUIZ 8,9 AND 10 Cost reduction is the process of decreasing a company's
expenses to maximize profits.
Identification
⁃ lowering cost

Reductions in unit cost achieved by producing a _______ of Refers to a business process of providing customized goods
a product. and services that best meet individual customer's needs.
⁃ large volume ⁃ mass customization

Refer to skills within the firm that competitors cannot easily It is a basic manufacturing unit and can operate
match or imitate. independently in a job-shop-type manufacturing system.
⁃ core competence ⁃ flexible machines cells

Its function is controls the transmission of physical materials the role of it is to identify and exploit new market
through the value chain, from procurement through opportunities
production and into distribution.
⁃ adaptive capability
⁃ logistics
refers to the detailed planning of the production process in
The provision of service to customers before, during and order to optimize workflow for a specific time-period.
after a purchase.
⁃ production scheduling
⁃ customer service
An asset whose value is contingent upon a particular
It can lower cost of value creation and help the firm to relationship persisting.
achieve a low cost position.
⁃ specialized asset
⁃ location economies
This is the idea that valuable knowledge does not reside just
This is a systematic reductions in productions cost that have in a firms domestic operations.
been observed to occur the life.
⁃ global learning
⁃ experience curve
True or False
It is economic and political demands imposed by host
country governments may require responsiveness. Global standardization strategy goal is to pursue high-cost
⁃ host government demands strategy on a global scale.
⁃ false - low cost strategy
Is a very much like counter purchase in that, one party agrees
to purchase goods and services. International markets yield slightly of new opportunities for
⁃ offset your business to grow.
⁃ false - plenty
Occurs when a firm builds a plant in a country or supplies
technology. A company can decrease its growth rate by taking goods or
⁃ compensation services developed at home and selling them intentionally.
⁃ false - increase
It is the common payment instrument in international
commerce. Transnational Strategy: High on Global Integration and High
⁃ draft on Local Responsiveness.
⁃ true
It is the common payment instrument in international
commerce. International Strategy: High on Global Integration and Low
⁃ draft on Local Responsiveness.
⁃ false - low
it represents a broad assortment of barter-like agreements that
facilitates the trade of goods. A localization strategy focus on increasing profitability by
⁃ countertrade customizing the firm's goods and services so that they
provide good match tastes.
Refers to the use of a specialized third-party trading house in
⁃ true
a counter trade agreement.
⁃ switch trading Gain a stronger foothold in a local market more quickly is an
advantages transnational strategy.
basically a direct exchange of goods and/or service between
⁃ false - localization strategy
two parties without a cash transaction. location economies.
⁃ barter Commitment of owners and top management is one of
example of company keenness.
Refers to activities involved in creating a product.
⁃ true
⁃ production

 Many firms succeed to consider export opportunities simply ⁃ Low-cost Strategy

because they lack knowledge of the opportunities available.
⁃ false - fail High in Global Integration and Low on Local
Responsiveness.
Import strategy recognize time and managerial commitment ⁃ Global Strategy
involved in building export sales. ⁃ Global Standardization Strategy
⁃ false - export strategy
Concerned with the creation of goods or services.
On the export strategy they hire local personnel to establish a ⁃ Production
firm in a foreign market.
⁃ true A strategy that focuses primarily on increasing the
attractiveness of a product.
Bill of landing it simply remains at the Center of ⁃ Differentiation Strategy
International Commercial Transactions.
⁃ false - letter of credit Concerned on creating the firms value in several ways.
⁃ Marketing and Sales
A way to expand sales, able to diversify sales and a way to
gain the requisite international experience are the minor occurs when a firm builds a plant in a country or supplies
reasons. technology, equipment, training or other service to the
⁃ false - major country.
⁃ compensation
This ignorance can be unmoved by collecting and sharing
information on export opportunities. Services with a specified percentage of the proceeds from the
⁃ false - overcome original sale.
⁃ offset
A make-or-buy decision refers to an act of choosing to
developing a product in-house or outsource its production Refers to the use of a specialized third-party trading house in
from external vendors. a countertrade agreement.
⁃ false - develop ⁃ switch trading
Adaptive capability enables company to recognize the value It takes place when a firm agrees to purchase a certain
of new, external information, absorb it and use it. amount of materials back from a country to which a sale is
⁃ false - absorptive capability made.
⁃ counterpurchase
Offsets are common in the commercial aerospace industry
⁃ true It is an order written by an exporter Instructing an importer,
or an importer's agent, to pay a specified amount of money at
Dependent suppliers are the firms that buys its components a specified time.
from independent suppliers can avoid all those problems and ⁃ draft
be associate costs.
⁃ false - independent suppliers It is therefore mainly utilized for one-time-only deals in
transactions with trading partners who are not creditworthy
SMART stands for Specific, Measurable, Attitude, Relevant, or trustworthy.
Time Bound ⁃ barter
⁃ false - achievable
Vertical Integration a strategy that allows a company to
streamline its operation by taking direct ownership of various
stages of its production process rather than relying on
external contractors or suppliers.
⁃ true
Disassemble to Order are large amounts of different
alternatives can be offered for the customer.
⁃ false - assemble to order
Matching Type

Concerned with the design of products and production

processes.
⁃ Research and Design (R&D)
A strategy that focuses primarily on lowering production
costs.