Question 1

The Bretton Woods system was centered on _____ as the common denominator.

Accepted Answer

A)  diamond 
B)  the US dollar 
C)  gold 
D)  the British pound 
A)  diamond 
B)  the US dollar 
C)  gold 
D)  the British pound

Question 2

In the context of balance of payments (BOP),a country experiencing a current account surplus:

Accepted Answer

A)  will see its currency appreciate. 
B)  has to be financed by purchase and sales of assets. 
C)  will see a decrease in exchange rates. 
D)  will experience a decrease in demand for its currency. 
A)  will see its currency appreciate. 
B)  has to be financed by purchase and sales of assets. 
C)  will see a decrease in exchange rates. 
D)  will experience a decrease in demand for its currency.

Question 3

In the context of foreign exchange,_____ are the classic single-shot exchange of one currency for another.

Accepted Answer

A)  currency swaps 
B)  spot transactions 
C)  forward discounts 
D)  forward transactions 
A)  currency swaps 
B)  spot transactions 
C)  forward discounts 
D)  forward transactions

Question 4

Grenasia is a developed country.The exchange rate of Grenasia's currency is higher than other currencies in the world.In this case,which of the following is the effect of such a high exchange rate?

Accepted Answer

A)  Grenasia's exchange value will decrease. 
B)  Demand for Grenasia's home currency will decrease. 
C)  Grenasia will attract foreign funds. 
D)  Outflow of capital will be more than inflow of capital. 
A)  Grenasia's exchange value will decrease. 
B)  Demand for Grenasia's home currency will decrease. 
C)  Grenasia will attract foreign funds. 
D)  Outflow of capital will be more than inflow of capital.

Question 5

A capital flight will lead to increase in exchange rate.

Accepted Answer

A) True 
 B)False

Question 6

_____ means spreading out activities in a number of countries in different currency zones in order to offset any currency losses in one region through gains in other regions.

Accepted Answer

A)  Strategic hedging 
B)  Currency hedging 
C)  Forward transaction 
D)  Spot transaction 
A)  Strategic hedging 
B)  Currency hedging 
C)  Forward transaction 
D)  Spot transaction

Question 7

Purchasing power parity (PPP)is usually used to capture the differences in cost of living between countries.

Accepted Answer

A) True 
 B)False

Question 8

In the context of foreign exchange rate,a(n)_____ is an increase in the value of a currency.

Accepted Answer

A)  ask rate 
B)  capital increase 
C)  appreciation 
D)  forecast 
A)  ask rate 
B)  capital increase 
C)  appreciation 
D)  forecast

Question 9

Explain the significance of purchasing power parity (PPP)theory.

Accepted Answer

Purchasing power parity (PPP)is a conver

Question 10

The _____ refers to a system of flexible exchange rate regimes with no official common denominator.

Accepted Answer

A)  Bretton Woods system 
B)  post-Bretton Woods system 
C)  gold standard 
D)  International Monetary Fund 
A)  Bretton Woods system 
B)  post-Bretton Woods system 
C)  gold standard 
D)  International Monetary Fund

Question 11

Treevia is a country that has just received a loan from the IMF.Because the IMF operates in a no-strings-attached manner,Treevia is free to enact its own policy reforms to enable repayment of the loan.

Accepted Answer

A) True 
 B)False

Question 12

The most basic way for a nonfinancial company to cope with potential currency risks is to invoice customers in their own currency.

Accepted Answer

A) True 
 B)False

Question 13

Mexico recently printed more currency,causing the supply of the peso to increase while demand stayed the same.Which of the following is NOT a likely outcome of this scenario?

Accepted Answer

A)  the value of the peso will decrease 
B)  investors will be prompted to sell-off pesos 
C)  the world market will respond quickly 
D)  inevitable investor sell-offs will cause the appreciation of the peso 
A)  the value of the peso will decrease 
B)  investors will be prompted to sell-off pesos 
C)  the world market will respond quickly 
D)  inevitable investor sell-offs will cause the appreciation of the peso

Question 14

Explain how supply and demand determines the price of a commodity.Reason out with an example why the US dollar is the most sought after currency.

