Questions

Nations that have major economic expansion attracts

The world's 4 major trading currencies are all free to float against each other. They include all of the following except
The Bretton Woods system called for
Which of the following is not a reason for international investment?
The __________ refers to the orderly relationship between spot and forward currency exchange rates and the rates of inte
In the foreign exchange market, the ________ of one country is traded for the ________ of another country.
Which of the following examples definitely illustrates a depreciation of the U.S. dollar?
By definition, currency appreciation occurs when
Given a home country and a foreign country, purchasing power parity suggests that:
If purchasing power parity were to hold even in the short run, then:
Interest Rate Parity (IRP) implies that:
Hedging is used by companies to:
Which of the following is not a type of foreign exchange exposure?
Which of the methods below may be viewed as most effective in protecting against economic exposure?
When an enterprise has an unhedged receivable or payable denominated in a foreign currency and settlement of the oblig
The potential for an increase or decrease in the parent's net worth and reported net income caused by a change in exchan
The impact of Foreign exchange rate on firm is called as
Purchasing-power parity (PPP) refers to__________.
A group of European countries have formed a union and created a common currency known as __________.
The spot exchange rate __________.
Which of the following is an example of a natural hedge?
They attempt to make risk-less profits by entering into foreign exchange transactions simultaneously in two or more marke
They are those who take positions in the foreign exchange market by anticipating whether the exchange rate will go up or
They are those who participate in the foreign exchange market to reduce the foreign exchange risk that they already face.
They are the individuals or institutions that operates only for the sole purpose of allowing the individuals or institutions to
It acts as a principal in a transaction and conduct business in their own account by committing their own funds.
They acts as agents for an actual buyer/seller of foreign exchange but do not commit their own funds.
_________ stand ready to buy and sell standard amounts of the currencies for which they are making a market, and seek p
A _________ is the no. of units of home currency that can be exchanged for one unit of foreign currency.
An _________ is the no. of units of a foreign currency that can be exchanged for one unit of home currency.
A _______ is the smallest price increment a currency can make against another currency in foreign exchange trading.
A _______ is the standard unit size of a foreign exchange transaction.
The system of adopting the currency of another nation as a legal tender is known as ____________ .
There is no intervention by the monetary authority of a country in exchange rate determination when the domestic curren
Under a ___________, the government intervenes in the foreign exchange market whenever it wants the exchange rate to
It involves fixing the value of a currency in relation to the value of another currency or a basket of currencies.
Reduction in the value of a currency relative to another currency is known as _________ of currency
And the opposite phenomenon – an increase in the value of the currency relative to another currency – is referred to ____
Any increase in currency value relative to another currency under the floating exchange rate system is called __________
A fall in a currency value relative to another currency is called __________ of currency.
A
Imports
The British Pound
The IMF to promote development
To provide an expected risk-adjusted return in excess of that required.
one-price rule
currency; currency
The dollar exchanges for 1 pound and then exchanges for 1.2 pounds
the value of all currencies fall relative to gold.
the home currency will appreciate if the current home inflation rate exceeds the current foreign inflation rate;
real exchange rates should tend to decrease over time;
Interest rates should change by an equal amount but in the opposite direction to the difference in inflation rates b
Decrease the variability of tax paid
Tax exposure
Futures market hedging
Tax exposure
Translation exposure
Operating Exposure
the concept that the same goods should sell for the same price across countries after exchange rates are taken into
the EU currency
is the rate today for exchanging one currency for another for immediate delivery
The prices and costs are both determined in the global market place.
Arbitrageurs
Arbitrageurs
Arbitrageurs
Facilitators
Facilitators
Facilitators
Facilitators
Direct quote
Direct quote
Pip
Pip
Nationalisation
Fixed
managed float system
Curreny fixing
Devaluation
Devaluation
Devaluation
Devaluation
B
Direct Foreign Investment
The Japanese Yen
Floating exchange rates against the Japanese Yen
To gain access to important raw materials.
interest-rate parity
currency; financial instruments
The dollar exchanges for 250 yen and then exchanges for 275 francs
the value of all currencies rise relative to gold.
the home currency will depreciate if the current home interest rate exceeds the current foreign interest rate;
quoted nominal exchange rates should be stable over time.
The difference in interest rates in different currencies for securities of similar risk and maturity should be consist
Decrease the spread between spot and forward market quotes
Translation exposure
Forward contract hedges
Operating exposure
Exchange rate exposure
Transaction exposure
the concept that interest rates across countries will eventually be the same
the European Union
is the rate today for exchanging one currency for another at a specific future date
The prices are determined in the global market place and costs are determined in the domestic market place.
Hedgers
Hedgers
Hedgers
Primary dealers
Primary dealers
Primary dealers
Primary dealers
Indirect quote
Indirect quote
Lot
Lot
Internationalisation
Free floated
Free floated
Currency pegging
Revaluation
Revaluation
Revaluation
Revaluation
C
Exports
The Spanish Peso
Fixed exchange rates against the US Dollar
To produce products and/or services more efficiently than possible domestically.
purchasing-power parity
currency; goods
The dollar exchanges for 100 francs and then exchanges for 120 yen.
the value of one currency rises relative to another currency
the home currency will depreciate if the current home inflation rate exceeds the current foreign inflation rate.
real exchange rates should tend to increase over time;
The interest rates between two countries start in equilibrium, any change in the differential rate of inflation betw
Increase the variability of expected cash flows
Transaction exposure
Geographical diversification
Accounting exposure
Strategic exposure
Translation exposure
the orderly relationship between spot and forward currency exchange rates and the rates of interest between count
the EMU
is the rate today for exchanging one currency for another at a specific location on a specific future date
The costs are determined in the global market place and prices are determined in the domestic market place.
Speculators
Speculators
Speculators
Brokers
Brokers
Brokers
Brokers
Both of the above
Both of the above
Both of the above
Both of the above
Dollarization
Both of the above
Both of the above
Currency management
Appreciation
Appreciation
Appreciation
Appreciation
D
Privatization
The US Dollar
Floating exchange rates against US Dollar
International investments have less political risk than domestic investments.
exchange-power parity
goods; goods
The dollar exchanges for 120 francs and then exchanges for 100 francs
the value of one currency falls relative to another currency
the home currency will depreciate if the current home inflation rate exceeds the current foreign interest rate.
real exchange rates should be stable over time;
In the long run real interest rate between two countries will be equal
Decrease the variability of expected cash flows
Balance sheet exposure
Money market hedges
Transaction exposure
Economic exposure
Business risk
the natural offsetting relationship provided by costs and revenues in similar market environments
the Euro
is the rate today for exchanging one currency for another at a specific location for immediate delivery
Both b and c are examples of a natural hedge.
None of the above
None of the above
None of the above
None of the above
None of the above
None of the above
Market Makers
None of the above
None of the above
None of the above
None of the above
None of the above
None of the above
None of the above
None of the above
Depreciation
Depreciation
Depreciation
Depreciation
Answers
B
C
C
D
B
A
D
C
C
D
B
D
A
C
D
A
A
A
D
A
A
A
C
B
A
B
C
D
A
D
A
B
D
A
A
B
A
C
C
D