Question 1

One reason why the ANZAC was not developed into a fully-fledged common currency for Australia and New Zealand is:

Accepted Answer

A)  political differences 
B)  differences in the size of the two economies 
C)  their terms of trade often moved in different directions 
D)  the desire to encourage multilateral trade 
A)  political differences 
B)  differences in the size of the two economies 
C)  their terms of trade often moved in different directions 
D)  the desire to encourage multilateral trade

Question 2

Which of the following statements is UNTRUE?

Accepted Answer

A)  The Bretton Woods Agreement was signed in 1944 
B)  The European Economic Community was established by the Treaty of Rome in 1950 
C)  The Mexican crisis of 1994-95 was the first in what has now become a long series of financial crises 
D)  The Asian currency crisis of 1997-98 initially began in Thailand 
A)  The Bretton Woods Agreement was signed in 1944 
B)  The European Economic Community was established by the Treaty of Rome in 1950 
C)  The Mexican crisis of 1994-95 was the first in what has now become a long series of financial crises 
D)  The Asian currency crisis of 1997-98 initially began in Thailand

Question 3

Between 1962 and 2007, the size of the US economy:

Accepted Answer

A)  has increased relative to that of Europe, China and Japan 
B)  has decreased relative to that of Europe, China and Japan 
C)  has increased relative to that of Europe and decreased relative to that of both China and Japan 
D)  has decreased relative to that of Europe and increased relative to that of both China and Japan 
A)  has increased relative to that of Europe, China and Japan 
B)  has decreased relative to that of Europe, China and Japan 
C)  has increased relative to that of Europe and decreased relative to that of both China and Japan 
D)  has decreased relative to that of Europe and increased relative to that of both China and Japan

Question 4

The trend towards increasing international use of currencies other than the US dollar in both current and capital account transactions is indicated by:

Accepted Answer

A)  a lower US dollar share of trading volumes in the foreign exchange market 
B)  a lower US dollar share of Eurocurrency deposits 
C)  a lower US dollar share of international bond issues 
D)  all of the answers given 
A)  a lower US dollar share of trading volumes in the foreign exchange market 
B)  a lower US dollar share of Eurocurrency deposits 
C)  a lower US dollar share of international bond issues 
D)  all of the answers given

Question 5

Currency crises spread in several ways, including:

Accepted Answer

A)  when one country is forced to devalue its currency, its exports gain an advantage, exposing countries with competing exports to the risk of speculative attacks on their currencies 
B)  when investors lose heavily in a particular currency they may be forced to sell assets denominated in other currencies just to maintain liquidity 
C)  once a country has suffered a crisis, investors tend to worry about others in similar situations 
D)  all of the answers given 
A)  when one country is forced to devalue its currency, its exports gain an advantage, exposing countries with competing exports to the risk of speculative attacks on their currencies 
B)  when investors lose heavily in a particular currency they may be forced to sell assets denominated in other currencies just to maintain liquidity 
C)  once a country has suffered a crisis, investors tend to worry about others in similar situations 
D)  all of the answers given

Question 6

Balance of payments difficulties are a source of concern for the finance manager because:

Accepted Answer

A)  they affect interest rates 
B)  they affect exchange rates 
C)  they create constraints on economic policy 
D)  all of the answers given 
A)  they affect interest rates 
B)  they affect exchange rates 
C)  they create constraints on economic policy 
D)  all of the answers given

Question 7

The twin deficit problem refers to deficits in the United States':

Accepted Answer

A)  current account and budget 
B)  capital account and budget 
C)  capital account and unilateral transfers 
D)  budget and unilateral transfers 
A)  current account and budget 
B)  capital account and budget 
C)  capital account and unilateral transfers 
D)  budget and unilateral transfers

Question 8

The term 'international operations' encompasses:

Accepted Answer

A)  international trade 
B)  international investment and financing operations 
C)  carrying out production abroad 
D)  all of the answers given 
A)  international trade 
B)  international investment and financing operations 
C)  carrying out production abroad 
D)  all of the answers given

Question 9

Martin Wolf identifies the following benefits of modern finance:

Accepted Answer

A)  it allows the creation of vast enterprises out of the combined capital, supplied at modest cost, by millions of individual investors 
B)  it facilitates risk sharing 
C)  it allows the creation of vast enterprises out of the combined capital, supplied at modest cost, by . millions of individual investors AND it facilitates risk sharing 
D)  it has developed as an industry in its own right employing millions of people 
A)  it allows the creation of vast enterprises out of the combined capital, supplied at modest cost, by millions of individual investors 
B)  it facilitates risk sharing 
C)  it allows the creation of vast enterprises out of the combined capital, supplied at modest cost, by . millions of individual investors AND it facilitates risk sharing 
D)  it has developed as an industry in its own right employing millions of people

Question 10

Which of the following is NOT a factor that has contributed to increased financial market integration?

