$1.$ Identify the one false statement about the current banking system:

a$.$ In foreign exchange markets, a market maker in one currency pair is a commercial bank obliged to state a bid and an ask rate for this currency pair

b$.$ As foreign exchange markets are de$-$centralized, you can always buy or sell foreign currency during working days, even on$,$ e$.$g$.,$ Thursday $1$am$.$

c$.$ In foreign exchange markets, foreign exchange dealers always state the name instead of the dimension of the currency pair they want to trade in$.$

d$.$ The wholesale tier of the foreign exchange markets consists exclusively of a number of large commercial banks.

e$.$ At each point in time, the limit order book shows the best bid and ask quote.

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$2.$ Identify the one false statement about futures:

a$.$ Futures are traded on organised markets.

b$.$ Futures are standardised contracts.

c$.$ Futures have zero initial value.

d$.$ Trading with futures will result in a margin call.

e$.$ Marking to market is a primitive version of daily re$-$contracting, where the discounting is omitted.

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$3.$ Identify the one true statement about the current banking system:

$($a$)$ The assets of a commercial bank cannot contain loans to the private sector.

$($b$)$ Some UK commercial banks are not required to hold a deposit with the central bank.

$($c$)$ The money supply M$1$ is defined as the money multiplier times the money supply M$0($i$.$e$.,$ M$1=$ m $*$ M$0).$

$($d$)$ The money supply M$0$ is defined as loans to the private sector plus loans to the government sector $($i$.$e$.,$ M$0=$ D $+$ G$).$

$($e$)$ None of the above.

$4.$ Identify the one false choice about the mechanisms used by banks that partially solve the problem of default risk under a forward contract:

$($a$)$ Margin requirements.

$($b$)$ Restricted use.

$($c$)$ Credit agreements.

$($d$)$ Right to offset.

$($e$)$ Short lives.

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$5.$ Identify the one false statement about the expected exposure of the USD value of assets

to a change in the USD$/$CAD exchange rate:

$($a$)$ US government bonds have zero exposure.

$($b$)$ Canadian government bonds have positive exposure.

$($c$)$ Shares in an American exporter have negative exposure.

$($d$)$ Shares in a Canadian importer have positive exposure.

$($e$)$ Shares in an American exporter have positive exposure.