CFA Practice Question

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CFA Practice Question

In Harvey, N.D., three local banks have issued no-interest loans in the form of Harvey Bucks. They can be spent in local stores. Retailers get 95 U.S. cents for each Harvey Buck. From this information, you can conclude that Harvey Bucks ______
A. although less liquid than Fed Notes, are money because they are accepted as money and they are assets for everyone who holds them.
B. are not money because they are liabilities for consumers who have been issued Harvey Bucks.
C. are not money because they are not backed by the Federal government.
Explanation: Harvey Bucks function like credit cards. For those consumers who have been issued Harvey Bucks, they are liabilities. To be money they would have to be financial assets for everyone who holds them.

User Contributed Comments 5

User Comment
sarath To be considererd as money no liability...
serboc good question!
jnptrsn1 But where does that leave bitcoin
wsiyer @jnptrsn1
not in the scope of the CFA
rishabh321 If a person borrows a loan from a bank and spend that money to buy something.....the money he borrowed is a liability and it cant be deemed as money?
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