Accepted Answer

A)  relaxation of capital controls 
B)  financial deregulation 
C)  the fall of communism 
D)  new technology 
A)  relaxation of capital controls 
B)  financial deregulation 
C)  the fall of communism 
D)  new technology

Question 11

The introduction of the euro as a hard currency:

Accepted Answer

A)  is sufficient to create a single market for European business 
B)  is a necessary, but not a sufficient, step towards the creation of a single market for European business 
C)  is neither a necessary, nor a sufficient, step towards the creation of a single market for European business 
D)  is both a necessary and a sufficient step towards the creation of a single market for European business 
A)  is sufficient to create a single market for European business 
B)  is a necessary, but not a sufficient, step towards the creation of a single market for European business 
C)  is neither a necessary, nor a sufficient, step towards the creation of a single market for European business 
D)  is both a necessary and a sufficient step towards the creation of a single market for European business

Question 12

Which of the following statements is UNTRUE?

Accepted Answer

A)  A moral hazard is typically created by a government intervention to rescue a failed institution, as it signals the government's willingness to come to the rescue whenever similar institutions are in trouble 
B)  In the US, financial institutions traditionally had kept mortgage loans on their books until maturity, . but prior to the subprime crisis they changed from 'originate and hold' to 'originate and distribute' 
C)  The existence of a moral hazard in relation to financial institutions and the shift to an 'originate and distribute' modus operandi by mortgage originators lead to an increase in the complacency about the credit risk of subprime borrowers by US financial institutions 
D)  All of the answers given 
A)  A moral hazard is typically created by a government intervention to rescue a failed institution, as it signals the government's willingness to come to the rescue whenever similar institutions are in trouble 
B)  In the US, financial institutions traditionally had kept mortgage loans on their books until maturity, . but prior to the subprime crisis they changed from 'originate and hold' to 'originate and distribute' 
C)  The existence of a moral hazard in relation to financial institutions and the shift to an 'originate and distribute' modus operandi by mortgage originators lead to an increase in the complacency about the credit risk of subprime borrowers by US financial institutions 
D)  All of the answers given

Question 13

Increased volatility of interest rates can be traced back to:

Accepted Answer

A)  1971, with the collapse of the Bretton Woods system 
B)  1979, when the US Federal Reserve System shifted from a policy of interest rate targeting to a policy of money supply targeting 
C)  1973-74, with the OPEC-led oil price rise 
D)  1989, with the agreement to establish NAFTA 
A)  1971, with the collapse of the Bretton Woods system 
B)  1979, when the US Federal Reserve System shifted from a policy of interest rate targeting to a policy of money supply targeting 
C)  1973-74, with the OPEC-led oil price rise 
D)  1989, with the agreement to establish NAFTA

Question 14

The globalisation of finance has been driven by:

Accepted Answer

A)  advances in information and computer technology 
B)  globalisation of national economies 
C)  liberalisation of national financial and capital markets 
D)  all of the answers given 
A)  advances in information and computer technology 
B)  globalisation of national economies 
C)  liberalisation of national financial and capital markets 
D)  all of the answers given

Question 15

Which of the following is the least likely indicator of the internationalisation of finance?

Accepted Answer

A)  The volume of international bank lending 
B)  Convergence of inflation rates 
C)  the value of security transactions with foreigners 
D)  the value of daily turnover in the global foreign exchange market 
A)  The volume of international bank lending 
B)  Convergence of inflation rates 
C)  the value of security transactions with foreigners 
D)  the value of daily turnover in the global foreign exchange market

Question 16

Securitisation has the following benefits:

Accepted Answer

A)  lowers borrowing costs 
B)  provides for an efficient use of capital 
C)  facilitates the sale of risk to investors with an appetite for risk 
D)  all of the answers given 
A)  lowers borrowing costs 
B)  provides for an efficient use of capital 
C)  facilitates the sale of risk to investors with an appetite for risk 
D)  all of the answers given

Question 17

The Eurocurrency market:

Accepted Answer

A)  is a market for assets denominated in currencies other than that of the country in which they are held 
B)  is a market in which euro-denominated assets are bought and sold 
C)  is a foreign currency market based in Europe 
D)  includes all foreign currency trading conducted in the European Union 
A)  is a market for assets denominated in currencies other than that of the country in which they are held 
B)  is a market in which euro-denominated assets are bought and sold 
C)  is a foreign currency market based in Europe 
D)  includes all foreign currency trading conducted in the European Union

Question 18

Studying international finance is important for the finance manager because:

