GORDON COLLEGE

COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT

1ST Semester A. Y. 2019-2020

FIN101 BASIC FINANCE

MIDTERM EXAMINATION

NAME:_______________________________________________________ DATE:___________________
COURSE:_____________________________________________________ SCORE:__________________

IMPORTANT INSTRUCTIONS: Strictly no ERASURES or SUPERIMPOSITION.

I. Multiple Choice: Encircle the letter of the best answer.

1. Kind of money that possesses intrinsic value.

a. Commodity Money
b. Credit Money
c. Fiat Money
2. It refers to the currency and coins which are in circulation and legal tender. It is also known as a medium of exchange.
a. Coins
b. Fiat money
c. Money
3. This system refers to the exchange of products and services for other products and services.
a. Barter system
b. Currency system
c. Monetary system
4. Characteristics of good money that easily be recognized.
a. Cognizable
b. Durable
c. Malleable
5. It refers to the overall set of laws practices which control the quality and quantity of money in a country.
a. Monetary standard
b. Metallic standard
c. Commodity standard
6. Type of monetary standard that the value of the monetary unit is kept equal to the value of a designated quantity of a
particular commodity or group of commodities.
a. Bimetallic standard
b. Metallic standard
c. Commodity standard
7. Refers to the monetary system in which the monetary unit is made up or convertible to only one metal.
a. Bimetallism
b. Monometallism
c. Monetary unit
8. The monetary unit is defined in terms of silver.
a. Gold standard
b. Metallic standard
c. Silver standard
9. It is known as managed standard because the quantity of money in circulation is controlled and managed by the monetary
authority with a view to maintain stability in prices and incomes with in the country.
a. Gold standard
b. Metallic standard
c. Paper standard
10. It regulates the creation or supply of money and the banking system which issues bank notes and creates checking account
money in the economy.
a. Credit system
b. Currency system
c. Monetary system
11. It is an extension of credit by which fixed, scheduled payments are made until the loan is paid in full.
a. Charge Account/ Revolving Credit
b. Installment Closed-End Credit
c. Non-installment Credit
12. Type of credit that due all at once in a lump sum payment of the fill amount owed.
a. Charge Account/ Revolving Credit
b. Installment Closed-End Credit
c. Non-installment Credit
13. Credit which one businessman may extend to another when selling goods on time for resale or commercial use.
a. Bank credit
b. Consumer credit
c. Mercantile credit
14. Credit intended to provide in funding agricultural procedures.
a. Agricultural credit
b. Bank credit
c. Investment credit
15. Credit payable within one year from the date of acquisition.
a. Long-term Credit
b. Medium or Intermediate term Credit
c. Short-term Credit
16. Credit payable for more than five years.
a. Long-term Credit
b. Medium or Intermediate term Credit
c. Short-term Credit
17. Provides loans from an available capital source and earns profits strictly through the interest paid by borrowers.
a. Banks
b. Credit Unions
c. Finance Companies
18. A document evidencing the existence of a credit obligation which defines the responsibility of the debtor towards his
creditor and the right of the creditor to collect from the debtor on the date designated.
a. Credit Instrument
b. Corporate bonds
c. Government bonds
19. It is a debt security issued by a corporation and sold to investors.
a. Credit Instrument
b. Corporate bonds
c. Government bonds
20. Characteristics of good money that refers to the staying power of a given object or thing designated as money.
a. Divisible
b. Durable
c. Portable

II. ENUMERATION ( 40 points)

1. Advantages and disadvantages of installment credit (4pts)
2. 5 C’s of Credit (5pts.)
3. Functions of money (4pts. )
4. The importance of money (3pts.)
5. Characteristics of good money (7pts.)
6. Types of consumer credit (3pts.)
7. Sources of credit (9pts.)
8. Credit according to maturity (3pts.)
9. Basic types of bond (2 pts)

III. ESSAY
Directions: Write an essay on the following question/s. Essays will be graded based on content, understanding/application,
structure, and grammar.

1. According to the Gresham’s Law, “the tendency for money of lower intrinsic value to circulate more freely than money
of higher intrinsic and equal nominal value, expressed as “Bad money drives out good money”. Does it apply to our
current monetary standard? Why? Explain your answer briefly.(10pts)
2. Why is money important? What will happen to the economy without money? (10pts)
3. In a report released last April 30, 2019 by Standard and Poor Company, the credit rating of Philippines economy was
upgraded from “BBB” to “BBB+ Stable”. What does the given rating depicts in relation to the Philippine's economy and
what might be the economic implication to other countries? Does this credit rating would be helpful for our economic
growth? Why? Explain your answer briefly. (10pts)