Question 1

Fundamental models examine moving averages over time and thus allow the development of a forecasting rule.

Accepted Answer

A) True 
 B)False

Question 2

If today's exchange rate reflects all relevant public information about the euro's exchange rate, but not all relevant private information, then ____ would be refuted.

Accepted Answer

A)  weak-form efficiency 
B)  semistrong-form efficiency 
C)  strong-form efficiency 
D)  A and B 
E)  B and C 
A)  weak-form efficiency 
B)  semistrong-form efficiency 
C)  strong-form efficiency 
D)  A and B 
E)  B and C

Question 3

If the foreign exchange market is ____ efficient, then historical and current exchange rate information is not useful for forecasting exchange rate movements.

Accepted Answer

A)  weak-form 
B)  semistrong-form 
C)  strong form 
D)  all of the above 
A)  weak-form 
B)  semistrong-form 
C)  strong form 
D)  all of the above

Question 4

Which of the following forecasting techniques would best represent sole use of today's spot exchange rate of the euro to forecast the euro's future exchange rate?

Accepted Answer

A)  Fundamental forecasting 
B)  Market-based forecasting 
C)  Technical forecasting 
D)  Mixed forecasting 
A)  Fundamental forecasting 
B)  Market-based forecasting 
C)  Technical forecasting 
D)  Mixed forecasting

Question 5

Assume that the UK interest rate is 11 percent, while Australia's one-year interest rate is 12 percent. Assume interest rate parity holds. If the one-year forward rate of the Australian dollar was used to forecast the future spot rate, the forecast would reflect an expectation of:

Accepted Answer

A)  depreciation in the Australian dollar's value over the next year. 
B)  appreciation in the Australian dollar's value over the next year. 
C)  no change in the Australian dollar's value over the next year. 
D)  information on future interest rates is needed to answer this question. 
A)  depreciation in the Australian dollar's value over the next year. 
B)  appreciation in the Australian dollar's value over the next year. 
C)  no change in the Australian dollar's value over the next year. 
D)  information on future interest rates is needed to answer this question.

Question 6

MNCs can forecast exchange rate volatility to determine the potential range surrounding their exchange rate forecast.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true?

Accepted Answer

A)  Nominal forecast errors cannot be negative. 
B)  Nominal forecast errors are negative when the forecasted rate exceeds the realized rate. 
C)  Absolute forecast errors are negative when the forecasted rate exceeds the realized rate. 
D)  None of the above. 
A)  Nominal forecast errors cannot be negative. 
B)  Nominal forecast errors are negative when the forecasted rate exceeds the realized rate. 
C)  Absolute forecast errors are negative when the forecasted rate exceeds the realized rate. 
D)  None of the above.

Question 8

The most sophisticated forecasting techniques provide consistently accurate forecasts.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is the common exchange rate forecasting technique?

Accepted Answer

A)  Technical forecasting 
B)  Fundamental forecasting. 
C)  Market-based forecasting 
D)  All of the above 
A)  Technical forecasting 
B)  Fundamental forecasting. 
C)  Market-based forecasting 
D)  All of the above

Question 10

Silicon ltd has forecasted the Canadian dollar for the most recent period to be £0.47. The realized value of the Canadian dollar in the most recent period was £0.45. Thus, the absolute forecast error as a percentage of the realized value was ____% to the nearest 1/10th %.

Accepted Answer

A)  4.0 
B)  0.4 
C)  4.4 
D)  -4.0 
A)  4.0 
B)  0.4 
C)  4.4 
D)  -4.0

Fundamental models examine moving averages over time and thus allow the development of a forecasting rule.

If today's exchange rate reflects all relevant public information about the euro's exchange rate, but not all relevant private information, then ____ would be refuted.

If the foreign exchange market is ____ efficient, then historical and current exchange rate information is not useful for forecasting exchange rate movements.

Which of the following forecasting techniques would best represent sole use of today's spot exchange rate of the euro to forecast the euro's future exchange rate?

Assume that the UK interest rate is 11 percent, while Australia's one-year interest rate is 12 percent. Assume interest rate parity holds. If the one-year forward rate of the Australian dollar was used to forecast the future spot rate, the forecast would reflect an expectation of:

MNCs can forecast exchange rate volatility to determine the potential range surrounding their exchange rate forecast.

Which of the following is true?

The most sophisticated forecasting techniques provide consistently accurate forecasts.

Which of the following is the common exchange rate forecasting technique?

Silicon ltd has forecasted the Canadian dollar for the most recent period to be £0.47. The realized value of the Canadian dollar in the most recent period was £0.45. Thus, the absolute forecast error as a percentage of the realized value was ____% to the nearest 1/10th %.

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

Exchange Rate Changes

Currency Derivatives

Exchange Rate History and the Role of Governments

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates and Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Foreign Direct Investment

Country Risk Analysis

Long-Term Financing

Ethics

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 9: Forecasting Exchange Rates

Fundamental models examine moving averages over time and thus allow the development of a forecasting rule.

If today's exchange rate reflects all relevant public information about the euro's exchange rate, but not all relevant private information, then ____ would be refuted.

If the foreign exchange market is ____ efficient, then historical and current exchange rate information is not useful for forecasting exchange rate movements.

Which of the following forecasting techniques would best represent sole use of today's spot exchange rate of the euro to forecast the euro's future exchange rate?

Assume that the UK interest rate is 11 percent, while Australia's one-year interest rate is 12 percent. Assume interest rate parity holds. If the one-year forward rate of the Australian dollar was used to forecast the future spot rate, the forecast would reflect an expectation of:

MNCs can forecast exchange rate volatility to determine the potential range surrounding their exchange rate forecast.

Which of the following is true?

The most sophisticated forecasting techniques provide consistently accurate forecasts.

Which of the following is the common exchange rate forecasting technique?

Silicon ltd has forecasted the Canadian dollar for the most recent period to be £0.47. The realized value of the Canadian dollar in the most recent period was £0.45. Thus, the absolute forecast error as a percentage of the realized value was ____% to the nearest 1/10th %.

Multinational Financial Management: an Overview

International Flow of Funds

International Financial Markets

Exchange Rate Changes

Currency Derivatives

Exchange Rate History and the Role of Governments

International Arbitrage and Interest Rate Parity

Relationships Among Inflation, Interest Rates and Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Foreign Direct Investment

Country Risk Analysis

Long-Term Financing

Ethics

Financing International Trade

Short-Term Financing

International Cash Management

Filters