Accepted Answer

A)  it helps the manager decide how international events affect the firm 
B)  it helps the manager anticipate events and to make profitable decisions before the events occur 
C)  it helps the manager understand and control risks affecting the firm 
D)  all of the answers given 
A)  it helps the manager decide how international events affect the firm 
B)  it helps the manager anticipate events and to make profitable decisions before the events occur 
C)  it helps the manager understand and control risks affecting the firm 
D)  all of the answers given

Question 19

The global financial crisis of the 21 century is more complex than earlier crises as:

Accepted Answer

A)  financial innovation allowed the creation of complex assets whose risk profiles were hard to assess 
B)  financial innovation allowed the creation of complex assets which were hard to value 
C)  it spread more quickly from the US to other countries 
D)  all of the answers given 
A)  financial innovation allowed the creation of complex assets whose risk profiles were hard to assess 
B)  financial innovation allowed the creation of complex assets which were hard to value 
C)  it spread more quickly from the US to other countries 
D)  all of the answers given

Question 20

The appreciation of the domestic currency is:

Accepted Answer

A)  always good for firms with international operations 
B)  always bad for firms with international operations 
C)  good or bad, depending on the specific conditions of the situation 
D)  good or bad, depending on the interest rate differential 
A)  always good for firms with international operations 
B)  always bad for firms with international operations 
C)  good or bad, depending on the specific conditions of the situation 
D)  good or bad, depending on the interest rate differential

One reason why the ANZAC was not developed into a fully-fledged common currency for Australia and New Zealand is:

Which of the following statements is UNTRUE?

Between 1962 and 2007, the size of the US economy:

The trend towards increasing international use of currencies other than the US dollar in both current and capital account transactions is indicated by:

Currency crises spread in several ways, including:

Balance of payments difficulties are a source of concern for the finance manager because:

The twin deficit problem refers to deficits in the United States':

The term 'international operations' encompasses:

Martin Wolf identifies the following benefits of modern finance:

Which of the following is NOT a factor that has contributed to increased financial market integration?

The introduction of the euro as a hard currency:

Which of the following statements is UNTRUE?

Increased volatility of interest rates can be traced back to:

The globalisation of finance has been driven by:

Which of the following is the least likely indicator of the internationalisation of finance?

Securitisation has the following benefits:

The Eurocurrency market:

Studying international finance is important for the finance manager because:

The global financial crisis of the 21 century is more complex than earlier crises as:

The appreciation of the domestic currency is:

The Foreign Exchange Market

The Balance of Payments and Effective Exchange Rate

Exchange Rate Determination

The International Monetary System and Exchange Rate Arrangements

The Eurocurrency Market and International Banking

International Banking Regulation and Basel Accords

Exchange Rate Forecasting, Technical Analysis and Trading Rules

Currency Futures and Swaps

Currency Options

International Arbitarage

Foreign Exchange Risk and Exposure

Foreign Exchange Risk Management

International Short-Term Financing and Investment

International Long-Term Financing and Investment

Foreign Direct Investment and International

Filters

Exam 1: An Overview

One reason why the ANZAC was not developed into a fully-fledged common currency for Australia and New Zealand is:

Which of the following statements is UNTRUE?

Between 1962 and 2007, the size of the US economy:

The trend towards increasing international use of currencies other than the US dollar in both current and capital account transactions is indicated by:

Currency crises spread in several ways, including:

Balance of payments difficulties are a source of concern for the finance manager because:

The twin deficit problem refers to deficits in the United States':

The term 'international operations' encompasses:

Martin Wolf identifies the following benefits of modern finance:

Which of the following is NOT a factor that has contributed to increased financial market integration?

The introduction of the euro as a hard currency:

Which of the following statements is UNTRUE?

Increased volatility of interest rates can be traced back to:

The globalisation of finance has been driven by:

Which of the following is the least likely indicator of the internationalisation of finance?

Securitisation has the following benefits:

The Eurocurrency market:

Studying international finance is important for the finance manager because:

The global financial crisis of the 21 century is more complex than earlier crises as:

The appreciation of the domestic currency is:

The Foreign Exchange Market

The Balance of Payments and Effective Exchange Rate

Exchange Rate Determination

The International Monetary System and Exchange Rate Arrangements

The Eurocurrency Market and International Banking

International Banking Regulation and Basel Accords

Exchange Rate Forecasting, Technical Analysis and Trading Rules

Currency Futures and Swaps

Currency Options

International Arbitarage

Foreign Exchange Risk and Exposure

Foreign Exchange Risk Management

International Short-Term Financing and Investment

International Long-Term Financing and Investment

Foreign Direct Investment and International

Filters