Accepted Answer

Basic economic theory suggests that a co

The Bretton Woods system was centered on _____ as the common denominator.

In the context of balance of payments (BOP),a country experiencing a current account surplus:

In the context of foreign exchange,_____ are the classic single-shot exchange of one currency for another.

Grenasia is a developed country.The exchange rate of Grenasia's currency is higher than other currencies in the world.In this case,which of the following is the effect of such a high exchange rate?

A capital flight will lead to increase in exchange rate.

_____ means spreading out activities in a number of countries in different currency zones in order to offset any currency losses in one region through gains in other regions.

Purchasing power parity (PPP)is usually used to capture the differences in cost of living between countries.

In the context of foreign exchange rate,a(n)_____ is an increase in the value of a currency.

Explain the significance of purchasing power parity (PPP)theory.

The _____ refers to a system of flexible exchange rate regimes with no official common denominator.

Treevia is a country that has just received a loan from the IMF.Because the IMF operates in a no-strings-attached manner,Treevia is free to enact its own policy reforms to enable repayment of the loan.

The most basic way for a nonfinancial company to cope with potential currency risks is to invoice customers in their own currency.

Mexico recently printed more currency,causing the supply of the peso to increase while demand stayed the same.Which of the following is NOT a likely outcome of this scenario?

Explain how supply and demand determines the price of a commodity.Reason out with an example why the US dollar is the most sought after currency.

Globalizing Business

Understanding Politics Laws Economics

Emphasizing Cultures Ethics Norms

Leveraging Resources Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing On Global Regional Integration

Growing Internationalizing The Entrepreneurial Firm

Entering Foreign Markets

Making Alliances Acquisitions Work

Strategizing Structuring Learning Around The World

Managing Human Resources Globally

Competing On Marketing and Supply Chain Management

Managing Corporate Social Responsibility Globally

Filters

Exam 7: Dealing With Foreign Exchange

The Bretton Woods system was centered on _____ as the common denominator.

In the context of balance of payments (BOP),a country experiencing a current account surplus:

In the context of foreign exchange,_____ are the classic single-shot exchange of one currency for another.

Grenasia is a developed country.The exchange rate of Grenasia's currency is higher than other currencies in the world.In this case,which of the following is the effect of such a high exchange rate?

A capital flight will lead to increase in exchange rate.

_____ means spreading out activities in a number of countries in different currency zones in order to offset any currency losses in one region through gains in other regions.

Purchasing power parity (PPP)is usually used to capture the differences in cost of living between countries.

In the context of foreign exchange rate,a(n)_____ is an increase in the value of a currency.

Explain the significance of purchasing power parity (PPP)theory.

The _____ refers to a system of flexible exchange rate regimes with no official common denominator.

Treevia is a country that has just received a loan from the IMF.Because the IMF operates in a no-strings-attached manner,Treevia is free to enact its own policy reforms to enable repayment of the loan.

The most basic way for a nonfinancial company to cope with potential currency risks is to invoice customers in their own currency.

Mexico recently printed more currency,causing the supply of the peso to increase while demand stayed the same.Which of the following is NOT a likely outcome of this scenario?

Explain how supply and demand determines the price of a commodity.Reason out with an example why the US dollar is the most sought after currency.

Globalizing Business

Understanding Politics Laws Economics

Emphasizing Cultures Ethics Norms

Leveraging Resources Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing On Global Regional Integration

Growing Internationalizing The Entrepreneurial Firm

Entering Foreign Markets

Making Alliances Acquisitions Work

Strategizing Structuring Learning Around The World

Managing Human Resources Globally

Competing On Marketing and Supply Chain Management

Managing Corporate Social Responsibility Globally

Filters